It's the Economy! (Stupid)

"A universally helpful and insightful book. I particularly liked the straightforward charts and summary points. It should be a reference manual for everyone interested in the US economy."

David Gamble
Former Chief Executive
British Airways Pension
Investment Management Ltd

(excerpt from the book...)

THE USA AND THE GLOBAL ENERGY INDUSTRY

Industrial countries run on energy - no energy, no industrial society, it really is that simple. Consequently, one of the primary responsibilities for national policy-makers must be an accurate appraisal of long-term energy management. This requires, first, identifying energy dependency through consumption and production patterns; and, second, developing a long-term policy to secure our future energy resources. Understanding how these two responsibilities play out by the numbers for the USA is the first step in being clear about the issue of "energy independence" - a term that many political candidates are talking boldly about this election year. However it is clear they aren't fully aware of what this means, and therefore are misleading the public!

This Chapter will provide you with the numbers about our energy uses - past and present - and then those for the future as determined by the Department of Energy (DoE). Then we'll look at what has to happen to achieve energy independence and the implications for our country. It is understood that we are all in favor of energy independence for lots of good reasons. Consequently as a country we should all seriously understand these numbers if we want to move in that direction. To do so requires an evaluation of how our country consumes energy. And it means an appreciation of "time" in how long it takes to accomplish changes in our pattern of energy consumption. Unfortunately, Americans are not the most patient people in the world when it comes to "change". So let's first evaluate what our energy consumption is, particularly historically and then in relation to the rest of the world.

Although this chapter is entitled "energy independence" much of it will be devoted to the issue of "oil independence" for one important reason: Although energy encompasses many forms--oil, coal, natural gas, hydro, nuclear, and renewable sources--only oil poses a serious threat to our national economic security, as we all now know from our forays into the Middle East and the price of gasoline now at over $4.00/gallon. And for the most part, all Americans would be more than happy to figure out a way where we are no longer dependent on oil imports from the Middle East (or other unstable regimes for that matter) for our energy needs. But wishing it so doesn't make it happen!

The Department of Energy publishes an International Energy Outlook (IEO) each year as well as a US Annual Energy Outlook (AEO), both of which are available on their website, www.doe.gov, and OPEC maintains an excellent website as well to provide information about global energy and oil patterns www.opec.org. OPEC is focused entirely on oil and natural gas, while the other DOE reports focus on all energy sources at a comparable focus. The DOE uses a standard for energy measurement called the "British thermal unit" (Btu) since Btus measure energy output from any energy source. Gross energy consumption and production is measured in "quadrillion British thermal units," or Btu quads, for short. In this way we can equate energy produced and/or consumed whether from coal, nuclear, oil, or any source. This is useful in the overall analysis of our energy production and consumption patterns, especially compared to other countries, but of course different energy sources are used for different purposes; for example, we're not shoveling coal into our cars to make them go, are we?

On page 172 is a quick historic view of global energy consumption by energy source since 1635. In a snapshot you can see that it is only 150 years that we've lived in a truly multi-energy source world. "King Coal" lasted less than 100 years before oil supplanted it as the dominant energy source. There is a corresponding statistic to this snapshot that should be kept in mind here: In 1800, the world population was only 978 million. By 1900, it had increased 69% to 1.65 billion. In the last century, however, the world population has exploded from 1.65 billion to over 6 billion--an increase of 363% - the greatest increase of population in recorded history! While energy sources are certainly not the cause for this increase in population - declines in infant mortality, fewer global wars, and medical improvements, esp. disease control, are the major reasons - nonetheless, the end result of this population explosion has led to an equal explosion in energy demand that quite literally the world had never seen before. To bring this down to a personal level, many of you reading this probably had a grandparent born around 1900 who witnessed most of this transformation personally, so it isn't so far removed from our own lives.

(...more in the book)