Gas(P) Guzzlers

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The Energy Crunch (Two Views)

The pessimist: How Soon We Forget

Back in the late '70's and early '80's, we had a real panic over energy costs as a result of the Mid-East oil cartel. To deal with this, many programs were introduced to conserve energy, including the Canadian Home Insulation Program (CHIP) and the grants that accompanied it. Everyone leapt on the bandwagon. Often this meant ill-informed homeowners hiring less than scrupulous contractors, to upgrade their attics.

It's hard for us in the seemingly energy rich '90's to imagine what the fuss was all about. At the time of the energy crunch, cars became smaller (the Rabbit and the Civic), and large houses were almost impossible to sell. So why today are cars (and vans) getting larger and more powerful, and why are so many large houses still being built? There are many reasons. First, the oil cartel self-destructed. Second, we came to believe that nuclear energy was the answer, and there was nothing to worry about. Then there was the short period of time when we were so oil rich (late '80's) that the oil industry put most of its crude into the production of plastics, resins, etc., and the leftovers went into gasoline, instead of the other way around.

But perhaps the more likely reason for the increases in our energy demands can be attributed to short memories. So let's ask a fundamental question. Is there more oil in the world today than in the '70's? The question is absurd. We know that our energy sources are finite in quantity. Furthermore, history has taught us that governments are reluctant to develop any energy source that has no military application (Wind, solar and tidal power are good examples of wasted opportunities).

That brings us to the bottom line - are we likely to have another energy crisis? It's almost like asking if El Nino will ever cause problems again. The next crisis will likely be triggered when we attempt to reduce our carbon dioxide (CO2) emissions in accordance with the agreement to combat global warming. Private studies on global warming predict dire consequences to the finances of each of us if we are truly to meet the CO2 emission targets set last year. There are even those who state that we are likely to suffer more financial hardship than we have from the recent debt and deficit reduction programs.

In practical terms, it means we will once again turn our attention to energy conservation.
When is this likely to happen? The first step is being put in place now. If Saddam Hussein becomes a legitimate oil exporter the increased production will force the Mid-East cartel to work together to control production and price. Stability in the region means no more cheap oil exports to finance costly wars, weapons and armies. Oil prices will rise as the quantity controls take effect, and natural gas prices will go up as well (naturally).

We've probably got a 2-3 year window before governments start warning us of a new crisis. (Marshall McLuhan said "The blind experience everything suddenly!"). How will governments respond to the combined forces of limited oil in the marketplace, plus a commitment to reducing our CO2 emissions?

The first response is predictable - taxes. Tax any furnace less than 8096 efficient. Tax fuel costs. There may even be a surtax on house size. What can we do now? Any renovation project should focus on insulating well. Vapour barriers need to be caulked to the structure to prevent air leakage, etc. And while it's fresh in your mind, have a peek in the attic to see what kind of shape the insulation is in. Finally, after considering these ideas carefully, if downsizing your home is in the near future, maybe it's time to think seriously about it.

Could there possibly be another point of view to this looming crisis that we aren't hearing?

The optimist: No Problem

The recent death of Julian Lincoln Simon, an optimistic economist (oxymoron?) has prompted this article.* Referring to himself as an 'economics educator," he wrote about 30 books and was in demand as a speaker on the university circuit. His approach to economics was gaining support in the States, and Fortune magazine listed him as one of the "150 great minds of the 1990s."
The short version of his position is that global warming, increased population and shortages of natural resources are overstated.

Simon challenged the accepted view that there were limits to growth. He also made a very public bet with an opponent in 1980 that prices of raw materials would actually fall. His critics all claimed that the earth's natural resources were becoming so scarce that they would become costlier to obtain.

The bet was to measure the price of copper, tin, chrome, nickel and tungsten in 10 years (1990). In 1990, as Mr. Simon predicted, all had fallen in price.

His critics, still outraged at his willingness to play down the problems, insisted that the question of growth, the environment, pollution, and global warming were going to destroy us.

Simon was always able to argue otherwise. For instance, typical economists have claimed (since Malthus in 1800) that if population growth was not checked, the world was facing starvation. Simon pointed out that India, once regarded as a hopeless case, could now feed itself. The world could deal with many more people, he said, because future generations would produce enough geniuses to solve the problems that more people would cause (One of his favourite questions was to ask how many Mozarts, Michelangelos and Einsteins had been lost to the world by birth control.) .

In his most influential book The Ultimate Resource (1981) he says "The ultimate resource is people: skilled, spirited and hopeful people who will exert their will and imaginations for their own benefit and so, inevitably, for the benefit of us all."

He believed that the threat of high prices for seemingly essential materials would encourage the search for new supplies or alternatives. His thesis is his confidence in the ingenuity of mankind to overcome its problems and to progress.

In his 1996 book The State Of Humanity, he made two predictions for the 21st century. The first, guaranteed to upset every pessimist, was that "humanity's condition will improve in just about every material way," whether it was life expectancy, the price of a natural resource or the number of telephones in China.

The second prediction was that "humans will continue to sit around complaining about everything getting worse." I think we can all agree that Julian Simon was at least half right.