Energy crisis is a matter of demand

Here's my latest newspaper column, hot off the virtual presses:


Energy crisis is a matter of demand
St. Cloud (MN) Times
5 May, 2006

The secret's out: We're in the midst of an energy crisis.

Nine months after most Americans got the message at the gas pump, Energy Secretary Sam Bodman finally acknowledged a problem with our energy supply.

"There's apparently some evidence that we have a crisis," he told Tim Russert on Sunday's "Meet the Press." It was in defense of President Bush's recent decision to halt deposits to the federal strategic petroleum reserve against the charge the move was an election-year ploy.

Certainly Bush, or at least his advisers, know playing around with the reserve will have little noticeable effect on retail prices. And Bush has previously stated his opposition to fooling with the reserves, especially if it's for political purposes.

In fact, in September 2000 he said, "Strategic reserves should not be used as an attempt to drive down oil prices right before an election. It should not be used for short-term political gain at the cost of long-term national security."

So he must have something else in mind.

Perhaps some of the president's advisers should tell him this: We consumed 5.5 billion barrels of crude last year and placed just 14 million into reserves.

Holding back a month's deposits will have no effect on the retail level. When the price of crude was in the $37 range — as recently as January 2005 — the cost of bringing a gallon of gas to the retail pump (including taxes) was about $1.85, fairly close to retail prices at that time.

Since then, the cost of crude has skyrocketed to about $66, a 78 percent increase.

But pump prices are hovering in the $2.75 range, or just 49 percent higher than in January 2005. So while we're feeling the pinch at the pump, current retail gas prices are certainly within reason, given the substantially higher cost of crude.

'70s crisis

We'd have to go back to the summer of 1979 to remember a time when the cost of gas made daily news headlines and energy was a regular topic of dinner-table conversation.

That July, President Carter delivered his now-famous "crisis of confidence" speech excoriating Americans for wasting energy and calling for sacrifice on all levels to relieve the shortage. In 1977 he had warned Americans that "ours is the most wasteful nation on earth," actually wasting more energy than we imported.

By 1979 energy was on everyone's minds because people were having trouble filling up their cars; some stations were even running out of gas. Carter responded to the crisis by establishing a clear set of goals for the future, capped with the bold pronouncement that "this nation will never use more foreign oil than we did in 1977 — never."

A variety of federal programs were established to promote investment in alternative energy, efficiency and domestic production capabilities.

Though most of the conservation and alternative energy programs died with Ronald Reagan's election, we did push ahead to increase domestic oil production through the 1980s, and within a few years prices came down.

Carter's pledge to reduce imports held true until we broke the 1977 import record in 1993. We have broken it every year since.

In 2005, we imported 3.6 billion barrels of crude, up 50 percent from the line Carter drew in the sand a generation ago and accounting for about one-third of the trade deficit. So the energy is still out there if we're willing to pay market prices for it; there is no crisis of supply.

What we are facing is a crisis of demand.

The problem

Though Carter was slammed for saying it, we are the problem.

We, all of us, use too much energy. We are still among the most wasteful societies on the planet.

We turn our backs on common-sense conservation measures and place the likes of Vice President Dick Cheney in charge of our nation's energy future, the very man who said "conservation may be a sign of personal virtue" but that the key to energy security was increasing production and relaxing environmental laws.

Though many will claim Big Oil or the OPEC cartel controls our destiny, it's really a simple matter of demand. We can chose to drive more efficient cars, better insulate our homes, waste less plastic and invest in alternative sources of energy.

Minnesotans are no better or worse than the rest of the country. In fact, we're pretty average, ranking 21st in population, 21st in petroleum consumption. But we can show our leaders in Washington we know there's more at stake in the current crisis than short-term political gains.

We can adopt new conservation measures, we can reduce demand and we can become part of the solution by changing our profligate ways.

As Carter said in 1979, "there are no short-term solutions to our long-range problems. There is simply no way to avoid sacrifice."

Far better to chose that sacrifice now than have it chosen for us somewhere down the line when we're less able to respond, less prepared to adapt and less willing to admit our own culpability in the problem.