Energy supply, costs and opportunities

Tight energy supplies and high prices are on everyone’s mind. Oil prices are expected to stay high for the next several years. Tight supplies, increased demand from China and India, oil wars, political instability, financial speculation, limited energy exploration during the 1990s, hurricane damage and supply disruptions are among factors contributing to high energy prices.

In response to high prices, many proposals have been made for federal assistance to increase energy supplies. The former Office of Technological Assessment considered technological, economic and environmental implications of proposed projects and determined if they merited federal support. Such assessments could help avoid environmentally damaging and costly efforts to increase energy supplies. A dollar invested in energy efficiency now returns $6 worth of energy services. These returns are far superior to all projects that increase energy supplies.

While many interests believed the office performed a useful service, it fell victim to the desire to stop government interference in the free market. However, existing energy markets are not free as government subsidies keep us hooked on oil. Without subsidies, oil prices would be twice what they are.

Ralph Nader reminds us of energy interests’ influence on Congress, the adverse effects of corporate energy cartels including excessive profits, executive pay and benefits and the need for a competitive domestic energy industry. He points out that while no new refineries were built since the mid 1970s, the oil industry closed existing refineries contributing to shortages in refining capacity.

If energy prices remain high long enough, a reorganization of our economy and lifestyles will occur, stimulating more efficient use of energy and improving the quality of our lives. High asthma rates, air pollution, global warming and oil wars are not components of a high-quality life.

Some economists believe we need oil prices to remain around $50 per barrel for years to implement essential energy and behavioral changes needed to develop a sustainable economy and to simulate the adoption of renewable energy sources.

With high energy prices, commuters are reconsidering the cost of owning a big home on a large lot in the distant countryside. They may drive less, buy more fuel-efficient vehicles and find urban living more attractive. They will be more likely to use mass transit and support efforts to upgrade and expand these services. They will insulate their homes, buy energy-efficient appliances and find zero net energy homes very attractive.

Some economists are concerned that any sharp break in energy prices, even temporary, would severely damage efforts to develop more sustainable energy practices. Some advocate a tax strategy to keep prices high. They envision maintaining high oil prices by having taxes increase in proportion to any drop in oil prices. To gain public acceptance, the increased tax would be offset by lowering other taxes proportionately.

Many opportunities to discuss energy efficiency, alternative-fueled vehicles, hybrid vehicles, zero net energy homes and solar and wind energy technologies with experts will be available at this year’s Illinois Renewable Energy and Sustainable Lifestyle Fair. Join us and explore the possibilities.

From the May 10-16, 2006, issue

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