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Thinking About Energy

The way a society thinks about energy affects the way society makes decisions about energy. In the United States, most policy analyses have failed to fully recognize the many meanings of energy in modern society. Consequently, promising policy options are often overlooked in energy debates. This chapter illustrates one fundamental way thinking about energy has been limited and shows how that limited thinking has shaped policy debates, excluding some plausible policy alternatives from serious consideration.

FOUR VIEWS OF ENERGY

Physicists have a clear definition of energy: it is a property of heat, motion, and electrical potential, and is measurable in joules, British thermal units, and their equivalents. When the concept is extended to include mass, energy can be neither produced nor consumed: its quantity is always conserved; and its quality is always declining. This concept of energy has been useful in advancing science and technology, but it is not always useful for social purposes. As a society, America does not usually think of energy in technical terms.

For most people, energy is both produced and consumed, and energy conservation is an option rather than a natural law. The popular definition of energy is not the same as the physicists’, nor does is it have the same precision. When a new natural gas field is discovered or a new process is developed for extracting oil from shale, people feel that more energy is available. Even economic events can change the amount of energy meaningfully in existence, because “proved” and “probable” reserves of oil and



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THINKING ABOUT ENERGY 14 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, 2 and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. Thinking About Energy The way a society thinks about energy affects the way society makes decisions about energy. In the United States, most policy analyses have failed to fully recognize the many meanings of energy in modern society. Consequently, promising policy options are often overlooked in energy debates. This chapter illustrates one fundamental way thinking about energy has been limited and shows how that limited thinking has shaped policy debates, excluding some plausible policy alternatives from serious consideration. FOUR VIEWS OF ENERGY Physicists have a clear definition of energy: it is a property of heat, motion, and electrical potential, and is measurable in joules, British thermal units, and their equivalents. When the concept is extended to include mass, energy can be neither produced nor consumed: its quantity is always conserved; and its quality is always declining. This concept of energy has been useful in advancing science and technology, but it is not always useful for social purposes. As a society, America does not usually think of energy in technical terms. For most people, energy is both produced and consumed, and energy conservation is an option rather than a natural law. The popular definition of energy is not the same as the physicists’, nor does is it have the same precision. When a new natural gas field is discovered or a new process is developed for extracting oil from shale, people feel that more energy is available. Even economic events can change the amount of energy meaningfully in existence, because “proved” and “probable” reserves of oil and

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THINKING ABOUT ENERGY 15 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, other energy sources are defined in terms of the economic cost of recovering them from their physical surroundings. The energy of political debates—of “energy and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. policy” and the “energy crisis”—is not the physicists’ energy but rather a socially defined entity.1 This fact is crucial for making effective energy policy, for there is no single socially shared concept of energy. And each concept of energy has different implications for the way a society produces, controls, allocates, and uses energy. Fundamental lack of agreement about the definition of energy underlies many conflicts and policy shifts on particular energy issues. Furthermore, the dominance in most policy analysis of one view of energy—as a commodity— helps explain a pattern of conflict in recent debates about energy policy and the failure of the political system to seriously consider certain otherwise plausible energy-related alternatives. Explicit recognition of conflict over the very concept and definition of energy can be a step in clarifying issues and leading to more productive policy debates. Energy as a Commodity At least four quite different views of energy are widely held in U.S. society, and each contains some truth (see Table 1).2 First, energy is often seen as a commodity or, more accurately, a collection of commodities. Energy means electricity, coal, oil, and natural gas. (To a physicist, electricity is the only energy form on this list; the others are substances that contain chemical potential energy that can be converted to thermal energy when they are burned.) When people talk about “U.S. energy supplies” or “projected energy demand,” they are usually talking about this list of tradeable goods. Commodity energy consists of energy forms or energy sources that can be developed and sold to consumers. And energy is a commodity in a real sense because the society treats it that way: a significant portion of the U.S. economy has been built on trade in fuels and electricity. The view of energy as a commodity reflects a certain set of values and beliefs; acting on this view tends to move particular interests to the center of attention. The commodity view emphasizes the value of choice for present-day consumers and producers. It assumes that such choice will allocate energy (and other commodities) effectively and efficiently. It also assumes that when prices rise, fuel substitutes will be found and that inequities that arise can be handled by ad hoc modifications to the system. It focuses analysis on the transaction between buyer and seller and away from other aspects of energy use that are external to the transaction. The interests of energy producers, along with those of consumers who have sufficient resources to participate in energy markets, take center stage. The effects of energy use on environmental values, social equity, occupational and public health, the international balance of payments, and the like are

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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 1. Four views of energy THINKING ABOUT ENERGY Important properties of View of energy energy Central values emphasized Interests emphasized Energy producers Commodity Supply Choice for present buyers Consumers with sufficient Demand and sellers resources Price Sustainability Bystanders to market Ecological resource Depletability Frugality Environmental impact transactions Effect on other resources Choice for future citizens Future generations Poor people Social necessity Availability to meet essential Equity needs (distribution) Poorly funded public services U.S. energy suppliers Geopolitical location National military and Strategic material Availability of domestic economic security Military substitutes 16

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THINKING ABOUT ENERGY 17 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, considered secondary, and people who are concerned with such effects must petition the political system for attention to those issues. Meanwhile, the interests and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. of the participants in the transactions are advanced, since they are able to externalize the costs of those transactions. For most of this century, the commodity view of energy has been widely accepted in the United States. It made sense to the companies that produced and distributed fuels and electricity, as well as to many of the companies’ customers. The use of markets to exchange commodity energy seems to have been generally satisfactory, judging from the relative lack of political debate about it in the period from World War II until recently. The oil embargo of 1973 reopened political debate about energy. Many people argued that a national energy policy was needed—as though the federal government was not already deeply involved. What they meant was that energy should be treated differently, as a special national priority, deserving special attention. A cabinet-level department was created to lead a visible and coordinated effort to eliminate U.S. dependence on foreign suppliers of oil. For those supporting creation of the Department of Energy, energy was no longer simply a commodity. Energy as an Ecological Resource A second view of energy is that it is an ecological resource. Even before the 1973 oil embargo, serious academic and policy debates about the relationship between energy use and environmental pollution indicated that energy was seen by many people as something other than a commodity. Those people argued that energy use had implications beyond the interests of buyer and seller. When energy is seen as an ecological resource, people who now breathe combustion products, as well as future generations of producers, consumers, and breathers, have a stake in how energy is managed. The ecological resource view emphasizes certain properties of energy. Energy sources are classified as renewable or nonrenewable, exhaustible or inexhaustible, polluting or nonpolluting. Moreover, energy sources and transformations are seen in the context of biospheric systems: extraction and use have implications beyond energy—for soil, water and air quality; for climate; for the availability of other resources such as water and land; and for the health of biological communities. The view of energy as an ecological resource emphasizes some differences between energy sources that look the same from a commodity viewpoint. For example, coal deposits can be depleted, but hydroelectric resources, also used to produce electricity, cannot; and heating with oil pollutes the air and threatens to produce long-term climatic change by adding carbon dioxide to the atmosphere, but heating with passive solar technology does not.

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THINKING ABOUT ENERGY 18 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, Viewing energy as an ecological resource suggests that by using energy at the world’s present rate, the present generation might be altering the environment and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. and making the world a less healthy place for its children and grandchildren. Because high levels of energy use may irreversibly alter major environmental systems, such as climate, the resource view emphasizes frugal energy use.3 Since the western industrial world is particularly dependent on nonrenewable energy resources (oil, coal, natural gas, and uranium), the ecological resource view puts special emphasis on careful use of those energy sources. Like the commodity view, the view of energy as an ecological resource reflects a value system and focuses attention on particular interests. The resource view emphasizes the values of sustainability and frugality. It also values choice, but future choices have a higher priority than in the commodity view. It assumes that energy resources are finite and interdependent with other resources and emphasizes the fact that present use displaces significant costs to nonparticipants in energy transactions and to future generations. Thus, the resource view draws attention to the interests of groups that pay the costs of this energy although they are outside the market transactions—workers in unsafe mines, breathers of polluted air, energy users who pay for powerplants that need not have been built, and future generations of workers, breathers, and energy users. In this view, buyers and sellers have legitimate interests, but other groups are the center of attention. This view often leads to setting limits on market transactions through a political process: for example, by regulating or taxing resource extraction, waste, and pollution. The effort, in short, is to develop an energy system that incorporates the interests of those who are not participants in, but are affected by, buying and selling of energy. Energy as a Social Necessity A third major view of energy has also become increasingly important in the last ten years: energy as a social necessity. In this view, people have a right to energy for home heating, cooling, lighting, cooking, transportation, and for other essential purposes. In a biological sense, these things are no more basically essential to human life than they ever were. But society has changed greatly in the past century, and the social definition of “necessity” has changed with it. Because of technological advances and more than a generation of inexpensive and readily available energy, most people in the United States expect that they and their neighbors will have heat and lights in their homes whenever they want them. The same history has led many Americans to live more than a day’s walk from work, so transportation to and from a job is needed. And many people now live in desert climates that are inhospitable without using energy to cool homes and workplaces and to import water. The changes that have increased the

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THINKING ABOUT ENERGY 19 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, need for energy in the United States were not especially salient until 1974, when the long, slow decline of energy prices abruptly reversed. But salient or not, real and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. energy needs have always existed. Energy as a social necessity is not a new idea. Welfare programs have treated utility bills as necessary household expenses for a long time, and government utility regulators have typically sought to prevent or minimize interruptions of service. But events surrounding the 1973–1974 oil embargo made energy needs much more apparent to both consumers and policy makers. Interruptions of energy supplies threatened some areas with power blackouts, and many consumers stopped taking home heating and mobility by automobile for granted. For the poor, the rapid rise of oil prices forced choices between energy and food, clothing, or other essentials. City governments began to see the cost of energy change from an insignificant expense to one of the largest items in municipal budgets—and essential services depended on keeping fire engines, police cruisers, and other vehicles running and on keeping city buildings comfortably heated or cooled. The central value implicit in the view of energy as a social necessity is equity. Certain energy needs must be met by society as a precondition for any further allocation of resources. This view assumes that private action will not meet these needs for everyone and that public action is essential. In a market economy, it emphasizes the interests of those who lack market power—chiefly poor people and poorly funded parts of the public sector. It also supports people who may face energy-related hardship in a crisis. In this view, the goal is to ensure a minimum energy standard for all; energy beyond what is required to meet minimum needs can then be treated as a commodity or as a resource. Energy as Strategic Material A fourth significant view of energy is as strategic material. In this view, the important properties of each energy source include its geographical location in the world; the political stability and orientation of the countries in which it is located; and, if an energy source is located in an unstable area, the availability of domestic or other reliable substitutes. Energy became noticeable to the public as a strategic material in 1973 when oil was used as a political weapon against the United States. Of course, oil had always been strategic, because of the dependence of the national economy on oil-fueled internal combustion engines and on the profitable functioning of oil- related industries. But the significance of this dependence increased as the level of oil imports from the Middle East increased and with the development of international agreements to share available oil with other nations. By 1980, the strategic vulnerability of the U.S. energy system had become a central concern of federal energy policy (Lewis, 1980).

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THINKING ABOUT ENERGY 20 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 view of energy as strategic material emphasizes a value of national security defined in terms of economic vitality and the maintenance of military and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. strength. It assumes that energy—especially oil—is essential for an economically and militarily strong nation and that public action is required to ensure a secure supply. This view emphasizes the interests of groups that supply and demand oil for strategic purposes, particularly U.S. energy companies and the military. These interests are promoted by spending federal money for military fuel, hardware, and personnel and by protecting the overseas investments of U.S. energy companies. When, as at present, the strategic view of energy is advanced in tandem with a military buildup, the interests of the many industries that supply the military are also advanced. In this view of energy, strategic needs take priority over all others, and any debate about how to treat other demands on energy sources and federal funds must take place after those needs are met. Conflict about Views of Energy The most heated debates about specific energy issues are also conflicts about the nature of energy.4 The intensity and persistence of energy conflicts reflect the fact that more is at stake than the specifics of any particular policy. Policy choices are often, implicitly, choices among different views of energy, and as such, they legitimize those views of energy most consistent with the chosen policies. Consequently, the effects of policy decisions can be more profound than the particular policies adopted. When a society implicitly accepts a particular definition of energy, the choice tends to set the terms for future political debate and define the legitimate participants; future policies are likely to reflect particular interests. Recent disputes about government support for the commercialization of conservation and solar energy technologies are an instance of conflict between the commodity view and other views of energy. The argument against government involvement rests on the assumption that market forces will allocate resources among energy technologies more efficiently than government decisions—an assumption that is widely accepted for ordinary commodities. The argument for a government role is based on the assumption that energy is not an ordinary commodity. In this view, energy involves a special national interest—in minimizing the effects of pollution; in saving natural resources for future generations; in meeting human needs; or in reducing the nation’s vulnerability to disruptions of oil imports. A variety of government policies make sense in terms of some views of energy, but not others. Oil and gas price decontrol are appropriate policies if the goal is to allocate commodities efficiently, but such policies are counterproductive if energy is viewed as a social necessity. Energy assistance and home-weatherization programs can effectively provide for social needs, but they interfere with market allocation of energy commodities.

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THINKING ABOUT ENERGY 21 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, Standby gasoline allocation and conservation assistance for schools and hospitals provide for social necessities but interfere with markets; exhortations to save and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. energy, fuel economy standards for automobiles, and conservation tax credits conserve resources but may disregard issues of social necessity; federally funded oil stockpiles and emergency contingency plans preserve national security but constrain markets; and deregulation of the generation of electricity would allocate that commodity more efficiently but might have significant environmental and social costs. Each of these policies institutionalizes a particular view of energy and gives other views second place. Adoption of any policy represents a choice among views of energy. By creating or strengthening interest groups, a single policy can provide institutional and symbolic support for a whole range of policies based on a similar view of energy. In this way, energy policies help shape a society’s definition of energy. The connection of policies to interests and to basic perspectives partly explains why energy debates have been more acrimonious than they would be if energy were merely a technical issue. It also helps explain why consensus about energy facts does not often resolve energy disputes. A Shifting Foundation for Policy Disagreement about the nature of energy makes it difficult to sustain societal effort in dealing with energy problems. The difficulty is increased because rapidly changing events continually shift the attention of the public, experts, and political interest groups from one aspect of energy to another. A glance at the history of U.S. energy policy over the past decade demonstrates these shifts in focus. For most of this century, energy costs, resource depletion, and environmental pollution were not salient for most people. There was relatively little reason to question the view of energy as a commodity or to offer alternatives. Only since the early 1970s, when this situation changed, did spirited public debate arise. The environmental movement and the “limits-to-growth” argument focused attention on ecological resource issues, and the temporary oil shortage of 1973–1974 was seen as evidence of resource depletion. The oil shortage also focused attention on energy as a social need and on energy’s strategic significance, as fuel shortages threatened the economy and many people suddenly were unable to pay market prices for energy. Thus, competing views of energy attracted attention and led to the organization and reorganization of political movements and interest groups to influence “energy politics.” In the period between 1974 and 1979, oil became more readily available and real prices dropped. The concern with energy needs and resource issues was expressed with less urgency while concern about energy as a

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THINKING ABOUT ENERGY 22 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, strategic material remained acute because of the still-increasing level of oil imports. National policy makers came to see oil vulnerability as the preeminent and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. issue in energy policy (e.g., Lewis, 1980). The 1979 oil shortfall again focused attention on the needs of individuals and municipalities because short supplies were unevenly distributed and because price increases forced hard choices on many consumers. More recent events, including a sharp decline in oil imports and a downward slide in oil prices, have again changed perceptions in the policy community. With shortages and price fluctuations receding into memory and the rapid decline of oil imports through 1981 and 1982, the arguments that the Department of Energy was not needed and that the market could handle energy became more plausible. Once again there was a shift to regarding energy as a commodity. These shifts of perspective are likely to continue for some time. When sharp price increases for forms of energy occur, they direct attention to unmet social needs. Recurring political crises in the Middle East underline the necessity of energy and reemphasize energy’s relationship to national security. And major accidents or environmental incidents associated with nuclear power production, oil refining, coal burning, or the disposal of petrochemical or radioactive wastes —which can occur at any time—remind people of the importance for ecological systems of careful use of energy resources. Yet, despite the rapid shifts in the way experts and others perceive energy problems, the problems themselves are rather stable and persistent. Because of the dependence of Western economies on Middle Eastern oil, strategic problems will continue to surround the energy issue. Because energy prices are unlikely ever to return to their pre-1973 levels, many households and localities will continue to suffer economically.5 Even by the most optimistic estimate the buildings sector of the economy will take decades to adjust to the price increases. And because of the time delays involved in such environmental problems as acid rain and the greenhouse effect, environmental issues will persist in energy policy, no matter what actions are taken in the immediate future. This situation presents a dilemma for sustained policy making. Effort is necessary to deal with long-lasting energy problems, but because of changing perceptions, it is difficult to maintain such effort. Policy analysts tend to focus on only one or two aspects of energy at a time. This weakness in developing an inclusive energy policy is rooted in the failure to recognize energy as being many things simultaneously. Given rapidly changing world conditions, policies based on any one view of energy are likely to seem inappropriate when conditions change. When public officials fail to appreciate this point, they often believe that their particular views of energy can be sustained politically over time. For example, former Secretary of Energy James Edwards could defend the Reagan Administration’s abrupt

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THINKING ABOUT ENERGY 23 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, reversal of policy on conservation, solar, and nuclear energy by saying (quoted in Smith, 1982): “We are putting behind an era of stop-and-go policymaking.” and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. Given society’s failure to recognize the complexity of energy, Edwards’ reversal will not be the last. A fuller appreciation of the meanings of energy can generate a more stable policy process, appropriate to the nature of U.S. energy problems. THE DOMINANCE OF THE COMMODITY VIEW The four basic conceptions of energy do not have equally strong support, either in the political arena or among policy analysts. In most aspects of the national policy process, the commodity view is dominant. Dominance of a particular view of energy does not mean that it is the only view given consideration, but that other views must make special claims before being taken seriously. And in most U.S. energy policy debates, the burden of proof still remains on those who assert that energy should be treated as something other than an ordinary commodity. When these advocates succeed, they do so by winning exceptional treatment for particular situations rather than by changing the dominant perspective. Two examples illustrate this dominance of the commodity view. The National Environmental Policy Act of 1970 mandates a procedure for evaluating the environmental and socioeconomic impacts of major federal actions. Because many energy activities come under the purview of the act, the Department of Energy conducts environmental assessments of its major programs. In practice, energy programs are usually conceived and justified on technical and economic grounds and only after they are designed and proposed are the likely environmental effects examined. If those effects are negative enough and serious enough, the program can be modified or discontinued. Socioeconomic impacts, which include equity effects, effects on communities, and the like, are considered as part of the environmental analysis, but usually a small part. While this procedure ensures some consideration of environmental and social values, they are considered only after energy officials have developed some commitment to a program. Adverse environmental impacts are seen as requiring “mitigation” so a program can proceed; financial compensation is considered for communities disturbed by an energy project; and public antipathy toward a new project is regarded as a “barrier to implementation.” In this process, the prospective project is evaluated as a given, and the role of environmental and social concerns is as a barrier. Advocates of those concerns are placed in a reactive and adversary role with respect to government officials (see Nelkin and Fallows, 1978). The view of energy as a commodity is built into these procedures. This

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THINKING ABOUT ENERGY 24 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, becomes obvious when one considers how different the policy process might be if the ecological resource or social necessity view dominated. In those cases, and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. policies would be conceived and justified primarily on grounds of their desirable effects on environmental or on social values, within technical and budgetary limits. The primary goals would be to enhance environmental quality, to strengthen local communities, or to develop technologies that the public wants. For example, only after a policy were first suggested on such grounds would analysis be carried out to evaluate the costs of the energy services it would provide under current and projected market conditions. High cost would be considered a barrier to implementation, and the government might consider surmounting the barrier by tax subsidy, regulation, or other means. Another example of the dominance of the commodity view can be seen in the way in which the resource conception of energy has been advocated in recent years. While the argument for careful and limited use of energy resources can be supported with evidence of the adverse environmental effects of mining low- grade fossil energy resources, burning carbonaceous fuels, disposing of radioactive wastes, and the like, the most influential recent works promoting the resource view have argued the point mainly on the grounds of economic efficiency. Thus, in discussions of energy conservation, a distinction has been developed between energy efficiency, on one side, and curtailment or sacrifice, on the other (e.g., Hayes, 1976; Yergin, 1979). A number of recent studies have emphasized that many energy users should, out of pure economic self-interest, increase their investments in energy-efficient buildings and equipment (Ross and Williams, 1981; Stobaugh and Yergin, 1979; Solar Energy Research Institute, 1981). Some writers have even attempted to redefine the commodity view to provide an argument for conservation: by defining the commodity in question as “energy services”—amenities such as heat and transportation rather than merely the fuels used to produce them—they argue that a free market for energy services would produce very low levels of growth in energy use, even in an expanding economy (Sant and Carhart with Bakke and Mulherkar, 1981). Apparently, concern with resource depletion, air pollution, and the like are less persuasive in the energy policy community than concern with economic efficiency. The advocates of energy conservation have found a way to get ecological resource issues considered, but not on their own terms. The commodity view of energy dominates the resource and necessity views in the sense that environmental, equity, and related concerns must be asserted as reactions to policy initiatives that usually derive from the commodity view. However, the commodity view is not always dominant. A strategic consideration often dominates other concerns—as is evident in the area of petroleum allocations. In that particular debate, the burden of proof has fallen on those who hold the commodity view, arguing that

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THINKING ABOUT ENERGY 25 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 market can handle allocation in an emergency better than the government. In this sense, the strategic view seems dominant over the commodity view. Strategic and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. considerations also dominate over the resource and necessity views. For example, there was widespread support for the expensive strategic petroleum reserve even in 1981, when energy programs concerned with environmental quality and the needs of low-income energy users were being cut severely. While the commodity view is generally dominant, and the strategic view dominates in some policy arenas, continuing conflict demonstrates that no single view of energy has achieved universal acceptance. This is understandable since each view of energy contains some of the truth, and each has a constituency. So political debate continues, and interests that stand to benefit from each particular view of energy continue to provide support for that view while arguing for policies that promote their interests. Energy corporations and their allies support the commodity view; environmentalists and some consumer and labor groups support the resource view; representatives of people with low or fixed incomes, as well as some municipalities, support the view of energy as a necessity; and the military establishment and its suppliers support the strategic view. A particular view of energy can be supported in several ways. A view may be promoted in the media when an advocate appears on television saying that energy efficiency can help cut air pollution (ecological resource view) or that the country might be held hostage by Arab sheiks (strategic view). A view of energy may be promoted when people with that view have access to decision makers, such as legislators or high-level officials of the federal administration. And a view of energy may also be promoted through academic research that focuses on the variables that are central to a particular view of energy. Since energy is simultaneously a commodity, a resource, a necessity, and a set of strategic materials, research can find evidence for each view. For example, research showing that energy use declined when prices rose promotes the commodity view. However, while energy use declined other things also occurred. For example, poor people sacrificed some amenities and necessities more than people in other income groups (social necessity view).6 Each set of interests understandably supports and publicizes research that legitimizes its view of energy issues. A significant fact of energy politics is that the supporters of different views of energy have unequal resources to promote their ideas. Proponents of the commodity view are in a much stronger position for advocacy than proponents of the resource or necessity views of energy. The most powerful proponents of the commodity view are the energy corporations—some of the largest industrial corporations in the nation. No institutions in our society have greater access to the media, to research expertise, or to decision makers. In addition, the commodity view gains the support of corporate interests outside the energy system because any challenges to this view are

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THINKING ABOUT ENERGY 26 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, believed to support wider government intervention in markets, a position that is opposed by most corporate interests. And because the commodity view of energy and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. has been dominant for so long—partly because of the resources available to its proponents—many people have never been exposed to discussions of energy that proceed from other views. Thus, the commodity view of energy is well institutionalized; it has a strong and stable fund of resources in the energy industries and an established intellectual base in economic theory and research.7 And of course, the common experience of paying for fuels and electricity makes the commodity aspect of energy a very real part of people’s lives. Proponents of the strategic view of energy also have a strong base from which to advocate their position. Like the commodity view, the strategic view has the support of many major energy corporations, whose foreign investments are protected by governmental efforts to make imported oil supplies secure and who profit from sales of oil to government stockpiles. The suppliers of equipment to the military constitute another wealthy and influential base of support. In addition, the strategic view has a stable set of well-placed advocates in the Department of Defense of any administration. And people remember past encounters between the United States and hostile foreign governments that include the use of energy as a weapon against the United States, so they can clearly see the strategic aspect of energy. The two other views of energy have a weaker base from which to compete. They lack politically or economically powerful supporters, and, unlike the commodity view, they do not have a well-established intellectual paradigm from which to derive policy suggestions. Relatively few people have direct experience with providing for their own energy needs or managing depletable resources, and most people do not regularly experience pollution that is visibly tied to energy; consequently, the resource and necessity aspects of energy are not as regularly or dramatically experienced as, for example, gasoline purchases. All of the above factors have helped the commodity view of energy remain dominant in the face of challenges from the necessity and resource views. Thus, energy policy alternatives presented for public debate continue to be based primarily on a commodity view, with allowances for exceptional treatment when extreme inequity can be demonstrated or when political pressure for exceptions becomes intense. THE NEED FOR A BROADER VIEW The dominance of the commodity view is a problem for U.S. energy policy because it restricts vision, limiting the ability of both the public and energy analysts to explore a full range of policy alternatives. One example of this

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THINKING ABOUT ENERGY 27 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, limited vision is the lack of debate in recent years over public control of energy production and distribution. and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. Given that the environmental and equity implications of energy decisions have been increasingly salient in the past decade, one possible development might have been a serious effort to move control over energy decisions from the oil companies and electric utilities, which allocate most of the relevant resources, to some publicly controlled body. But debate over nationalizing oil or “municipalizing” electricity has only been an occasional and minor feature of recent energy politics, even though there are many municipally owned utilities. More prominent in political debates have been attempts to exert limited public control over energy corporations: by taxing windfall profits from oil deregulation or by requiring utilities to offer energy audits and to purchase power from some small producers at favorable rates. We do not analyze the arguments for and against public control of energy, but we do find it significant that this obvious way of bringing controversial energy decisions into the political arena has not been taken seriously in recent years. We believe that the dominance of the commodity view of energy is a partial explanation: when energy is defined as a commodity, its control is seen as properly belonging in the private sector. By contrast, if energy were seen mainly as a resource, a greater public role would be considered proper; if it were seen mainly as a social necessity, decisions about production and distribution would be seen as essentially public rather than private; and if it were seen as a strategic issue, some energy decisions would be strictly controlled by government. The issue of public control is implicit in many recent efforts to solve energy problems through collective action at the local level. These efforts are examined in Chapter 7. There are other examples of limits on policy options that relate to the dominance of a commodity view of energy. In governmental attempts to promote residential energy conservation, various programs have been considered: tax credits, low-interest loans, several kinds of information programs, and others— all of which directly affect consumers but only indirectly affect producers. Policies that might involve governments directly in the production of energy or energy services have not often been considered. For example, the U.S. government has rarely distributed insulation materials to households and has never produced such materials. A policy of outright grants to households for energy efficiency expenditures, which has been implemented in Canada, is not considered politically feasible in the United States. As a result, such a policy has not been the subject of the serious analysis given to more complex tax and loan programs that are less likely to promote energy efficiency widely in the society. Government grants for conservation may be seen as interference in the

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THINKING ABOUT ENERGY 28 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, market when energy is defined as a commodity; but if energy is seen as a social necessity, grants for insulation may be seen as appropriate government actions. and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. Chapter 4 shows how not only grants, but also effective informational programs for energy users are foreclosed by a narrow vision in which energy is seen as a commodity, and energy users are seen as rational economic decision makers. The dominance of the commodity view has two major effects on energy policy. First, it tends to leave the energy policy community conceptually unprepared for changes in world conditions that will, from time to time, force people to regard energy as something other than an ordinary commodity. While politicians often respond to widespread public demands that are insistently expressed, they cannot respond effectively without some appropriate policy options. A capability for analysis and policy planning that transcends immediate concerns is imperative, especially in an area such as energy, where public concerns change rapidly with world events. Such a capability must include analysis of events that may bring ecological resource, social necessity, and strategic issues to the center of public attention. One example of unpreparedness may be seen in U.S. policies to deal with the needs of low-income households faced with rapid increases in the price of home heating fuel. Partly because this problem is often seen as a secondary effect of price increases, which policy analysts have advocated for their aggregate effects, the problems of the poor are usually left for amelioration after price increases have occurred. In the crisis atmosphere of a winter without heat, a decision to offer financial assistance to pay fuel bills is understandable—and such a decision is also quite consistent with the definition of energy as a commodity. But from the perspective of meeting energy needs, energy assistance programs are far from the best way to spend government money. Direct investments in weatherizing buildings or in improving the efficiency of furnaces are more cost- effective and can meet the needs of energy users more completely and for a longer period of time.8 Second, the dominance of the commodity view helps create a familiar pattern of conflict in energy policy. Technical and economic considerations are the initial bases of policy analysis, so advocates of environmental values and of poor people and poorly funded public services are most often found struggling to block policy proposals that have already been approved in government agencies. In the same conflicts, energy producers often appear as supporters—active or silent—of agency positions. A typical example is the opposition of environmental groups to nuclear power plant siting decisions: endorsement of plans by government agencies has led to lawsuits, demonstrations, and lobbying efforts (Nelkin and Fallows, 1978). Another example is opposition to utility rate increases by advocates of poor people.

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THINKING ABOUT ENERGY 29 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, Yet another example arises from treating energy resources as ordinary market commodities in the event of a major supply shortage.9 While there may and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. be no serious political opposition to such a policy in normal times, a severe shortage will make energy needs very prominent, and needy people and organizations will act outside the market. This might result in political action— possibly powerful enough to force a hastily drawn allocation scheme. Conflict might also move outside the political system, in widespread theft of fuel or of the money to purchase fuel. Recognition of such possibilities is part of the basis of the discussion of energy emergencies in Chapter 6. To summarize, the dominance of the commodity view of energy tends to limit policy analysis to investigation of those social institutions and processes believed to be critical to trade in commodities. As a result, otherwise plausible policy options are often overlooked, and a characteristic pattern of political conflict is reinforced. A fuller recognition of the multiple aspects of energy in policy analysis could give society a wider range of options to consider. This wider range is especially needed in a time of rapidly changing energy conditions and public perceptions. Notes 1. The “social construction of reality” (Berger and Luckmann, 1966) is a continuing social process about which there is fairly extensive literature. One current line of research in sociology investigates how important social concepts have come to be defined and how changing definitions produce changes in social organizations and in processes that affect people’s lives. Such research has been done on the social definitions of crime (Quinney, 1970), poverty, sexual deviance, alcoholism, and a variety of other “social problems” (Spector and Kitsuse, 1977). 2. The distinction among views of energy is drawn partly from Schnaiberg (1982). 3. In this view, the goal of energy policy can be described as finding ways to accomplish the things energy does for people while putting less strain on ecological systems. This approach leads to an emphasis on providing “energy services”—mobility, space heating and cooling, mechanical work, industrial process heat, and so forth—by using less energy and especially by using less energy from depletable sources. Energy services can be provided by improving the efficiency of the technologies that, by using fuels and electricity, provide energy services. Thus, homes can be insulated, the efficiency of furnaces and motors can be improved, and au

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THINKING ABOUT ENERGY 30 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, tomobiles can transport people the same distance using less fuel. Energy services can be provided by design, such as incorporating passive solar features in buildings or using aerodynamic design for vehicles. Even more indirectly, energy services can be provided by substituting products that take less and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. energy to manufacture for those that use more and by substituting services for products. For those favoring the ecological resource view, these substitutes for fuel are as much a part of energy as are fuels. This is why some writers have begun to speak of conservation as a source of energy (e.g., Ross and Williams, 1981; Stobaugh and Yergin, 1979). Minimizing strain on ecological systems implies more than efficiency in energy transformations. For many people with an ecological resource view, it also means minimizing total energy use; a choice of inexhaustible energy sources over depletable energy sources; and, among inexhaustible sources, a preference for rechanneling ongoing energy flows, for example, sunlight, over developing new inexhaustible sources with major foreseeable and negative environmental impacts, for example, the breeder reactor. 4. A related argument has been made by Robinson (1982). 5. The poorest people in the United States now spend about one-quarter of their income directly on energy for use in their homes, while the richest people spend only about 2 percent (Energy Information Administration, 1982). 6. Data gathered by the Energy Information Administration (1982) show that between 1978 and 1980, energy use in the residential sector of the economy decreased by 12.3 percent while prices rose. It is also true, however, that energy costs (price times consumption) for the poorest people in the population increased 48 percent, while energy costs increased only 17 percent for the richest people. Thus, the conclusion that energy price increases produce conservation is supported by the data; so is the conclusion that energy price increases hurt the poor. 7. The commodity view of energy is central in most current economic analyses, which proceed from neoclassical economic theory. Neoclassical economics does address many ecological and national security implications of energy, using the concept of externalities and the large body of work on the problem of public goods, and it also addresses questions of social needs for energy. However, it usually argues that such needs be met through a welfare policy rather than as part of an energy policy. The nature of such analyses demonstrates the centrality of the commodity view in neoclassical economic thinking: the noncommodity aspects of energy are treated as exceptions to an analytical rule—the functioning of

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THINKING ABOUT ENERGY 31 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, ideal markets—rather than as integral parts of a phenomenon in need of conceptualization. Just as the political dominance of the commodity view puts a burden of proof on those who assert claims based on environmental preservation or social equity, the central place of the commodity view in economic and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. analyses puts a burden of proof on those who assert that more analytic effort should be given to understanding ecological or equity issues. 8. Weatherization is more cost-effective than energy assistance in the same sense that insulation is often cheaper than energy: since weatherization costs a building owner less over the long term than energy, it is an equally good investment for a government agency that would otherwise be paying for the energy. 9. Such a plan apparently lay behind President Reagan’s March 1982 veto of congressional authority to allocate petroleum supplies in an emergency.