February 25, 2012

OF COURSE, THE AGE OF (RELATIVELY) EXPENSIVE OIL WAS A FUNCTION OF PUBLIC POLICY...:

The best way for government to reduce oil dependence? Do nothing (David Frum  Feb 25, 2012, National Post)

After the oil shocks of the 1970s, the United States succeeded in reducing its use of oil. As late as 1995, the United States was using no more oil than it had used in 1978. Not its use per person, or use per vehicle, but its use, period.

This progress was not accomplished by reinventing the internal combustion engine. It was accomplished by (1) shifting homes from oil to gas heat; (2) ending the burning of heavy oil by electrical utilities; and (3) shifting freight traffic from trucks to trains. No government official planned these changes. They just happened, in response to market forces. Result: Even as Americans put more cars on the road -- and drove further in them -- they successfully decreased their oil reliance.

More impressively, they dramatically decreased the "energy intensity" of their economy: the amount of oil it took to generate an additional dollar of Gross National Product. In the cheap-oil era from 1995 to 2005, that progress slowed. By 2005, the United States was using 10% more oil than at the peaks touched in 1978 and 1995.

Such progress could resume again without any need for dramatic technological change. We don't need to imagine anything heroic, like Los Angeles shifting from cars to subways -- just an accumulation of small incremental changes: a consumer shift to hybrid cars or to smaller homes located closer to work.

Not all the changes are obviously energy-related. Americans move away from central cities in part to find better schools. Improve schools nearer to where Americans now live, and fewer Americans will feel pushed to move to more distant exurbs to pursue something better. Build condo towers atop shopping and entertainment areas, and more people will choose to enjoy a lifestyle where they can walk to their fun instead of driving.

If, however, people are told that today's prices are an outrage, that oil can be made cheaper again -- well then they won't make the changes and investments needed to move to a post-oil future. They'll just cut back their spending on other things, and tough out today's prices.

...just not our own.  So as we seek to replicate it, why not make it our policy?

Posted by at February 25, 2012 1:54 PM
  

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