Energy Then and Now

I’ve been going back through a book I first read 30 years ago, the National Academy of Sciences’ Energy in Transition 1985-2010: Final Report of the Committee on Nuclear and Alternative Energy Systems.

At this point I’m less interested in specific predictions (over a future 25 year period?) than I am in the thinking and policies espoused by the NAS (and later by a variety of government administrations, as it will have turned out) to achieve the report’s goal of reduced energy consumption by the US.  Thus, the book leads off with this (remember, this is a 1980 copyright):

Slowing the growth of energy demand will be essential, regardless of the supply options developed in the coming decades.  In fact, the demand element of the nation’s energy strategy should be accorded the highest priority.  …this reduction could be accelerated by such explicit government policies as taxes and tariffs on energy and standards for performance….  [G]rowth of demand for energy in this country could be reduced substantially…by price-induced shifts toward less energy-intensive goods and services.

So much for recovering our manufacturing capacity.  The NAS continued [emphasis added]:

A major conclusion…is that technical efficiency measures alone could reduce the [energy/GNP [the earlier measure of US economic output]] ratio to as little as half its present value….  (This conclusion is sensitive to the prices assumed in the analysis,…result of this magnitude is attained only if prices…increase more rapidly than probable in a market at equilibrium.)

In some cases the price increases necessary…would have to be secured by taxes that would open up a wedge between consumer prices and the cost of producing and delivering energy.

The NAS had this to say about the impact of such measures [again, my emphasis]:

To avoid economic penalties, the rate of replacement must generally depend on the normal turnover of capital stock…though rising energy prices will accelerate this turnover in most cases.

“Normal turnover,” carefully manipulated by government interference with free market pricing through those taxes and tariffs and standards.

The real problem is finding a new balance between energy supply and energy demand, consistent with generally satisfactory overall economic performance. …

Tax, tariff, and price control policies…are important influences on the demand for energy.  But energy consumption can also be molded directly—for example, by imposition of mandatory standards for the efficiency of energy-using equipment….

Here is the NAS’ endorsement of economic management from the center—from government—preferring that to the clutter of a market of free actors freely interacting; i.e., we individual Americans acting in our own self-interest, unfettered by government, and achieving our own balance and defining for ourselves our “generally satisfactory performance.”  A free market at equilibrium is not to be tolerated.

Does any of this sound familiar in today’s political (I hesitate to say economic) environment?

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