Demand Matters

As energy prices soared earlier this year, the snickers could be heard once again any time conservation was mentioned.  I got sick of hearing about Jimmy Carter’s sweater wearing during White House winters. The fact is, Carter did us all a favor by moving the country – for a short time – toward conservation awareness.

Our newly official recession is also serving as a form of forced conservation.  Conservation after all is about lessening demand.  Less economic activity is sharply lowering demand for oil worldwide.  The first chart below came from a late-November International Energy Agency publication.  I like this one because it shows oil demand forecasts against the shrinking GDP.  The next chart is one that I made with data from the U.S. Dept. of Energy.  It shows the weekly average oil price during roughly the time period of the first chart.

I look at exercises such as this as further proof – as if we need more – that there are a range of choices available to the U.S. in order to ease our consumption of foreign oil.  $40 per barrel oil gives the Irans of the world a lot less money to invest in Hezbollah and nuclear weapons research than $147 per barrel pricing did.  Additionally, the greatest long-term threat we face as a nation is the depletion of oil resources.  Our entire economy from farmer’s field to Silicon Valley is based on petroleum products.  We need to move toward an energy future not fueled by gasoline and diesel. 

One question for energy policy experts has been what is the bridge to this future?  After all, we are not anywhere near technologically or economically ready.  I think the bridge will be built of several spans and conservation will be one of them.  Another span will be a nationwide commitment to the Pickens Plan or something very similar.