6
Energy Emergencies

One of the most dramatic lessons from recent history is that the system of energy supply and use in the United States is vulnerable to disruption. When oil represents nearly half of the energy used and imports account for a large portion of that oil, the country is susceptible to actions that would sharply reduce the amount of oil it can import. Moreover, recent experience shows that electricity blackouts, coal strikes, and natural gas shortages in winter can and do occur. And sudden, large-scale energy shortages can dramatically increase energy and other prices, cause serious unemployment, and lead to social and political stress. In short, the prospect of a serious energy shortage underscores the views of energy as social necessity and a set of strategic materials (see Chapter 2).

Because of the countless ways in which energy has become essential for comfort, convenience, mobility, and productive activity in the United States, few events seem potentially more disruptive than a sharp reduction in its supply. Most people agree that the United States should try to reduce the threat posed by any or all of these energy contingencies. One explicit indication of this has been the decision—with remarkably little controversy—to create a national strategic petroleum reserve, a public investment that could eventually cost more than $30 billion.

For the past ten years, much of the analysis of energy disruptions has taken either of two approaches: the first has been purely technological, focusing on the capacity of the energy production and distribution system to deal with disturbances; the second has emphasized the relationship between public policy and market adjustment processes. The latter approach has used the theory of market allocation as a normative standard



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ENERGY EMERGENCIES 132 About this PDF file: This new digital representation of the original work has been recomposed from XML files created from the original paper book, not from the original typesetting files. Page breaks are true to the original; line lengths, word breaks, heading styles, and other typesetting-specific formatting, however, cannot be retained, 6 and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. Energy Emergencies One of the most dramatic lessons from recent history is that the system of energy supply and use in the United States is vulnerable to disruption. When oil represents nearly half of the energy used and imports account for a large portion of that oil, the country is susceptible to actions that would sharply reduce the amount of oil it can import. Moreover, recent experience shows that electricity blackouts, coal strikes, and natural gas shortages in winter can and do occur. And sudden, large-scale energy shortages can dramatically increase energy and other prices, cause serious unemployment, and lead to social and political stress. In short, the prospect of a serious energy shortage underscores the views of energy as social necessity and a set of strategic materials (see Chapter 2). Because of the countless ways in which energy has become essential for comfort, convenience, mobility, and productive activity in the United States, few events seem potentially more disruptive than a sharp reduction in its supply. Most people agree that the United States should try to reduce the threat posed by any or all of these energy contingencies. One explicit indication of this has been the decision—with remarkably little controversy—to create a national strategic petroleum reserve, a public investment that could eventually cost more than $30 billion. For the past ten years, much of the analysis of energy disruptions has taken either of two approaches: the first has been purely technological, focusing on the capacity of the energy production and distribution system to deal with disturbances; the second has emphasized the relationship between public policy and market adjustment processes. The latter approach has used the theory of market allocation as a normative standard

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ENERGY EMERGENCIES 133 About this PDF file: This new digital representation of the original work has been recomposed from XML files created from the original paper book, not from the original typesetting files. Page breaks are true to the original; line lengths, word breaks, heading styles, and other typesetting-specific formatting, however, cannot be retained, and analyzed the effects of various government policies, such as price and allocation controls, on the adaptive responses of the economy. and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. This chapter takes a different view of the emergency process, emphasizing what we call its human dimension—the behavior of individuals and institutions in anticipation of energy emergencies and the effects of an energy supply interruption on social institutions, social processes, and individual well-being. This perspective recognizes that despite the theory of market allocation, governments have repeatedly intervened in emergencies. Various social goals and social processes, underemphasized in market analyses, play a major causal role in generating political demands for government intervention and are also important in their own right. The best example is probably the fact that energy emergencies are perceived as human failures. This perception leads to efforts to place blame, and political conflict over responsibility predictably follows. THE VARIETY OF ENERGY EMERGENCIES We define an energy emergency (after Fritz, 1961) as an event, concentrated in time and place, in which an interruption in energy supply or use disrupts essential functions of a society or economy. Two aspects of this definition are worth noting. First, an emergency is a temporary phenomenon. Emergency preparedness is distinctive in that it concerns preparations for and responses to short-run, abnormal conditions. Second, an emergency exists because the economy and society are disrupted, not just because energy supply or use is interrupted. Energy is a means to social ends; it is not an end in itself. When those social ends can be achieved with substantially less energy, even on relatively short notice—by using stored energy, reducing nonessential uses of energy, substituting other things for energy, or changing people’s views about comfort and convenience—the tie between energy events and true emergencies is weak. At the heart of energy emergency preparedness, therefore, is the relationship between energy and society. Dimensions of Energy Emergencies Energy emergencies differ from each other in important ways, and those differences affect the role government needs to play and the kinds of policies it will undertake. At least eight dimensions of energy emergencies are important: 1. Causation. The cause of an emergency may be internal or external tothe affected area: for example, a power plant breakdown or a foreign oil

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ENERGY EMERGENCIES 134 About this PDF file: This new digital representation of the original work has been recomposed from XML files created from the original paper book, not from the original typesetting files. Page breaks are true to the original; line lengths, word breaks, heading styles, and other typesetting-specific formatting, however, cannot be retained, embargo. It may be a conscious goal of policy or an unintended side effect. The precipitating event may be political, economic, military, and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. legal, or even natural. 2. Immediacy. The onset of an emergency may be immediate with respectto the energy event that causes it, or the effects may be delayed. 3. Magnitude. The effects associated with the emergency may range fromdiscomfort to catastrophe. 4. Incidence. The emergency may be concentrated in a small area, or itmay be diffuse. The disruptive effects of an emergency may be focused on one segment of society or may be defined by geography, income level, or energy dependence. 5. Duration. The emergency may be brief or long-lasting. As in the oilcrisis of the 1970s, it may be the acute phase of a long-term socioeconomic change. 6. Probability. An emergency may be considered likely or unlikely. 7. Credibility. In some emergencies, official statements that an emergency exists are little questioned, for example, a widespread power failure that leaves a large group without light, heat, and power; in others, such statements result in public skepticism, for example, an announced shortage of oil reserves. 8. Manageability. An emergency may be one whose likelihood or effectscan be easily reduced, or it may be exceedingly hard to handle. Clearly, emergency preparedness is shaped by the kind of emergencies one considers. Low-probability events present different challenges from high-probability events, and a situation in which social disruption would be immediate is fundamentally different from one in which the disruptive effects of the event lag by weeks or months. Types of Energy Emergencies Table 2 illustrates the variety of energy emergencies by comparing four types of emergencies. As it shows, an oil import emergency is in many ways unlike a natural disaster or other kinds of events. For instance, an emergency because of an interruption in oil exports from the Middle East is distinctive in the time lag between the drop in exports and the actual drop of energy supply in the United States. It also differs from most other kinds of energy emergencies in its relationship to international politics, its

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ENERGY EMERGENCIES 135 About this PDF file: This new digital representation of the original work has been recomposed from XML files created from the original paper book, not from the original typesetting files. Page breaks are true to the original; line lengths, word breaks, heading styles, and other typesetting-specific formatting, however, cannot be retained, widespread impact throughout the country, its particular focus on the transportation sector, and the process through which it becomes apparent. Past and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. experience suggests that an oil emergency may also be associated with particularly serious credibility problems for large energy corporations and the federal government. An electricity emergency due to a shutdown of nuclear power ation, as shown in Table 2, is distinctive in that it results from a conscious regulatory decision. It differs from an oil import emergency in the immediacy of its impacts, as well as in its particular focus on regions and sectors. A coal strike resembles an oil import emergency in that, because of coal stockpiling by major users, energy shortages are not immediate. It differs from an import emergency, though, in the influence the U.S. government can have on the causes, the timing, and the duration. Its focus on coal-producing and coal-using regions and sectors is different from either an oil shortage or a nuclear electricity curtailment. An “act of God” is distinctive in its cause and usually in its unpredictability, its immediacy, and its strong regional focus. It may also differ from other kinds of emergencies because people are less likely to assign blame or seek scapegoats for it; consequently, it may be less divisive and more likely to generate social cohesion than other types of energy emergencies. Other distinctive sets of conditions can also be imagined. For example, less immediate “acts of God” can also lead to energy emergencies: droughts as they affect hydroelectric power supply and protracted cold or hot weather as it affects energy demand in buildings. This chapter is concerned with serious national emergencies, including oil and coal supply disruptions or a nationwide nuclear power plant shutdown following a local nuclear plant catastrophe; it does not discuss emergencies of small magnitude or those whose effects are very localized. It is necessary to take the possibility of a major energy emergency seriously, even though U.S. history since World War II has left Americans with the expectation that any emergencies that may arise will be of only moderate intensity. (Views about nuclear war are an obvious exception to this.) This expectation, if not held as matter of conscious and considered belief, has been a tacitly accepted context for thought and discussion about emergency preparedness. Associated with the general expectation that emergencies will not be severe are some more specific expectations about the way society will respond. These expectations are also historically based. For example, people tend to expect that “business as usual” will continue to a large extent in spite of an energy emergency. Consequently, it can be expected, and has so far been the case, that the political struggles of organized groups to secure economic advantages through the political process will continue unabated, and may even be intensified, in an energy emergency.

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About this PDF file: This new digital representation of the original work has been recomposed from XML files created from the original paper book, not from the original typesetting files. Page breaks are true to the original; line lengths, word breaks, heading styles, and other typesetting-specific formatting, however, cannot be retained, and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. Table 2, Dimensions and consequences of selected energy emergencies Type of Emergency An earthquake in the A major interruption of A shutdown of nuclear A protracted coal strike south-central U.S. oil supply from the electricity generation ENERGY EMERGENCIES that seriously damages Middle East because of a nuclear major oil and gas accident pipelines, rail lines, and electricity lines in the region Dimension Labor dispute Natural hazard ("act of 1. Causation External governmental Regulator decision to protect public safety decisions, political God") instability, or terrorism End-use energy scarcity Immediate effects on gas 2. Immediacy Immediate effects on Import cutoffs lagged supply to importing electricity supply lagged up to 90 days 5-6 weeks regions, and on the electricity grid; various lags otherwise 3. Magnitude Uncertain; could be Probably no more than Possibility of immediate Could be substantial in discomfort in most dangers to life and serious but unlikely to some locales places; union control health in the affected be catastrophic over coal supply area but energy appears limited impacts unlikely to be the major concerns locally Focused on coal- 4. Incidence Affects most sectors of Some geographical focus Besides the earthquake producing and society and economy but broad social region, focused on coal-using regions in the U.S. and in effects in region where other regions 136

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About this PDF file: This new digital representation of the original work has been recomposed from XML files created from the original paper book, not from the original typesetting files. Page breaks are true to the original; line lengths, word breaks, heading styles, and other typesetting-specific formatting, however, cannot be retained, and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. other oil-importing nuclear power is and sectors receiving energy countries; particular important, and on the shipments through the impacts on nuclear industry south-central U.S. transportation and other end-users of oil (heavy industry, some utilities, building in some regions ) ENERGY EMERGENCIES Uncertain; unlikely to Uncertain and probably Strike must be fairly Short—until repairs are 5. Duration be very short, could long to create an made and shipments contentious; likely to be quite long emergency resumed be long 6, Probability Opinions differ, but may Opinions differ; Low to moderate; Low probably low, but probably varies with be fairly high with a rising national dependence probability if/as on coal nuclear power generation grows 7. Credibility Uncertain, unless the Probably high, but Higher in High cause and magnitude disputes abut the need coal-producing than of the emergency are for the energy action coal-using area self-evident; would grow as considerable public impacts are felt distrust of some of the key institutions Causation is hard to There are ways to The relative lack of Almost impossible to 8. Manageability control, but the reduce the likelihood immediacy makes this prepare for or to impacts on an import of the emergency, but situation more manage in the very cutoff can be reduced the impacts of an manageable than most short run; rapid by prior actions: emergency, if it recovery is practicable stockpiling, fuel shifts, occurs, would be hard oil conservation, and to handle domestic energy production 137

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ENERGY EMERGENCIES 138 About this PDF file: This new digital representation of the original work has been recomposed from XML files created from the original paper book, not from the original typesetting files. Page breaks are true to the original; line lengths, word breaks, heading styles, and other typesetting-specific formatting, however, cannot be retained, But there is no basis for great confidence that serious emergencies will not occur. It is all too easy to generate plausible scenarios by which a severe and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. emergency—for example, a virtually complete cutoff of Middle Eastern oil supplies—might come about. The sequence of hypothetical headlines as such a scenario unfolds is no more bizarre than some actual sequences that have occurred in the last few years. To restrict analysis and policy to contingencies of moderate severity, like those of recent decades, is no more reasonable than ignoring the possibility of emergencies entirely. This chapter sets forth some insights from social and behavioral research on emergencies that may help to clarify some problems and point the way to some solutions. Some of the generalizations are robust enough to apply across a wide range of energy emergency situations; others apply more specifically to a particular kind of crisis situation, such as an oil import emergency. PREVENTION AND PREPAREDNESS Being prepared for an emergency can sometimes help in preventing it, but preparedness is no substitute for prevention. Preparedness is only likely to be efficient and credible if it is coupled with reasonable efforts to prevent energy emergencies. The attitudes of the public toward the federal government and other large institutions during an emergency—a key to an effective response—depends partly on whether or not people believe that everything reasonable has been done to avoid the emergency. Credibility in this respect is a key to effective response because it is known that some parties will profit in certain emergencies and it is widely suspected that those parties do not want to avert an emergency. For example, most people in the United States believed that the 1973–1974 oil crisis was caused by the government or by the oil companies (Murray, Minor, Bradburn, Cotterman, Frankel, and Pisarsky, 1974), and there remains a common belief that oil and natural gas have been withheld from the market to force price increases (see, e.g., Brunner and Vivian, 1979). In order to combat cynicism and to encourage cooperation, a comprehensive approach to emergency preparedness must have as its fundamental thrust the anticipation and prevention of sudden changes in energy supply. In fact, prevention and preparedness are part of the same process. For example, one approach to dealing with an oil import emergency is to prepare to deal with certain specific effects of a supply interruption: preparedness, in a narrow sense. Alternatively, the nation might try to prevent the kinds of international crises that might precipitate an interruption or to reduce its dependence on oil by diversifying its energy sources.

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ENERGY EMERGENCIES 139 About this PDF file: This new digital representation of the original work has been recomposed from XML files created from the original paper book, not from the original typesetting files. Page breaks are true to the original; line lengths, word breaks, heading styles, and other typesetting-specific formatting, however, cannot be retained, Clearly, these different kinds of approaches are not independent of each other. Being prepared for an emergency may help to prevent it. For example, and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. several types of emergencies can be caused by a party who wants to use their effects, or the threat of those effects, to achieve an objective. If the action— limiting exports, blowing up a power plant or transmission facility, going on strike, or whatever—will not have serious economic and social impacts, it loses much of its purpose and potential power. Other possible causes of emergencies will remain, but the overall probability of a crisis will have been reduced. At the same time, prevention can aid preparedness by making it more credible. Everyone knows that there are winners and losers in almost any set of circumstances, and that some, including parties in government or in industries, may see emergencies as ways to solve other problems. For example, an emergency can be used to establish controversial policies. Given these realities, together with the natural tendency in unstable times to look for conspiracies and to assign blame, any impression that the country has not tried hard enough to prevent a crisis could rapidly turn into a serious alienation of broad segments of the population under the stress of an emergency. One of the primary difficulties in establishing consensus about energy emergency policies is that different strategies look more or less appropriate depending on the observer’s time horizon. With a short time horizon, it makes some sense to plan as if emergencies will not occur, but with a long horizon, emergencies are a certainty, and prevention becomes a critical goal. For example, major manufacturers in the United States require fairly long-term stability in energy availability in order to make judgments about production, markets, and investments. Such stability can only exist when there is a sustained attention to what some might call “system maintenance” with respect to energy conditions. A long time horizon is at the heart of such policies. An important element of prevention is resiliency: the social and economic capacity to adapt to uncertain domestic and international energy supply and demand conditions. Because resiliency, or the lack of it, is not evident until a system is stressed, it is difficult to conceptualize as a policy goal. It does, however, sometimes conflict with short-term efficiency goals: under short-term decision criteria, investments in resiliency may appear redundant or economically inefficient. Consider the problems of a potential producer or consumer investment in an alternate energy system that relies on an unconventional source of fuel. As long as the primary fuel is available at an affordable cost, conventional corporate accounting would treat the proposed investment in a new system as unproductive, since it in fact produces no concrete goods or services. But the resiliency of a firm would be increased because an alternative or a backup system would be productive

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ENERGY EMERGENCIES 140 About this PDF file: This new digital representation of the original work has been recomposed from XML files created from the original paper book, not from the original typesetting files. Page breaks are true to the original; line lengths, word breaks, heading styles, and other typesetting-specific formatting, however, cannot be retained, when the usual fuel is scarce. The presence of such a system might have an additional value: it would change the executives’ decision-making environment, and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. permitting capital and labor allocations with less uncertainty about the future availability of energy (see Chapter 5). The simplest parallel for investments in energy resiliency is risk or hazard insurance. No enterprise or individual in a modern industrial society can operate without some form of such private or collective insurance in a variety of areas: crop insurance, flood insurance, nuclear power plant insurance, foreign investment insurance, and so forth. The principle of risk insurance has been accepted as a part of the transaction costs of a modern industrial system, and except when the insurance fails to cover a loss, there is no tendency to treat it as an unproductive investment. Rather, models of the cost-effectiveness of insurance have been developed, and such cost-effectiveness models could be extended to resiliency investments as well. The fact that there is no simple technical measure of “enough resiliency” should not impede recognition of the basic need for some resiliency in a complex industrial system—not a social or political consensus about a single mode of energy resiliency, but rather an evolving agreement about more or less reasonable proposals and investments, to be altered as political and energy conditions change. A long time horizon becomes intertwined with resiliency when one makes an explicit effort to reduce the likelihood of energy emergencies. For example, preparing for a possible oil import cutoff might include improving mass transit capabilities, thus diversifying the transportation system. Prevention policies might include an emphasis on fuel-switching capability, so that a home or office building could run on oil, gas, solar, or geothermal energy. Prevention might imply energy policy and geopolitical agendas that reduce the strategic importance of the Middle East and reduce dependence on energy and other imports. Prevention might also be implicit in a policy stressing further development of service industries rather than energy-intensive product industries. Prevention policies would ensure that the country does not have all its energy eggs in one basket. Policies and actions that reduce reliance on one or a very few specific energy options or facilities would be preferred, because diversification—of resources, technologies, and sites—is one of the most important protections against energy emergencies (see, e.g., Rochlin, 1977). In this sense, strategic oil storage is a preventive measure because it reduces reliance on particular energy suppliers. Improved energy efficiency is a prevention strategy for another reason—it stretches available supplies. Even the design of buildings and equipment can be part of a prevention strategy. For instance, in the case of a summertime power outage, consider the adaptability of a high-rise building with windows that open compared with one whose windows do not.

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ENERGY EMERGENCIES 141 About this PDF file: This new digital representation of the original work has been recomposed from XML files created from the original paper book, not from the original typesetting files. Page breaks are true to the original; line lengths, word breaks, heading styles, and other typesetting-specific formatting, however, cannot be retained, Prevention extends to the vulnerability of other countries as well as the United States. A truly significant reduction in world oil supplies would affect the and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. United States even if it were not directly dependent on oil imports, because world economies are intricately linked. Economic disruptions in Europe and Japan would undermine the U.S. economy and national security as well, although the impact would be less immediate. Consequently, policies that reduce oil dependency for Europe, Japan, and other oil-importing nations will also reduce U.S. vulnerability to emergencies. Some of these preventive actions can be taken by reallocating existing resources—focusing design efforts on promoting energy efficiency in buildings, for example. Many forms of prevention, however, require resources—money, skills, and the attention of corporate and government leaders—that might otherwise be allocated to emergency preparedness or other objectives. Prevention can reduce the cost of preparedness by reducing the number of contingencies being prepared for. Thorough preparedness is costly, not only in direct budget requirements but also in public attitudes, which in turn affect preparedness and emergency response. However, public investment in preparations that help very little, or are perceived to help very little, in an actual emergency can exacerbate problems of confidence and credibility. A process that cries “wolf” too often can desensitize people to threats in the long run. Prevention aids preparedness by helping it to be credible and by enabling it to focus on the emergency conditions that are hardest to prevent. DIVERSITY AND CONFLICT IN ENERGY EMERGENCIES There are vast differences within an affected population in attitudes toward energy emergency preparedness and in needs and responses during an emergency. Preparations should be sensitive to this diversity and, when possible, make use of it as a part of an effective response to an emergency. The American population is a collection of very diverse groups with respect to energy emergency preparation and response. Some individuals and groups will perceive a particular situation to be an emergency when others in similar circumstances do not. Seeing an emergency, different people will react differently: some will accept official pronouncements about the emergency; others will not. In addition, when people accept the reality of an emergency, their options are often constrained: for example, what makes sense for young people may be unrealistic for the elderly, and some options available to the wealthy will be unavailable for the poor, as noted under “Incidence” in Table 2. These differences will create a diversity of behavior that contains the seeds of social discord and presents a formidable challenge for emergency management.

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ENERGY EMERGENCIES 142 About this PDF file: This new digital representation of the original work has been recomposed from XML files created from the original paper book, not from the original typesetting files. Page breaks are true to the original; line lengths, word breaks, heading styles, and other typesetting-specific formatting, however, cannot be retained, The Importance of Decentralized Response One clear implication of diversity is that, especially in diffuse emergencies, and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. detailed central control of emergency responses is impossible. Many decisions will require a knowledge of local attitudes, capabilities, and needs as changes in patterns of supply and use create a mosaic of localized gluts and shortages and as communities move to deal with their own problems. Because a central authority simply cannot manage the information flow and integrate the many pertinent factors with the speed and sensitivity that would be required, much of the troubleshooting in an emergency will need to be decentralized.1 The market system is one important mechanism for this decentralization. But it is important to recognize that social groupings, linkages, and stresses may be equally important during a serious emergency. Studies of communities under disaster conditions indicate that family groups, social relationships, and community organizations are often the focus of behavior (Dynes, 1970, 1972). In an emergency in which transportation fuel becomes painfully scarce, for example, friendship ties in neighborhoods and workplaces will influence the formation of carpools, and local nongovernmental organizations may take the lead in ensuring that community needs are met. Furthermore, attitudes and responses in a crisis situation are strongly affected by social interaction, as well as by the prices of goods and services. Individual opinions as to whether or not an emergency actually exists seem to be influenced by the behavior of close associates (Latané and Nida, 1981); emergency preparedness may also be influenced by social contacts and groupings. In a sense, it is a kind of social innovation, spreading through contact networks, which may be accepted or rejected. It is shaped by the salience of preparedness responses as alternatives and by the examples of others (e.g., Staub, 1974; Wilson, 1976), as well as by the norms of groups with which one is identified (Buss, 1980; Schwartz and Clausen, 1970). Because of such phenomena, an effective approach to emergency preparedness must address itself to the diversity of local concerns. It may, in fact, even be able to take advantage of some of this diversity, both in preparing for an emergency and in preventing it. While centrally located officials are often unable to deal with rapid changes in attitudes, behavior, and structures in an emergency, spontaneous improvisation at the local level has often been a key to effective emergency response (Kreps, 1979; Quarantelli and Dynes, 1977; Barton, 1969). Decentralized initiatives come from local groups that sometimes represent neither conventional economic actors nor conventional government operations. An example is the role of automobile clubs during recent oil shortages: by providing accurate information about the local availability of gasoline, the clubs helped to reduce disruption by adjusting travel to energy availability.

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ENERGY EMERGENCIES 150 About this PDF file: This new digital representation of the original work has been recomposed from XML files created from the original paper book, not from the original typesetting files. Page breaks are true to the original; line lengths, word breaks, heading styles, and other typesetting-specific formatting, however, cannot be retained, interests. It must allow the skeptical to resolve their suspicions, not simply provide facts: relying on the testimony of “experts” is clearly insufficient (e.g., and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. Kash et al., 1976; Hoos, 1978). The system must be prepared to receive communications, not just disseminate them. Receiving communications identifies where credibility is a problem, points to unforeseen informational needs, and helps officials to refine their own perceptions about what is actually happening in response to an emergency. Improving Emergency Communications Given such a formidable challenge, it makes sense not to attempt to gather every bit of detailed information, but instead to ensure that communication lines are kept open. In a crisis situation, unusual kinds of information may be needed quickly. For example, there may be a need to know what legal authority state and local officials have, which vacant buildings are available for shelter, or whether school buses can be used to supplement mass transit systems. The requirements for such information—and the facts themselves—will usually be highly localized. It would be futile to try to maintain a flow of timely and correct information to meet so many localized needs. More appropriate is a system that focuses centralized attention on a limited number of information functions and that assures their credibility. It is important for the system to be an effective emergency communication system as distinct from an information system. Meeting information needs in an emergency through a decentralized, pluralistic structure increases the importance of communication among individuals and among local organizations. Consequently, attention must be given to such prosaic matters as maintaining up-to-date lists of correct names and telephone numbers of key people. It is usually easy to identify ahead of time who will have a particular type of information, even if it is difficult to gather the information and keep it up to date. Also, because some communication links may be congested or broken in an emergency, the need for localized information suggests a need to build some redundancy into the emergency communication system to be used. IMPLICATIONS FOR THE FEDERAL ROLE The Dilemma of Federal Involvement The more severe a future energy emergency is, the more certainly will the federal government play a major role in meeting emergency needs. This fact creates a real dilemma for the allocation of emergency responsibilities among levels of government and the rest of society. To provide any in

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ENERGY EMERGENCIES 151 About this PDF file: This new digital representation of the original work has been recomposed from XML files created from the original paper book, not from the original typesetting files. Page breaks are true to the original; line lengths, word breaks, heading styles, and other typesetting-specific formatting, however, cannot be retained, centives for others to share in the process and burdens of prevention and preparedness, the federal government must convince the public that it will not do and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. everything. But if other parties are to prepare, they do so in the knowledge that in an extreme situation, government may act to distribute the benefits of their preparations over the society as a whole. A policy of no federal preparations would force preparations and responses to be decentralized, but it would become politically untenable in a serious emergency. There is also a significant danger that, in trying to shift some of the preparedness burden to the rest of society, the federal government may bring about the worst of both worlds: it may limit its own preparations as part of an effort to underscore the need for action elsewhere, yet fail to be convincing enough in this effort to actually trigger such action. If this happened, the federal role might be smaller than it should be in a severe emergency because of inadequate federal preparation; in a moderate emergency, it might be larger than it should be because of the inadequate preparation made by others. A central empirical fact helps define the federal role: private parties seldom prepare adequately-for emergencies (Kunreuther et al., 1978; Slovic et al., 1977). As a result, if private initiatives alone are relied on, many people and organizations will be unprepared (Kunreuther et al., 1978; Slovic et al., 1977, 1978; Meade, 1970).4 When the federal government makes emergency preparations to fill a gap, those programs may deter decentralized preparations, and, as we have already noted, a decentralized approach seems necessary.5 In addition, when the federal government can be expected to deal with the impact of an emergency, such as by offering disaster relief, others are unlikely to invest in disaster insurance or other individual preparations. Experience demonstrates that when people are not prepared and suffer greatly, the government will tend to meet their needs even in the absence of stated policies; in effect, people who fail to prepare are rewarded as “free riders,” while people who have prepared are penalized. It can be hard to persuade people that this experience will not repeat itself. And the more that people believe the government will intervene, the more necessary that intervention will become. The “No Policy” Approach In principle, one way for the federal government to maximize decentralized responsibility for handling an energy supply disruption is to offer no policy at all. If the federal government refuses to rescue individuals, private organizations, and local government, these groups will be forced to make their own preparations and find their own ways to respond. The “no policy” policy does, indeed, seem an effective way to allocate

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ENERGY EMERGENCIES 152 About this PDF file: This new digital representation of the original work has been recomposed from XML files created from the original paper book, not from the original typesetting files. Page breaks are true to the original; line lengths, word breaks, heading styles, and other typesetting-specific formatting, however, cannot be retained, scarce energy supplies. If energy supply decreases, with demand substantially unchanged, energy supplies will be quickly reallocated, at a higher price. and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. Realistically, a very abrupt supply change would produce a period of energy shortages in an economist’s sense, that is, situations in which supplies are not available for purchase at prevailing prices. Inflexibilities in routine pricing and inventory control systems would tend to have this effect, as would the strategic wariness of large energy corporations fearful that rapid price increases would trigger imposition of price controls. In some markets, the existence of long-term relationships between buyers and sellers might bring equity norms into play and result in attempts to hold prices down and allocate supplies with informal rationing systems. Of course, some prices are regulated, and their increase would be delayed and constrained by the regulatory mechanism. But, when these factors do not operate prices will rise rapidly, and it is likely that, given a sharp and obvious reduction in supply, prices will soon increase in most markets. With sufficiently large price increases limiting the number of potential buyers, shortages would disappear relatively quickly, probably in a matter of weeks: that is, buyers would be able to buy as much as they wanted and could afford at the higher prevailing prices. This conclusion holds regardless of the extent of the price increases and thus regardless of the damage such increases would inflict on poor people and on society as a whole. Whatever sacrifice must be imposed to force energy quantities demanded down to the reduced levels of supply, price increases can impose it. If the market is left to operate, price increases will impose it. In this sense, allowing the market to operate may be regarded as a reliable policy for the full range of energy emergency contingencies. Political Feasibility. There are two broad questions to be raised concerning the general policy concept of allowing market forces to determine the nation’s adaptation to energy supply disruptions. The first is whether such a policy is feasible. Feasibility is not, in this case, a question of the capabilities of government agencies; in that dimension, the demands of noninterventionist policy are small. The question, rather, is one of political acceptability. Undoubtedly, the answer to this question depends heavily on the severity of the crisis. Although the historical evidence from the 1970s indicates that emergencies of even such a moderate scale are sufficient to provoke substantial interventions, it is arguable that during those crises there was a political choice available. Perhaps reliance on the market is more clearly available as a policy option today, should a comparable moderate emergency occur in the near future. However, for more severe crises, there are strong reasons to believe that the pressures for political allocation of the necessary sacrifice would prove irresistible. The defect of the market mechanism from a socioeconomic point of view is its indifference to equity. It treats energy simply as a commodity

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ENERGY EMERGENCIES 153 About this PDF file: This new digital representation of the original work has been recomposed from XML files created from the original paper book, not from the original typesetting files. Page breaks are true to the original; line lengths, word breaks, heading styles, and other typesetting-specific formatting, however, cannot be retained, and ignores its status as a social necessity (see Chapter 2). While notions of equity are often ambiguous enough to have little impact, a national emergency and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. tends to sharpen their meaning and create many specific equity demands. If there is a national emergency, should it confer great good fortune on some, while the remainder bear not only the full burden of the national misfortune but also the burden of wealth transfers to others? Would the public accept that some fiscally poor communities would be unable to afford enough fuel for health care facilities and fire and police protection?6 It is noteworthy that regardless of the actual success of interventionist policies in mitigating inequities, the political stance of an administration that is visibly trying to achieve equity is vastly different from that of an administration that says it is not trying to do so. The force of these considerations in determining the actual policy course in an energy emergency should not be underestimated. Thus, even if a political decision is made to use a market-oriented approach to emergency response, the policy may fail the test of feasibility unless it is coupled with other policies and actions to ensure that critical social needs are met. If such needs are met, the prospects are much better that government will be able to limit its role and that markets will be allowed to operate. Desirability. A second broad question concerns the desirability of relianceon the market mechanism to cope with an energy emergency. The issues may be addressed under the headings of equity, efficiency, and compatibility with other national objectives: the concern here is with what the government should try to do on ethical normative grounds, rather than what political pressure may make it do. This is not the place for detailed consideration of the normative aspects of equity, but such concerns are legitimate: energy is, in part, a social necessity, and we believe that the equity aspects of an unfettered market solution to an energy supply cutback can be substantially improved upon by government policy. Very real difficulties arise, however, in defining and effectively implementing policies that are responsive to the vast diversity of individual circumstances. And it should be noted that well-vocalized and politically effective appeals based on equity and urgency of need may produce results that differ markedly from the relief that would be granted by an ethically sensitive and well-informed judge. In trying to design truly equitable policy, the political uses of equity claims are part of the problem. Although efficiency is a virtue often claimed for market-determined resource allocation, the circumstances of an energy emergency may be such as to leave an important role for government policy in bringing about efficient adjustment. In part, of course, this is because the market is far from unfettered under normal conditions; rather it is fettered both by public policy and by private long-term arrangements that look advantageous in normal times but may not be so in an emergency. Many of the

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ENERGY EMERGENCIES 154 About this PDF file: This new digital representation of the original work has been recomposed from XML files created from the original paper book, not from the original typesetting files. Page breaks are true to the original; line lengths, word breaks, heading styles, and other typesetting-specific formatting, however, cannot be retained, price-determining arrangements of the economy have considerable inflexibility. They do not respond nearly so well to new information as do, for example, and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. organized securities and commodities exchanges. The economy simply does not maintain, under normal conditions, a set of market institutions that is well adapted to the peculiar short-term needs of an emergency. Market arrangements that work well under normal conditions may be quite inadequate to an emergency, as participants may need to find new and unusual transaction patterns or information sources. Self-interest may be expected to bring about needed adaptations eventually, but the market may function poorly for some time. Since these conditions prevail in different markets in differing degrees, and since prices are interdependent, it is unlikely that prices would move quickly to a configuration appropriate to guide efficient response to the emergency. Serious instability is not to be excluded, and a protracted period of “hunting” for a new equilibrium is likely. The issue of compatibility with other national objectives recalls the fact that energy is not only a commodity but an ecological resource, a social necessity, and a set of strategic materials. The problem is most starkly illustrated by the possibility of an energy emergency combined with a military mobilization effort. The heart of the problem is the fact that the market is plainly not an appropriate institution to weigh the urgency of the mobilization or to determine its form. There are major complicating factors: the importance of government procurement, the fact that governments usually are not particularly nimble market participants, and the fact that many of the markets in which the government would seek to buy are far from competitive. There are further complications involving the macroeconomic problem of financing the mobilization. Taken together, these considerations strongly suggest that, in a future mobilization as in past ones, the government would have to intervene strongly in the economy to bring about an economic response compatible with national objectives. In such a context, much of the efficiency that markets display is likely to be efficiency in support of objectives contrary to those selected by the government. The compatibility issue applies to civilian priorities as well. The political process often makes decisions based on judgments of energy needs or national economic security. Thus, if it is agreed that there is more need to heat houses of the poor than to run the snow-making machines at ski resorts, direct policy intervention in the market might be needed. Similarly, if the nation decides it needs all the primary aluminum it can get, it would be appropriate to override a market signal that was shutting the industry down. It is to be emphasized that the force of the objections to reliance on the market increases with the severity of the emergency. While government passivity might effectively encourage adaptive decentralized preparations

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ENERGY EMERGENCIES 155 About this PDF file: This new digital representation of the original work has been recomposed from XML files created from the original paper book, not from the original typesetting files. Page breaks are true to the original; line lengths, word breaks, heading styles, and other typesetting-specific formatting, however, cannot be retained, for an emergency of moderate severity, that strategy would be less tenable and less appropriate for a severe emergency.7 and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. It has been noted that the federal government’s functions in an energy emergency include seeing that social needs are met and that national security is maintained. There is also a federal role in linking national, regional, and local emergency preparedness activities (Kreps, 1978). In most energy emergencies, one can expect states and localities to act to take care of their own interests or problems. In an oil import crisis, for instance, some oil-producing states may seek to set aside a substantial part of their production to meet state needs before providing oil for the general market or other states. Other states may try to enact restrictions on energy use, even if the federal government does not. Some of these actions are a natural part of a decentralized system for response, but some of them could increase regional differences in the impact of an emergency and, as a result, lead to conflicts between regions. Uncertainty about government actions to resolve interstate and interregional conflict can undermine attempts at the federa l level to clarify public-sector intentions. Certainly, state actions could present the federal government with a host of legal issues and challenges, many of which might best be resolved before an emergency occurs. Current energy emergency planning at the state level may provide clues to disputes that could arise. IMPLICATIONS AND RECOMMENDATIONS Decades of research in the behavioral and social sciences have produced a number of findings that can be used to plan for reducing the threat of energy emergencies. On the basis of insights gained from these studies, several principles should be recognized as part of a sound U.S. policy toward energy emergency preparedness, and several actions can be taken in accordance with those principles. Although these recommendations cover only a part of the territory discussed in this chapter, they can be a significant step in the right direction. The points are organized under three headings: federal government roles, organizing for preparedness, and information functions. Federal Government Roles Wherever possible, the federal government should take full advantage of the flexibility inherent in decentralized emergency preparation and re sponse. The federal government should allow and even encourage individuals, groups, and areas to seek and use alternative response strategies. Rather than focusing an incentive program on private oil stockpiling alone,

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ENERGY EMERGENCIES 156 About this PDF file: This new digital representation of the original work has been recomposed from XML files created from the original paper book, not from the original typesetting files. Page breaks are true to the original; line lengths, word breaks, heading styles, and other typesetting-specific formatting, however, cannot be retained, the same incentives might be made available for other investments that offer the same benefits to the nation. This approach would invite parties to be creative in and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. identifying options that they believe make sense for them and for the total energy emergency program. Decentralized efforts to improve energy efficiency during nonemergency times constitute one important option because such efforts can help prevent emergencies. Besides encouraging innovation in the U.S. society and economy, promotion of decentralized responses can help build a more diversified and resilient system for responding to emergencies. As a first step, the federal government should ascertain the potential roles of social groups and relationships in a decentralized approach to emergency preparedness and help to identify options for enhancing their potential. To the extent possible, the federal government should ensure that emergency preparedness is clearly linked with emergency prevention. Not only canpreparedness help to prevent some kinds of crises, but a full portfolio of preventive actions can help to reduce the challenge of emergency preparedness —which is formidable at best—and to make preparedness more credible as a public and private enterprise. In its troubleshooting role, as part of the endeavor to rely on decentralized responses as much as possible, the federal government should ensure that critical social needs are met during energy emergencies. If critical socialneeds such as health care and law enforcement are not met during an emergency and if major inequities result from scarce energy supplies and higher prices, there will be strong, perhaps irresistible pressures for centralized government action. Even an administration that wishes to sustain a market-oriented, decentralized approach to an emergency must rely on previous federal government action to ensure that critical needs are met and that inequities do not reach a socially unacceptable level. As a step toward these objectives, a careful study of the needs of groups affected, of essential services required, of conditions under which services would be affected, and so forth is necessary, and alternatives for meeting these needs should be identified and examined. The federal government should keep to a minimum any uncertainty about its potential uses of the policy instruments available to it. Whenever thereis uncertainty about the potential uses of an emergency power by the federal government, such as price controls, fuel allocation policies, or decisions to sell oil from the strategic petroleum reserve, other parties tend to assume that full government power will be used. As a result, many of them will take less responsibility for emergency preparedness themselves, increasing the demands on government during an emergency. In this sense, uncertainty about government policies has a strong policy impact; clearly,

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ENERGY EMERGENCIES 157 About this PDF file: This new digital representation of the original work has been recomposed from XML files created from the original paper book, not from the original typesetting files. Page breaks are true to the original; line lengths, word breaks, heading styles, and other typesetting-specific formatting, however, cannot be retained, if this impact is not what the government would wish, the uncertainty needs to be reduced. The federal government should work toward broad nonpartisan and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. agreement on the roles and functions it will perform during an emergency, so that uncertainty and skepticism are reduced. For example, in the case of an oil import cutoff, agreement on such matters as the mechanisms to be used for a drawdown of the strategic petroleum reserve and for revenue recycling is vital. Since such actions require resolute cooperation by the various branches of the federal government, they present a substantial challenge. The federal government should act to reduce uncertainties about federal- state relations during a major energy emergency. Through legislation orcourt action, many of the current uncertainties about state powers in an emergency could be reduced substantially, and some legal disputes during an emergency could be avoided. At this stage, the important thing for emergency planning is that the issues be resolved, not that the resolution take a particular form. As a first step, the federal government should identify conflicts that might be caused by state and local emergency actions, including possible conflicts between energy-producing states and energy-consuming states. The federal government should seek to resolve these important issues before there is an emergency. Organizing for Preparedness Preparedness should be based on a continuing process rather than an infrequent production of “plans.” Because contingency plans, once prepared, are seldom used, it is more effective and more efficient to create a continuing process than a set of documents. For instance, recurring tests and exercises can be used to evaluate the nation’s preparedness; to train people in key positions; to train people in the use of communications systems; to test the readiness of these systems, for example, to check on whether lists and telephone numbers of key actors and information sources are up to date; and to investigate the nation’s options with respect to different contingencies. In addition, the federal government should seek to learn more about the importance of such factors as leadership, group norms, and media attention in maintaining public support for emergency preparedness. Preparedness should focus on systems for response rather than the responses themselves. Because it is so difficult to foresee the full range of characteristics of a real emergency, a system capable of responding to unexpected circumstances is better than a system that consists mainly of prespecified actions. The system has to be able to learn from people’s and institutions’ behavior during the early days of an energy emergency. If the system is

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ENERGY EMERGENCIES 158 About this PDF file: This new digital representation of the original work has been recomposed from XML files created from the original paper book, not from the original typesetting files. Page breaks are true to the original; line lengths, word breaks, heading styles, and other typesetting-specific formatting, however, cannot be retained, locked into a pattern of response that was defined well in advance, the policies may be poorly suited to the realities of the situation. The federal government and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. should develop an organizational structure for energy emergency preparedness that is broad-based, related to a wide variety of possible contingencies, and linked with complementary structures at the regional and local levels. The nation’s energy emergency preparedness effort should not be limited only to oil import interruptions. It would be a mistake to set up a systemfor emergency planning and response that is tailored exclusively for an oil import interruption. An oil import emergency might lead to other energy emergencies, but other emergencies might arise first. Preparedness should be broad-based, capable of handling such events as a severe electricity shortage, a major strike, a natural disaster, or a major military mobilization, as well as an oil import cutoff. Energy emergency preparedness programs should be concerned with post- emergency recovery. This recovery, as well as crisis management andimpact mitigation, must be part of any plan because recovering effectively from one emergency may be essential in avoiding or preparing for another. Information Functions Federal programs to meet public information needs in energy emergencies should directly address credibility issues. The efficacy of both centralizedand decentralized decision making during an emergency is likely to depend on the credibility of available information about the emergency. Unless information can be verified and thus widely accepted, it may tend to increase uncertainty and divisiveness rather than to reduce it. The federal government should investigate how to design a public information program that is credible to the public. Such a program would need to include ways to respond to public concerns and, in some cases, mechanisms for verifying the information provided. Aside from providing general information about what is happening, the key federal role in an energy emergency is ensuring that communication systems are ready to meet emergency needs. There is no way that thefederal government can meet all the needs for detailed information that will arise in an emergency. Most of those needs will have to be met in a decentralized way. But the requirements for coordination that are inevitable with decentralized action will increase the importance of effective communication systems, capable of operating under emergency conditions. The

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ENERGY EMERGENCIES 159 About this PDF file: This new digital representation of the original work has been recomposed from XML files created from the original paper book, not from the original typesetting files. Page breaks are true to the original; line lengths, word breaks, heading styles, and other typesetting-specific formatting, however, cannot be retained, starting point is such basic matters as lists of key personnel, both public and private, and how they can be contacted in a hurry. But the challenge also includes and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. providing alternate means of communication in case the regular system is congested or interrupted. Whether or not the federal government must itself provide such systems can be debated, but one of its most critical functions is to ensure that such systems exist. The federal government should improve its knowledge of the information needed during an energy emergency. It should determine what types ofinformation are needed, the best sources for providing these types of information under emergency conditions, and the likelihood that those needs will be met without federal government initiatives. The federal government should consider what kinds of information can be stockpiled ahead of time for an emergency. For instance, most kinds of detailed information will quickly become obsolete, but prepackaged news releases and television spots that provide examples of coping strategies, such as options for families if electricity supply is interrupted or petroleum products are very scarce, could be very useful. By adopting such principles, policies, and actions, the government of the United States could make the prospect of energy emergencies less threatening to the social and economic structure of the country. In addition, the process of improving readiness in this way can help the nation redefine the appropriate roles of central government and decentralized decision making. Notes 1. Of course, certain problems must be resolved in a centralized way. For an oil import emergency, examples include the use of the strategic petroleum reserve, dealing with restraints on interstate commerce, and meeting energy requirements for national defense. And local options and needs may be strongly affected by prior actions by central authorities (see “Implications for the Federal Role,” page 155, and “Prevention and Preparedness,” page 138). 2. This attention to information can mean that it is collected differently, introducing bizarre noncomparabilities into data series. 3. At the time of initial notification, certain parties who believe they have superior information may define the situation as an emergency while others without that information, or questioning the validity of the information, do not. Seeing the same response from the public, one group would perceive underreaction while another perceives overreaction (see “Diversity and Conflict,” page 141).

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ENERGY EMERGENCIES 160 About this PDF file: This new digital representation of the original work has been recomposed from XML files created from the original paper book, not from the original typesetting files. Page breaks are true to the original; line lengths, word breaks, heading styles, and other typesetting-specific formatting, however, cannot be retained, 4. This unpreparedness does not occur because private parties are unintelligent or fail to foresee events as well as government. But while a private party may carefully consider benefits and costs to itself, it does not usually take full account of the benefits of its actions for others. Consequently, and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. private initiatives may pay too little attention to actions that make sense for a larger group. 5. Some government programs do not necessarily deter decentralized preparation, for example: preventing emergencies by encouraging shifts to alternative energy sources and supplying information about national fuel supplies. Preparedness activities are particularly likely to deter decentralized actions, and stockpiled capabilities can have a similar effect. 6. A severe energy emergency poses such questions even more sharply than mobilization for war, because most of the beneficiaries of the crisis form a narrowly defined group whose members are readily identified—as contrasted with the more diffuse group of wartime “profiteers.” 7. This is not to imply that in a severe emergency, any action the government might take would necessarily be preferable to government inaction. Because of the diversity of emergencies, we have not attempted here to judge the desirability of alternative government policies for severe energy emergencies.