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Illusions About Energy

United States Mineral Resources

US Geological Survey, Professional Paper No. 820
US Government Printing Office, $9.50

US Energy Outlook

National Petroleum Council (1625 K Street NW, Washington, DC 20006)
Summary Report, $6.50 (paper)

The Potential for Energy Conservation

Office of Emergency Preparedness (Executive Office of the President)
US Government Printing Office, $3.00

I

Alternative energy is, after inflation in oil prices and profits, the major subject of present “energy crisis” rhetoric. But new energy supplies may not provide the relief that they now seem to offer, although President Nixon promised, in June, in the latest version of his energy strategy, “intensive effort,” and $10 billion, for alternative energy development.

Coal, shale oil, Alaskan oil, and nuclear fuels will, according to the Administration’s policy scenario, prevent the “serfdom” of oil imports. Energy experts from Wall Street to the Iranian government, and from Mobil to groups in the environmental movement, eagerly endorse the development of domestic energy. The corporate search for a “clean” coal technology resembles a modern gold rush, while oil industry stock analysts find “enormous” potential in a “coal [stock] play.” Professor Carroll Wilson of MIT expressed this general enthusiasm when, writing in Foreign Affairs, he urged an emergency “Decade Program” of publicly financed coal and nuclear development. Coal expansion, he wrote, was “a big job, but no bigger than the Manhattan and Apollo projects,” and, “On the whole we do very well in dealing with national emergencies.”1

A boom in coal and domestic fuel is certain in the next ten years. Unlike energy conservation, or negotiations with oil exporting countries, alternative energy development offers an opportunity for action, for government spending. Yet the unanimity with which this prospect is greeted conceals vast economic and political difficulties which the brisk optimism of, for example, Professor Wilson may not overcome. These difficulties may derive in fact from the basic tenet of present energy policy—a huge commitment to spend national resources on energy production and consumption.

One difficulty of official fuel policy has to do with the value of energy use. Current policy assumes that increased energy use is desirable, as well as inevitable. The confusion and alarm that surround energy policy are compounded by a figurative interpretation of the physicists’ definition of energy as “the capacity to do work.”^2 Yet national energy is distributed most unevenly among different uses, different fuels, different ways of doing economic work. Driving an automobile for three hours, for example, uses more purchased energy than operating a color television set for a year of normal viewing. Public support for increased energy use, as will be seen, favors certain energy-intensive industries. Energy consumption may not be an absolute good. It may, rather, be more like transportation than like progress—a good which depends on particular social and economic arrangements.

A second difficulty has to do with the extent to which energy policy encourages increased energy use. Government predictions about future energy demand have the force of self-fulfilling prophecy. By sponsoring long-term investment to meet expected needs, government policy will reinforce the existing pattern of energy demand. The commitment to provide for future demand will itself create extra demand. The commitment to provide fuels in a particular form will perpetuate demand for those fuels.

This is the same contradiction of government intervention that troubles, for example, transportation policy. By building roads, which are “needed” to avoid traffic jams, public policy makes driving easier, supports automotive power, and encourages extra auto travel. The identical effect was illustrated in President Nixon’s most recent energy message, urging development of a synthetic oil derived from coal. Public subsidy for such development would help to reduce oil shortages, but would reinforce the power of dominant American businesses—of companies which distribute liquid fuels, including petroleum marketers and oil pipeline operators, of aircraft producers, of conventional auto manufacturers.

A third problem concerns the prospects for energy conservation. Most alternative energy projects endorse energy saving. Their conservation proposals range from the serious if brief suggestions of such experts as Professor Wilson to the arbitrary exhortations of Nixon’s energy messages, urging, for example, the “relaxation of dress standards,” so that those who dress more lightly will use less air conditioning. Selective energy conservation, as Professor Wilson writes, is at least as important as discovering new possibilities for fuel production. But new production may become, in practice, a substitute for energy saving. The coming emphasis on energy investment will probably detract from the urgency of conservation attempts: in particular, of those more radical projects which demand industrial reorganization as well as consumer frugality.

Further problems have to do with the costs of alternative energy projects. The environmental costs of fuel development are suggested by present concern about, to take just a few examples, offshore oil production, strip mining, the Alaska pipeline, the hazards of nuclear power. A publicly supported energy boom will provide a lasting bonanza for powerful energy users—and for the US oil business, which, with its “total energy” corporations, now dominates the coal, oil shale, and uranium industries. Economic costs are at least as alarming. According to government estimates, and allowing for only modest development of “alternative energy,” capital investment in the US energy industries will cost some $100 million a day for the next twelve years.3 This money will be diverted, of course, from other needs and emergencies.

The costs and difficulties of alternative energy will attend fuel development for at least the next ten to fifteen years. Projects for using solar power on a large scale, or for fusion power, belong to the 1990s and later. These difficulties suggest that “emergency” energy programs are able to respond only to quite limited national needs. They will bring horrifying costs to some regions and some people, while favoring a few privileged industries. Unlike, for example, New Deal programs, they will provide few jobs. Their value, in fact, may be depressingly similar to that of the Apollo space programs.

II

More Oil. Petroleum is still the favored source of “new” domestic energy. Expectations about a coal boom notwithstanding, President Nixon has chosen the traditional US oil industry for his most immediate support. His recent tax proposals offer incentives for drilling exploratory oil wells. He urges fast construction of the Alaska pipeline and fast expansion of offshore oil production. New domestic production is unlikely, according to the US Geological Survey, to “make the US ever again economically self-sufficient in oil and gas.” But in the predictions of the National Petroleum Council, oil and gas investment will account directly for $250 billion, or almost half of the money to be invested in US energy between now and 1985.

Petroleum is the most convenient fuel for the US oil industry and for its leading clients. The costs and conflicts of new petroleum production will apply, in much more intense form, to other “new” fuels. Much of the conflict will be economic. Newly discovered oil will be more expensive than oil from older fields. (Even Alaskan oil, although cheap to produce, will be costly to transport.) By subsidizing domestic production, the US will lose the benefits of imported oil—which is likely to remain cheaper than new (or old) US oil for much of the next ten years. The national economy will pay a gigantic premium, for geopolitical security, but also for the safety of oil expansion.

New oil production will also bring the “inconvenience” of regional inequity. US oil consumption has followed the general shape of world oil use, with an advanced metropolitan region importing fuels produced in national and international backlands. The US East Coast, for example, has a role comparable to that of Japan in the world oil economy, using, recently, 40 percent of all oil consumed in the nation, and producing 0.3 percent of crude oil production.4 Oil (or gas) production is less destructive than, say, coal mining. But privileged US regions may find political problems in importing oil from poorer areas. Alaskans now demand increased compensation for bearing the social and environmental costs of national oil consumption. Even the New Mexico State Legislature has passed a so-called “energy crisis” bill, allowing the state to buy back locally produced minerals, and introduced, according to the Wall Street Journal, “after El Paso Natural Gas put some New Mexico cities on quotas while it moved New Mexico gas to California.”

Oil production will bring many new environmental costs. Much new US oil will be discovered under the oceans—and for US consumers, offshore oil production is more alarming in Santa Barbara or Southampton than in Venezuela, Borneo, or the Gulf of Alaska. The East Coast Outer Continental Shelf, from Montauk to Cape Hatteras, may itself offer enormous oil potential. According to the US Geological Survey, one local formation has “much in common geologically” with the world’s largest oil field, at Ghawar in Saudi Arabia. Yet the recent announcement of the mineral potential of these waters stimulated a storm of local protest. Officials of Suffolk County, Long Island, called for an injunction against any offshore drilling, supported by, among many groups, the New Jersey Department of Environmental Protection, the New England Sierra Club, and representatives of the regional fishing industry. The offshore technology that’ could satisfy Southampton would be enormously more elaborate than any yet imagined by the world oil industry.

The political problems of oil and gas development will be particularly intense when “new” North American fuels are discovered in Canada. The Canadian Arctic and offshore waters are the least explored fuel regions in North America. Alberta probably contains more oil, embedded in tar sands, than has been produced in the history of the American oil business. These resources promise exciting opportunities to US oil corporations and their Canadian subsidiaries. Yet Canadians are becoming, in the words of a Wall Street oil analyst, a nation of “blue-eyed Arabs.”5 In the last few months, Canada has imposed new controls on oil exports. The New Democratic provincial government of British Columbia (the “Chile of the North,” to oil investors) this spring boosted and in some cases doubled its royalty taxes on oil and gas. Meanwhile, Canadian regions share the life of an oil-exploration civilization. The North-west Territories are learning the hazards of what the Wall Street Journal describes, familiarly, as the “antifreeze problem,” where Eskimos living near Arctic mining camps learn to drink, and die from, such substances as antifreeze and the alcohol in cans of hair spray.

Alaska. Alaskan oil production now seems likely, but expensive, and less of a panacea than government pronouncements imply. It will make only a modest contribution to national energy requirements. According to the National Petroleum Council, oil from the Alaskan North Slope will in 1985 supply between 7 percent (the worst scenario) and 13 percent (with “maximum feasible” progress on all energy fronts) of US oil demand. The Economist estimates that eventual production could be twice as great as the Petroleum Council expects. Yet in each case, the physical and social costs of production will show most clearly the hazards of free enterprise in energy supply.

Environmental disruption is not the only cost of Alaskan oil production, or of the pipeline project. Even opponents of construction concede that corporate planning and behavior have improved since the early Arctic boom. Yet expensive public supervision will still be required throughout the lifetime of an Alaskan oil industry. (Mean-while, corporate privacy conceals the state of the technological arts in production and transportation. In the case of the Alaska pipeline, it is difficult for government agencies to judge the claims of private business—about the avoidability of oil spills, for example, or about the pliability of the pipeline, which according to its developers would “bend” but not break when subject to a severe earthquake in one of the several susceptible zones that it will cross.)

  1. 1

    Foreign Affairs, July, 1973.

  2. 3

    The White House Office of Emergency Preparedness estimates, based on figures supplied by electric utilities and by the National Petroleum Council, that total capital investment in the US energy industries will cost $566 billion between 1971 and 1985. (The Potential for Energy Conservation, October, 1972.) This amounts to an expenditure of $111 million a day for 14 years, or 5,110 days.

  3. 4

    The Role of Petroleum and Natural Gas from the Outer Continental Shelf, US Department of the Interior, May, 1970.

  4. 5

    Alberta tar sands could yield, according to the National Petroleum Council, 174 billion barrels of synthetic crude oil. US petroleum production, to date, is a little over 100 billion barrels.

    Official US policy so far downgrades the prospect of conflict between the US and Canada. The Wall Street Journal cites the view of Secretary Shultz that “there is almost no national security basis for restricting imports of oil from Canada, since it is difficult to imagine an emergency in which supplies from these sources could not be protected almost as easily as our own.” This sanguine imagination ignores possible “emergencies” where Canadian (or Mexican) supplies are jeopardized locally, rather than by outside intervention. The Canadian Minister of Energy recognized such a possibility when, discussing conceivable conflict over the transportation of oil and gas from Alaska and the Canadian Arctic, he said that in the last resort “the Americans could shut down all of Eastern Canada.”

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