Commentary Magazine


Energy Policy

To the Editor:

I think that Eugene Bardach’s article, “Save Energy, Save a Soul” [May], makes a lot of sense. If I correct him on a point, it’s because I hate to see so good an article fall into confusion.

There is nothing “unfathomable” or “bizarre” about the net-energy-yield test. Where energy is both the output and one of the inputs, then the net-energy-yield test can be seen as a special case of a businessman’s profitability test. If you have to invest ten BTU’s to produce ten, then the investment will be a losing proposition. Exceptions to this rule are imaginable in principle, but extremely unlikely in practice.

Indeed, conservationists can be assured that for the rational businessman, the net-energy-yield test is the absolute minimum criterion. The reason is that his costs of production involve more than just the purchase of energy. For example, there are interest charges. Also, if some of the BTU’s on the input side are to be regarded as the inputs of an engineer, then those BTU’s will be priced much higher than the BTU’s on the output side. In practice, then, the net-energy-yield will not only have to be positive, but a very large positive.

The point about the net-energy-yield test is not that it is wrong, but only that it adds nothing to our knowledge.

Eugene Epstein
New York City

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To the Editor:

Eugene Bardach’s rejoinder to the advocates of energy conservation is an extraordinary compound of ad hominem attacks and airy dismissal of the real issues.

Mr. Bardach begins with the rather disingenuous comment that “everyone who counts seems to agree that as a nation we must conserve energy.” But notwithstanding the current political rhetoric, the people who really count—the policy-makers in Washington—seem rather to agree with Mr. Bardach. Or so one would judge from their deeds. Even though the Energy Research and Development Administration says in its current National Plan for Energy Research, Development, and Demonstration that energy conservation has “highest priority,” a tight lid has been clamped on the ERDA conservation budget. For example, only $9 million will be spent next year on industrial energy conservation out of a total energy budget of $6 billion. Even more significantly, ERDA’s Office of Commercialization—responsible for actually putting new energy technologies into use—has no plans for even looking at conservation technologies, even though many of them have already been developed. The Federal Energy Administration’s record in the conservation area is, if anything, worse, causing FEA’s most recent Assistant Administrator for Conservation and Environment to resign in protest.

The fundamental assumption which underlies Mr. Bardach’s argument, and no doubt the view of government planners as well, is that the free market will enforce an optimum rate of energy use in the absence of government intervention. That this faith is contrary to all empirical evidence does not bother the devotees of the market. The refusal, for example, of the American steel industry to adopt the low-cost, energy-efficient basic oxygen furnace until many years after its widespread use in Europe is merely an inconvenient fact; what matters is the pure theory of the “invisible hand.”

The present level of efficiency in American industry’s energy use is exemplified by the FEA’s inclusion of “Eliminate Unused Roof Openings” on a list of important energy-conservation measures for factories. The question of implementation—how to make industry take those steps that Mr. Bardach cheerfully admits are in everyone’s interest and then forgets about completely—is perhaps the most important issue in the entire area of energy conservation.

Mr. Bardach’s handling of the environmental question is, to say the least, unique. He assumes that the only environmental effects of coal and oil are connected with mines and wells. The contributions of energy use, which include nearly all the sulfur and nitrogen oxides in our atmosphere as well as a portion (how large no one knows) of the cancer-causing agents in the environment, are ignored entirely.

Those of us who believe that our economic system in no way resembles a perfect optimum in the allocation of resources, that current energy prices fail to reflect all environmental costs, and that private planners discount the future more than public planners should, cannot share Mr. Bardach’s facile optimism about future energy supply. A proper conservation program will not eliminate the need to develop new sources of supply. But the health of our economy, not to speak of the health of our population, depends on a vigorous effort to keep future energy demands down to a manageable level.

Benjamin Ross
Cambridge, Massachusetts

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To the Editor:

. . . In spite of Eugene Bardach’s arguments about how little energy can be saved and why it should not be conserved, there are some facts which cannot be easily explained or justified. Why does the United States, with about 6 per cent of the world’s population, use about 40 per cent of the energy? Can this situation last forever and will the rest of the world support us in the style to which we are accustomed without “forceful intervention”? Why is there not a need for energy conservation when our oil production is declining and we depend on foreign (largely Arab) oil? If a 1961 Buick is still running, why not declare a moratorium on automobile production and save energy, materials, labor, and capital? . . .

According to Mr. Bardach, people who ride bicycles are devotees of some pagan cult devoted to Hercules or Beowulf. Those who advocate energy-saving measures such as mass transit are primitive Christians who believe in self-sacrifice and asceticism. With such statements from academics, no wonder the United States has no energy policy.

The automobile manufacturers, oil companies, and other business conglomerates are unpopular . . . not because of “demonology” but because big business does not act in the public interest. The “robber barons” are still with us but instead of the railroads we have the automobile-oil-cement-highway lobby. Manufacturers have fought tooth and nail against fair wages, safety measures, anti-pollution regulations, and energy conservation. General Motors was instrumental in killing mass transit and railroad passenger service. They do not want this competition to reappear. Most writers and commentators are not very enthusiastic about conservation. This is because the media depend on big business for advertising revenue. Universities have research contracts and other business connections. . . .

The fact is that intellectuals, including many economists and scientists, are deeply concerned about our economic system and what it is doing to the people and to the planet. America’s faith is in “free enterprise” or free-market capitalism on the Adam Smith model. However, the free market is confined to the declining area of small business and family farms. The dominant force in our society is what might be called the military-industrial complex or private monopoly capitalism whose characteristics have been well described by John Kenneth Galbraith. Large amounts of capital and several years of planning go into a production line. Demand is created and sustained by advertising. The system is not flexible and does not respond readily to changing circumstances. . . . It uses ever increasing amounts of energy and materials and is vulnerable to shortages, which cause recessions and unemployment.

Obviously, what is needed is overall national planning and allocation of fuel, materials, equipment, and labor. The objection to this is that government planning or state socialism is often inefficient, incompetent, and repressive. State planning in the Soviet Union eliminates a lot of waste in non-essential consumer goods but is repressive, militaristic, and deficient in providing basic necessities, such as food. However, it should be possible to have a democratic and humane type of planned economy. It should also be possible for the government to be independent of special interests and to act in the public interest. The answer to our situation might be simply for us all to become better citizens.

Mr. Bardach’s is not the only negative voice. There seem to be a malaise, apathy, and hopelessness today at a time when we have the technology to solve our problems. . . . The malaise might be caused by the failure of the Baal of free enterprise to deliver all its promises. . . .

There is a religion available which has inspired wise men down through the ages to criticize human society and set forth goals for humanity. It is based on moral laws and on justice, mercy, and benevolence. It is the religion of Moses, the Prophets, and the sages of Israel. Why not apply it to the problems of today and work together for a better society? Why not substitute the Law of Moses for the law of the jungle?

Winthrop C. Wolff.
Washington, D. C.

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Eugene Bardach writes:

If the energy budgeteers actually perform their accounting as Eugene Epstein imagines they do, he might be right. In that case, if the net-energy-yield test were successfully to displace the conventional economic test, as the BTU theorists urge, society would end up producing and consuming too much energy.

However, I believe he underestimates the ingenuity of the energy accountants. In an article to which I referred in my essay, Martha Gilliland in fact translates many non-energy costs of production into kilocalories. For instance, she estimates the 30-year construction and operation costs of labor, taxes, rents, and interest for a certain geothermal reservoir at $22 million. This is the equivalent, in her analysis, of 140 billion kilocalories. Although she does not indicate the source of her conversion factor of 6,400 kilocalories per dollar for such items, it is bound to be “bizarre.” Interest, for example, reflects a social rate of time of preference; hence, she must be using a formula for translating time into energy, if not in fact then at least by implication. I am confident that it is not Einstein’s theory at work here but simple confusion, though the confusion is neither Mr. Epstein’s nor mine.

In reply to Benjamin Ross, I do not say that energy markets work perfectly, only that they are likely to have a much more powerful effect on present and future energy consumption patterns than any amount of conservationist rhetoric. Relatively low energy prices over a long period were partly responsible for our present consumption pattern. Relatively higher prices in Europe and Japan induced a quite different, and much more frugal, pattern. If energy prices continue to rise, I do indeed have faith that those sluggish factory managers will get around to eliminating all those unused roof openings. If we want them to be less sluggish, I would suggest offering information and technical assistance rather than the governmental compulsion Mr. Ross appears to favor.

Mr. Ross is correct in thinking energy markets highly imperfect. They could be improved considerably if the federal and state governments were to stop regulating them so badly. But the worst offender in the energy marketplace is, of course, OPEC. The high price and insecurity of OPEC oil induces all who can do so to exploit high-cost domestic sources instead of using Middle Eastern oil which costs a pittance to produce.

Mr. Ross refers to certain noxious effluents which are the “contributions of energy use.” Indeed they are, but energy conservation would be an inefficient and probably ineffective way to deal with these discharges. Present anti-pollution policies, as imperfect as they are, at least aim at the right target, the discharges themselves.

Since fossil fuels are finite, we can all agree that eventually people will turn to more abundant energy resources, say, the sun or hydrogen. Presumably, Mr. Ross’s idea of a “proper conservation program” to benefit future generations should be linked to managing this particular economic transition. For my part, I cannot conceive that any such linkage could be other than very weak. The social cost of such a transition will be so heavily dependent on the character of the new energy technologies that a slightly lower future price for fossil fuel BTU’s—which is what the future gains by conservation efforts today—will be virtually irrelevant.

Winthrop C. Wolfe’s letter simply confirms the central argument of my original essay: “energy conservation” is symbolic politics, not practical policy. Amid such rhetoric it is a little difficult to remember that we must attend to such mundane problems as are involved in producing and consuming barrels of oil and tons of coal. I shall not restate here the cultural and psychological interpretations I applied in my essay to the symbol of “energy.” Suffice it to say that Mr. Wolfe’s letter is further validation of my inferences.

One particular error in Mr. Wolfe’s argument, however, is sufficiently widespread to warrant rebutting. Nothing of interest can be adduced from the fact that the United States has 6 per cent of the world’s population but uses 40 per cent of the energy produced. We consume disproportionately more of many things—that is what it means to be affluent. If Mr. Wolfe and others desire a program to equalize wealth across nations, they should not limit its scope to barrels of oil and tons of coal.

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