Energy Paragon

Today's Wall St. Journal profiles Japan's efforts to reduce its reliance on imported oil over the years. It's a compelling story, and the accompanying figures show remarkable progress between 1975 and 2004, presumably the last year for which all the comparable data was available. The author concludes that, as a result of these changes, Japan is better positioned to weather the economic impact of sustained high oil prices than other countries. The only problem with this analysis is that by many of the same criteria, the US is in even better shape than Japan.

I wouldn't want to take anything away from what Japan has done to reduce its vulnerability to oil shocks, and to make its economy more energy-efficient. It reduced its oil imports by about 4% in the last 15 years, while US oil imports were growing by an average of 4% per year. This is all the more remarkable, considering that Japan produces less oil than Wyoming. In the process, Japan has achieved one of the lowest levels of greenhouse gas emissions per unit of economic output, though because of the size of its economy, it ranks 5th highest among emitting nations.

Two of the factors contributing to this excellent energy performance might not be worth emulating, however. First, the period of comparison coincides with the flattening of population growth in Japan, resulting in one of the world's most rapidly aging populations and all the economic worries that brings. It also overlaps with the protracted recession that followed the collapse of the "bubble economy." Over the same period, US economic growth was robust, while our population increased by nearly half.

Nor does the US look so bad, in energy terms. The Journal extols Japan's 40% improvement in energy use per GDP, compared with 1975, yet in the same interval, the US reduced its BTUs/$GDP(real) by 44%. And while Japan imports 82% of its total energy needs, with oil making up 46% of the total, the US is still 71% self-reliant in energy, with oil making up 40% of the mix, down from 45% in 1975. For all of our problems, I wouldn't trade our position for theirs.

All of these comparisons are superficial, because the US and Japan are very different countries, with important economic, social and historical distinctions. Rather than touting the energy improvements of one against the other, the more useful conclusion is that both of these large industrial economies--and most others, by extension--became a lot more efficient after the energy crisis of the 1970s and are thus in a better position to absorb high energy prices without falling into severe recession. That helps explain why the virtual doubling of oil prices this year hasn't been catastrophic for the world economy, thus far. The longer oil prices remain high, the more these countries will invest in efficiency, making them even less vulnerable in the future, with accompanying benefits for the fight against climate change. Japan isn't alone in knowing how to do this.

I'd like to wish my US readers an enjoyable Thanksgiving. Postings will resume on Monday, November 26th.

What Savings?

It's probably too early to tell whether we've escaped any serious glitches from the early switch to Daylight Savings Time (DST.) It was interesting hear the Congressional sponsor of this change suggest a few days ago that, aside from the other expected results of DST, it "brings a smile to everybody's faces." I wonder how many of us will be smiling when we learn that the energy savings that prompted this measure are likely to be entirely illusory--if not actually negative--based on a study of the time change's effects in Australia. As much as anything else, this exercise serves as a useful reminder of the questionable benefits of adopting 1970s-style energy policies in the 21st century.

I am sure that when extended DST was imposed during the first energy crisis of 1973-74, it saved significant quantities of energy. But it's worth recalling just how different this country was, back then. In 1970, the US population was one-third smaller, and nearly 1 in 10 Americans worked in manufacturing, compared to about 1 in 30 now. Only 40% of women were employed outside the home, compared to 60% in 2006. Today, large numbers of Americans of both sexes work "24/7" jobs that start earlier and end later, and our leisure activities are likely to be at least as energy-intensive as anything we do at the office. It's not intuitively obvious that adding an extra hour of sunlight for a few more weeks in March and October will materially change our consumption of oil, gas or electricity.

Similar concerns apply to some of the other measures that lawmakers whose personal experience extends back to the 1970s might contemplate. That includes windfall profits taxes on a US oil industry that controls a greatly diminished share of global oil production, and for which disincentives on new production result in barrel-for-barrel increases in our imports from dubious suppliers--inverting any notion of furthering energy independence. For that matter, some of the legacy policies from the first energy crisis, such as the Strategic Petroleum Reserve, need to be rethought, rather than expanded as the President suggested in January.

In the near term--barring enormous public outcry--there's probably no going back to a shorter DST, even if it becomes clear that its extension was a mistake. Reverting to the earlier schedule would require yet another round of computer system patches to replace the timetable that was just updated, and result in further confusion. But changing our clocks back on the first Sunday November, instead of in October, should remind us again that we really need energy policies tailored to how Americans live and work now, rather than to the way their parents did. And for the future, it's possible to imagine a different, more flexible kind of DST, designed not to reduce consumption, but to align the daily peak in electricity demand with the output of solar power technology.