SubsidyEye

The Energy Efficiency Paradox

While it is true that there is some "claw back" of energy use as efficiency improves, it rarely returns to the same level all other things being equal. That is, a 10% reduction in the energy needed to perform a service does not lead to a 10% increase in demand for that service.

Take automobiles: while people did start buying bigger, less energy-efficient cars and SUVs after the big gains in the 1975-85 period, lower energy prices also were a major factor. And don't forget that the U.S. population has grown by 1/3 since 1980. That growth has nothing to do with improved energy efficicency.

U.S. Hits Record Energy Efficiency

The reduction in energy consumption per real dollar of GDP is no doubt a combination of greater energy efficiency AND the offshoring of energy-intensive manufacturing. There have certainly been big gains in energy efficiency in cement manufacturing, power generation and air transport. And the share of GDP accounted for by services -- which are generally less energy-intensive than manufacturing -- continues to grow. On the other hand, some of the heavy manufacturing that used to take place in the United States has moved offshore, which gives the appearance that we are now using considerably less energy per unit of GDP.

The Good, The Bad, And the Inaccurate Oil Forecasts

A trend is a trend is a trend.
The question is when will it bend.
Will it alter its course,
through some unforeseen force,
and reach its inevitable end?

An Energy Policy that Makes Cents (and Sense)

I'm glad to see you folks at Seeking Alpha finally tempering your enthusiasm for ethanol. Quite a change from the tone of the posts during 2006. But it continues to fascinate me how a group of "capitalists" (and I am not using that word pejoratively) can be so enamoured of government intervention in a way that requires somebody in government to pick winners. One can of course point to cases where governments have strongly backed particular technologies and those technologies have gone on to be successful, but those who hold up such examples rarely examine the counterfactual (was there an even better one that was pushed aside?), nor the cost, nor the numerous numbers of dead ends.

While I think most studies show there is value to society from government funding of fundamental research, what Mr. Ftizsimmons is calling for here is a much more government-directed funding of specific technologies. Is there reason to hope that the outcome of such a grand project will be any different than it has been so far? According to a recent study by the Government Accountability Office (for a summary, click here: www.researchrecap.com/.../), "[W]hile DOE has spent $57.5 billion over the past 30 years for R&D on these [advanced energy] technologies, the nation’s energy portfolio has not dramatically changed—fossil energy today provides 85 percent of the nation’s energy compared to 93 percent in 1973."

Mr. Fitzsimmons, acknowledges that GM and Ford, because of their dedication to pick-up trucks and SUVs, "will be out of business, or at least completely marginalized, within the next 3 years." So, let them live with the consequences. Why should taxpayers come to their rescue? Rather than bail out the Big 3, the government should remove obstacles to Americans gaining access to more-efficient vehicles produced by other companies. In France, the energy-efficiency of the CURRENT new car fleet is already at the level of the much-vaunted U.S. CAFE standard for 2020.

In short, my sentiments are similar to those of MMarkkkk and vboring. However, MMarkkkk calls on people to drive at 55 MPH voluntarily. All well and good, and my father and I have tried it. It is down-right frightening to drive at 55 MPH when SUVs are zooming up to your tail at 80 MPH and then swerving around you at the last minute. (And once a state trooper pulled my father over for driving at 54 MPH in on a stretch of highway where the max speed limit was 55 MPH -- he wanted to know if something was the matter with his car!) Let's start, in other words, with enforcing the speed limits we already have!