Will Americans respond to John Edwards' call?

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John Edwards gave a speech to a forum organized by the International Association of Machinists and Aerospace Workers, and said some nice things that nobody, on the surface, would disagree with.

In fact, they are the type of statements that you hear from a lot of people these days, not just political leaders, but men and women on the street. There would be broad consensus with this Edwards statement: "I think Americans are actually willing to sacrifice."

The sacrifice that Edwards was talking about would be American drivers giving up their sport utility vehicles. "One of the things they should be asked to do is drive more fuel efficient vehicles," CNN quoted Edwards as saying. The news agency reported that Edwards was asked specifically if he would tell them to give up their SUVs. The response: yes.

That's nice. But it is one more statement in a long line of declarations by people of all walks of life that fail to acknowledge the so-called conservation conundrum. Point 1 of the conservation conundrum is that people will always want to consume more energy. This is not just true of Americans; it's true of everyone.

Point 2 is that if you want to have any impact on point 1, the only way to do it is to jack up the price of energy, and keep it there. Governments in Europe and Japan have ignored the old shibboleth that hefty energy consumption is a unique part of American culture. If they truly believed that, and thought their own people are inherently more energy-efficient because of something in the water, they might not be so quick to unsheath the high tax weapon to restrain consumption.

But what about CAFE standards, and more energy-efficient appliances, and similar policies that everyone supports? Yes, they have an impact...for awhile. And then if the price of energy declines in reaction to weaker demand, people -- not just Americans -- find new ways to consume energy, ways that people of earlier generations never could have imagined. The SUV is just the most obvious example. Imagine telling a person in 1975 that 20 years on, people would be driving cars that were built on a truck chassis and weighed more than 7,000 pounds.

But other observers, most notably Peter Huber and Mark Mills, have pointed to today's oversized television sets as an even better example. The energy efficiency of a 27-inch color TV in 2007 is far greater than that of 30 years ago. So what have we done with those efficiency gains? We've sold hundreds of thousands of 54 and 60 inch flat screen/high-definition/plasma televisions that consume far more energy than today's 27-inch sets that manufacturers worked so hard to make more efficient. Those gains were not saved; they were put into more consumption. People always want to consume more energy.

But the Edwards view is that Americans are good people and will sacrifice for the national cause. Americans are good people, and they've sacrificed at many times in our nation's history. World War II is the most prominent example, when more than 400,000 US soldiers lost their lives after enlisting. Yet even during that great period of national sacrifice, the US government rationed gasoline. Somebody in Washington, grounded in basic supply/demand economics, knew that given the jump in incomes of Americans on the home front, propelled by war expenditures, people were going to want to drive. So under the war powers of the federal government, gasoline -- as well as the supply of other materials -- was rationed. People always want to consume more energy.

Remember the '03 blackout in the northeast US and southern Canada? One of the more interesting pieces of information that came out from that was that Ontario, an area not exactly known for scorching heat, had undergone tremendous increases in air conditioning usage in the prior 10 years or more. People always want to consume more energy.

Edwards then went off the energy rails by dragging out the old chestnut about Americans consuming 25% of the world's energy with only 4% of the population. This is a pointless comparison, because if you are giving a speech about energy efficiency, you want to compare energy consumption to GDP (note: these figures are a few years old, but for purposes of describing relative consumption patterns, they still have value). These numbers do not show the US to be overly inefficient. The reality is that the US share of global economic activity is about 25%, right in line with its share of energy consumption.

Many of the countries that are more energy efficient than the US (per dollar of GDP) fall into one of two categories: third-world economies, who are far down the energy-consumption chain (think of a tropical country where perishable food needs to be purchased on the day it is consumed, because of a lack of refrigeration); or developed countries that have implemented steep taxes on energy consumption (western Europe being the most obvious example). Those latter countries' tax policies rest in part on something they understand: people always want to consume more energy. And the only way to stop them from doing it is to make the price high.

Any policy recommendation that fails to take that into account will eventually chase its tail, no matter how many nice things you say about Americans' willingness to sacrifice. Civic virtue as a bedrock of energy policy is likely to accomplish nothing.

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3 Comments

While it is true that gasoline consumption can be greatly curtailed with certain economic policy, certainly no one within the industry will argue that. One must also look @ large scale pollutants. Policys regarding boilers, and machinery using heavy oils i.e. 380 cst, #6, as well as coal. Why should the average driver burden the entire brunt of economic mismanagement, as well as be the ecological saviour. Only with combined positive efforts might we achieve our goals. And finally we must ask what are they, merely stamping out the use of fossil fuels. Good Luck with that one I'm going to walk to the beach today though.

You absolutely nailed it on the head. You can't "jawbone" energy consumption. People aren't going to sacrifice unless they get some direct benefit. Price is the best (not perfect but the best) way to control consumption.

Oil companys are having record profits and we know who is in the White House, two oil kid. Edwards may have a great idea but tax incentives for economy vehicles, reduced speed limits and thoudands of other things that americans will go along with. Lord knows the two in the White House will do nothing, it will depend on the next president. This should be a major issue.

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About this Entry

This entry was written by John Kingston and was published on August 30, 2007 12:47 PM ET.

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