Gasoline prices are rising in the United States -- always bad news for an incumbent president.
Accordingly, President Barack Obama travelled to Miami to repeat his energy message, which can be summed up as follows: Help is on the way. The U.S. government is investing in new energy technologies -- and in time, those investments will pay off in the form of cheaper energy and new jobs:
"Our job is to help outstanding work that's being done in universities, in labs, and to help businesses get new energy ideas off the ground -- because it was public dollars, public research dollars, that over the years helped develop the technologies that companies are right now using to extract all this natural gas out of shale rock."
The implicit promise here is that new forms of energy will preserve the familiar American way of life. Electrical motors or fuel cells may replace internal combustion engines, but Americans will continue to commute long distances to work in individual vehicles -- or so this kind of talk suggests.
But what if the most cost-effective energy solution is not to change the energy we use, but rather to change the way we use energy?
After the oil shocks of the 1970s, the United States succeeded in reducing its use of oil. As late as 1995, the United States was using no more oil than it had used in 1978. Not its use per person, or use per vehicle, but its use, period.
This progress was not accomplished by reinventing the internal combustion engine. It was accomplished by (1) shifting homes from oil to gas heat; (2) ending the burning of heavy oil by electrical utilities; and (3) shifting freight traffic from trucks to trains. No government official planned these changes. They just happened, in response to market forces. Result: Even as Americans put more cars on the road -- and drove further in them -- they successfully decreased their oil reliance.
More impressively, they dramatically decreased the "energy intensity" of their economy: the amount of oil it took to generate an additional dollar of Gross National Product. In the cheap-oil era from 1995 to 2005, that progress slowed. By 2005, the United States was using 10 per cent more oil than at the peaks touched in 1978 and 1995.
Such progress could resume again without any need for dramatic technological change. We don't need to imagine anything heroic, like Los Angeles shifting from cars to subways -- just an accumulation of small incremental changes: a consumer shift to hybrid cars or to smaller homes located closer to work.
Not all the changes are obviously energy-related. Americans move away from central cities in part to find better schools. Improve schools nearer to where Americans now live, and fewer Americans will feel pushed to move to more distant exurbs to pursue something better. Build condo towers atop shopping and entertainment areas, and more people will choose to enjoy a lifestyle where they can walk to their fun instead of driving.
If, however, people are told that today's prices are an outrage, that oil can be made cheaper again -- well then they won't make the changes and investments needed to move to a post-oil future. They'll just cut back their spending on other things, and tough out today's prices.
This is why it is so misleading and dangerous for presidents to promise dramatic changes tomorrow -- and to sprinkle subsidies on shoot-the-moon technologies. Energy policy that promises too much distracts people from making the choices now that could accomplish something.
Tax energy, especially oil and coal. Use the proceeds to cut permanently the payroll taxes that most heavily burden working Americans, so that the typical person pays no more than he or she did before. Get the government out of the job of acting as venture capitalist to the energy industry. End the subsidies to wind and solar. And watch Americans rediscover in the 2010s what they learned in the 1980s: that in a market economy there need be no contradiction at all between energy conservation and a high and rising quality of life.
This blog was originally published in the National Post.
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