Whatever your view on the energy initiatives President Bush proposed in this year's State of the Union address, their biggest contribution may be in stimulating an overdue debate about energy. And while countless citizens and pundits have remarked on the absence of conservation measures from the President's list of recommendations, I haven't seen many detailed suggestions of just what that would involve, if it is to make any noticeable difference in the next few years.
When most of us talk about energy conservation, what we really have in mind is investment-driven initiatives such as more efficient cars, buildings and appliances, or new technologies for generating electricity. But we need to understand that all of these require more than just a few billions in R&D spending; they entail investment in capital stock and vehicles in the trillions of dollars. Although they hold great potential to reduce our energy consumption in the future, the time lags involved are daunting, as I described in last Monday's posting. Cars and appliances last up to two decades, and buildings last longer. We should begin moving in this direction, but it's very much like the college savings plan you open when your child is born; she won't enjoy the benefits for years, and you have to support her in the meantime.
So if we want rapid progress on any of the energy goals that are being espoused, whether it's achieving full independence, drying up oil imports and our payments to OPEC, or simply getting the price of oil and its products back into a more comfortable range, the only way to have any real effect in the near term is through a change in our behavior as consumers. This could take the form of the self-discipline I referred to recently, or it could be imposed through heavy taxes.
How about some specifics? Well, in addition to the sensible and relatively painless suggestions you'll find at Save-a-Gallon, it would involve steps such as eliminating unnecessary travel, or shifting it to more efficient modes. If you think flying is the most efficient way to get somewhere, guess again. Trains are generally more frugal, and a family of four driving cross-country in a sedan uses less fuel than they would by flying to their destination. Cancel that coast-to-coast business trip and replace it with a tele-, video- or web-conference, saving 100 gallons of jet fuel. Consolidating errands helps, but shopping from home over the internet or by phone saves even more energy. Because our lives are so energy intensive, there's tremendous scope for savings, without having to invest and wait years for results. If it's worth investing billions or trillions in efficiency, why wouldn't we undertake all these non-investment measures, as well?
There's a downside to some forms of conservation, though. While a significant amount of energy can be saved without harming the economy--beyond lost margins for utilities, refiners and retailers--other cuts would ripple far beyond their source. That cancelled business trip affects an airline, hotel, rental car or taxi company, restaurants, and many other service providers. A few bucks worth of jet fuel can quickly turn into the "for want of a nail..." factor that reduces corporate profits and employment. For this reason, we need to clarify just how much conservation we really want.
Are we calling for the kind of comprehensive effort that would prioritize energy far beyond its market price and put the whole economy on an energy-war footing? Or, when we mention conservation, are we committing to the no-pain measures promoted by groups like Save-a-Gallon, but acknowledging that we'll have to be very patient waiting for the larger, investment-driven changes in our cars and homes to begin to bite? That policy choice ought to be an outcome of our national debate on the subject.
Note: I'll be traveling on business for several days, so new postings will be less frequent.