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Manhattan Institute

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Running Strong


Running Strong

April 17, 2000
Energy & EnvironmentOther

ALMOST every poll shows Americans decisively rejecting higher taxes on fossil fuels, even though that proposal is one of the logical first steps in changing our policies in a manner consistent with a more responsible approach to the environment. The American people “signal agreement in principle while reserving the right to object strenuously to each and every specific sacrifice necessary to follow through.” But only because they “are waiting for leadership . . . They are hungry to hear hard truths and are nearly ready to make the all-out effort necessary for an effective response.”

Perhaps they are ready now. After all, it has been eight years since Al Gore published those thoughts in his 1992 book, Earth in the Balance, and almost as long since the Clinton-Gore administration took responsibility for providing leadership on these matters. True, the administration was thwarted in its attempt to enact a BTU tax in 1993, but OPEC’s latest antics have pushed up oil prices quite as effectively. Drivers will certainly notice if gas tops $ 2 a gallon this summer. And they will undoubtedly be reminded, by Republicans if not by Gore himself, that the vice president sees expensive gas as the “logical first step” in coming to grips with oil’s impact on the environment.

But whatever the price, they’ll keep driving. The first law of our energy economy is that over the long term, demand only rises, it never falls. Fluorescent light bulbs, more efficient refrigerators, or higher-mileage car engines haven’t repealed that law in the last 20 years, and they won’t in the next 20 either. The light abovethe desk may use less electricity than it used to, but the desk has acquired a brand new PC that uses more. The more efficient we get in old ways of using energy, the faster we invent new ones.

Yes, the rate of growth in demand drops steadily-but mainly because the denominator grows so relentlessly. Gain a steady ten pounds a year and your “rate of growth” will decline too. Our “energy consumption per unit of GDP” drops steadily as well-but only because a growing share of our wealth goes into energy-lite things like Windows or Viagra, not because we’re using less to heat our McMansions or to propel our SUVs. In personal “energy-per-GDP” terms, Bill Gates is more energy frugal than a farmer in Bangladesh, but so what?

Oil itself, by contrast, is steadily declining in importance in the overall energy picture. Demand keeps rising here too, but oil is used mainly for transportation, which constitutes only 10 percent of the economy. As energy analyst Mark Mills has pointed out, more than 80 percent of the growth in U.S. energy demand since 1990 has been met by electricity, which is the primary fuel of the information economy. The fuels we use to generate electricity itself are coal (52 percent), nuclear (19 percent), gas (15 percent), and hydroelectric (10 percent), and all are plentiful. The average retail price of a kilowatt-hour has dropped 10 percent since 1990, and with recent deregulation, wholesale prices are now in free fall.

Even with oil, the more we pump, the cheaper it gets to pump it, because technology keeps pushing down the long-run supply curve. Oil companies drill much deeper than they used to, and they’ve learned to drill horizontally as well as vertically. A slew of improvements in sensing technology and computer imaging have sharply cut the number of dry holes. And the genetically engineered micro-organisms already used to clean up spills will eventually free up the planet’s vast reserves of heavy oils and tar sands that are too viscous to pump today.

Long forgotten now are the timorous 1970s, when the federal government launched a massively misguided synfuels boondoggle (to convert coal to oil) and funded schemesto burn garbage, peanut shells, and chicken droppings. Gore’s book makes no mention of the “energy crisis.” There never was a supply-side energy crisis, of course, just a lot of political meddling, both here and abroad, that jerked around prices for a while. Jimmy Carter worried about how to heat our humble hearths. Al Gore worries about how not to heat the whole planet.

Are we about to? This much is clear: The 20th century witnessed a fundamental shift in the energy economy of the developed nations. Fuels grown on the surface gave way to fuels extracted from beneath it. Horses and pastures gave way to cars and pumps. For Gore, that transformation evokes the “theatrical legend that haunted the birth of the scientific revolution: Doctor Faustus.” In our vain attempt “to escape the Malthusian dilemma” we have simply struck “dangerous bargains with the future.” The “cumulative impact [of car engines] on the global environment is posing a mortal threat to the security of every nation that is more deadly than that of any military enemy we are ever likely to confront.” What America needs is a “Strategic Environment Initiative,” “a coordinated global program to accomplish the strategic goal of completely eliminating the internal combustion engine over, say, a twenty-five-year period.”

But in fact, the environmental consequences of our shift from a carbohydrate to a fossil-fuel energy economy have been overwhelmingly positive. Most of our footprint on the wilderness of this continent comes from our agriculture. For every acre of land we use for home or office, roads and byways, we currently use six acres for crops. Another eight acres are designated as range-larders for our livestock, which, pound for pound, outweighs us. By shrinking the footprint of agriculture, the shift from surface to subsurface fuels has made possible a remarkable environmental renaissance on the North American continent.

When Europeans first arrived, the area now represented by the lower-48 United States had about 950 million acres of forest. This portion shrank steadily until about 1920, to a low of 600 million acres, as rising population and economic growth impelled Ameri cans to spread across the landscape. In 1910, over one-quarter of all U.S. farmland was used to feed horses, the “natural” and “organic” transportation system of that era-twice as much land as is occupied today by all our roads and highways, oil pipelines, refineries, and wells. Then the wilderness area began to expand once again, and we began to retreat. Fossil and nuclear fuels have since displaced wood in our residential and industrial furnaces. We traded farm acres for trains, trucks, tracks, highways, internal-combustion engines, and fossil fuels. An advanced transportation infrastructure allowed us to trade inferior acres of farmland in the Adirondacks for much better acres in Iowa. High-tech agriculture did the rest. We now farm some 80 million fewer acres than we did 60 years ago.

Freeing up that much land to be reclaimed by wilderness has done much to clean the air and water, and protect wildlife, too. Nature has enormous power to cleanse and restore; 80 million acres reclaimed by watershed and forest has surely done more to clean water and protect birds than the curtailing of pesticides ever achieved. The best estimates at hand likewise indicate that forest regrowth in America currently recaptures all the carbon and then some that America releases into the air in burning fossil fuels.

Finally, the transformation of our energy economy has clearly created an enormous amount of wealth. And that, in turn, has had a very profound effect on another trend-the most important trend of all, it is often said, the one that propels all other trends toward environmental apocalypse. Abundant supplies of food and energy have turned out to be the most effective (not to mention moral) way to limit population. The U.S. fertility rate has dropped from eight children per woman two centuries ago to two children today. The greedier we have grown with energy, the more frugal we have become with children.

Green, it appears, is what people become when they feel personally secure, when their own appetites have been satisfied, when they do not fear for the future, or for their own survival, or their children’s. Plentiful food, abundant energy, and wealth itself-not synfuels or combustible chicken droppings-have given ordinary American families the confidence, the means, and the incentive to be generous to the world beyond.