Energizing America

"There is no question that the public is confused about the energy situation. I would like to clarify a flagrant misconception by making it perfectly clear that there is no energy crisis in the United States." Michael Halbouty Head of   President Reagan's   task force on energy

"The energy question is really a question about economic growth and security, which in turn means it is a question about the future of Western society...The stakes are high enough, the uncertainties great enough, the effects persuasive enough that it would be foolish to close our eyes...."   Daniel Yergin

NO ONE EVER SAID there was a consensus in the U.S. on the subject of energy. Daniel Yergin, lecturer at the Kennedy School of Government, and co-editor with Martin Hillenbrand of Global Insecurity, thinks there should be.

Yergin, who three years ago co-authored Energy Future: The report of the Energy Project at the Harvard Business School, argues in his essays on energy and the U.S. that without proper precautions America over the next 20 years could easily face a major energy crisis and in turn a lethal threat to its national security.

According to Yergin, interviewed in his K-School office, Americans find it very comforting to have a "1950s attitude of energy self-sufficiency" currently fashionable in Washington. But behind that sugar coating of "limitless domestic resources" is the bitter pill of the West's future energy vulnerability.

Yergin claims that America is suffering from an "oil-glut psychology": oil seems plentiful, OPEC looks to be in shambles, and promises of alternative energy sources seem just one technological step away. With the minds of American consumers and industries on other things, Yergin's doom and gloom approach is not very welcome. However, the appearance of this book and the attendant publicity surrounding it will hopefully begin to change prevailing attitudes. In all, Global Insecurity is a much needed prescription for our energy complacency.

The U.S. could avert an energy crisis, Yergin concedes--provided there is stability in the Mideast, accelerated development of alternate energy technology (i.e., synthetic fuels, nuclear, and solar), and substantial domestic conservation. However, because such prospects currently are more dream than impending reality, Yergin finds the problem too important to wait out with fingers crossed.

IN HIS CHAPTER, "World Energy to the year 2000," Robert Stobaugh, professor of business administration, designs two scenarios for the next 20 years. One possibility he calls the Upper Bound. It envisions no more oil shocks and significant progress in developing alternative energy technology. World energy supplies would increase by 2.6 percent annually and there would be healthy Western economic growth. The more pessimistic offering is the Lower Bound. It forecasts political upheavals in oil centers--which might be under Soviet influence--no domestic oil discoveries and little progress in developing other energy methods. Both Stobaugh and Yergin believe the Lower Bound is a more likely predicament.

If indeed the Lower Bound prevails, the U.S. will have to find alternative sources of energy to fuel its economy. Yergin believes that economic growth is the key to the survival of Western society. And energy, he argues, is the key to economic growth. By depending greatly on foreign sources with fluctuating prices, Western governments have had a hard time trying to organize coherent energy plans and efficient market corrections. Business have difficulty attempting to gauge energy prices and are afraid to make investments beyond the short term. It is that lack of long-term thinking in both the public and private sectors which Yergin says has prevented a national consensus on energy. He would like Western countries to begin to develop such a consensus for energy self-sufficiency to prevent destructive dependencies.

However, more immediate fears are predicated on what would happen if the oil supply to industrialized countries was suddenly cut off. The Arab oil embargo in 1973 and the fall of the shah in 1978 were oil shocks which, according to Yergin, could foreshadow a more rehabilitating oil stoppage. Those two events alone hiked the price of OPEC oil by four and two-and-a-half times respectively, clearly contributing to the West's high inflation and unemployment rates. Yergin predicts that a third oil shock could shake the economic systems of Western countries that have not yet learned to prosper in a time of expensive energy. The effects on developing countries would be worse because their nascent growth is inexorable linked to inexpensive and therefore available energy.

GLOBAL INSECURITY is supposed to be a wake-up alarm for the American people. However, with that alarm, the audience wants the news. In other words, Yergin and his co-authors have detailed the potential danger. Now, we want to know what we can do about it. They lay out a program, but it is not as comprehensive or cogent as their documentation of the problem. Yergin points to three main objectives: diversification of oil supplies, substitution by other energy sources, and energy conservation. The third goal is the basis for the book--what consumers and businesses with some government direction can do for themselves to help adjust. However, while that curbs the demand side of the problem, the supply part of the equation is dealt with in generalities.

While cutting energy demand might be a key to reducing the threat of a crisis, Americans will still drive their cars and companies will still produce such energy intensive products as steel. In sum, we still need oil and, more generally, abundant energy. The Mideast is risky, as are Mexico, Venezuela, and Nigeria in the long-term. And domestic off-shore drilling threatens not to live up to its promise. So, do we need a crash program to develop synthetic fuels? Coal is plentiful, but is it clean enough to be the electricity of the future? Are nuclear power, fusion and fission going to have a role in the next 20 years? And what should the government be spending to foster such research? These questions of supply, though hard to answer now, could have been more adroitly presented since in all likelihood they will have to be faced.

Daniel Yergin and his co-authors though, have issued a clear warning to the U.S. and the world to work out a coherent energy policy before time runs out. Global Security is an important book which conveys the immediacy of an energy problem pushed to the back-burner by the current administration that believes "the only energy crisis is the existence of the Department of Energy."