3
Some Barriers to Energy Efficiency

The past decade has been marked by failures to make accurate forecasts or effective policy about energy use. One of the major problems is that human thinking and action are not easy to predict. During the past several years, social and behavioral scientists have begun to understand the complex issues involved in human behavior, especially as it might affect energy use. While the data are far from voluminous, the new knowledge gives a clearer picture of the barriers to energy conservation and could make efforts to overcome some of those barriers considerably more effective. In this chapter and the next two we discuss some of these issues and the new insights. We begin with a look at the broad context of energy use in the United States.

Most observers of the energy scene are aware of how inaccurate past projections of energy demand have been. For example, there is now general agreement that energy demand in the year 2000 will be much less than almost any 1975 forecast. Projections of the need for imported oil—a critical portion of national energy use—can go out of date even more quickly and dramatically. The Department of Energy estimated in late 1980 (Lewis, 1980) that continued federal support of energy conservation would help reduce oil imports from the 1979 average of 7.9 million barrels per day to an average of 6.7 million per day by 1990 and—with optimistic estimates of domestic supply—that imports might fall to 3.8 million barrels per day by 1990. But less than two years later, in spring 1982, the United States was importing only 3.5 million barrels of oil per day (Martin, 1982).

Many factors combined to embarrass the experts. The national economy failed to grow as expected for a number of reasons only partly related to



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SOME BARRIERS TO ENERGY EFFICIENCY 32 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, 3 and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. Some Barriers to Energy Efficiency The past decade has been marked by failures to make accurate forecasts or effective policy about energy use. One of the major problems is that human thinking and action are not easy to predict. During the past several years, social and behavioral scientists have begun to understand the complex issues involved in human behavior, especially as it might affect energy use. While the data are far from voluminous, the new knowledge gives a clearer picture of the barriers to energy conservation and could make efforts to overcome some of those barriers considerably more effective. In this chapter and the next two we discuss some of these issues and the new insights. We begin with a look at the broad context of energy use in the United States. Most observers of the energy scene are aware of how inaccurate past projections of energy demand have been. For example, there is now general agreement that energy demand in the year 2000 will be much less than almost any 1975 forecast. Projections of the need for imported oil—a critical portion of national energy use—can go out of date even more quickly and dramatically. The Department of Energy estimated in late 1980 (Lewis, 1980) that continued federal support of energy conservation would help reduce oil imports from the 1979 average of 7.9 million barrels per day to an average of 6.7 million per day by 1990 and—with optimistic estimates of domestic supply—that imports might fall to 3.8 million barrels per day by 1990. But less than two years later, in spring 1982, the United States was importing only 3.5 million barrels of oil per day (Martin, 1982). Many factors combined to embarrass the experts. The national economy failed to grow as expected for a number of reasons only partly related to

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SOME BARRIERS TO ENERGY EFFICIENCY 33 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, energy. Demand was held down by high oil prices that rose faster and stayed higher than had been predicted after the first round of price increases in 1973– and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. 1974. In the 1970s, light manufacturing and service industries grew while heavy manufacturing declined, resulting in decreased energy demand per unit of economic production. In addition, the technological trend toward more energy- efficient equipment continued, and increases in public awareness of energy and in energy-related government programs contributed to changes in demand. The relative importance of all these factors is not clearly understood and is still a matter of debate. Figure 1 shows an analysis of recent changes in U.S. energy demand. While the estimates of the effects of particular influences on demand would vary under different analytic assumptions, what is striking is the overall difference between estimated demand and actual demand, a decrease of 27 percent. Much recent evidence, then, leads to questions of why energy demand is so low. But the issue is still more complex, because other evidence raises questions of why energy demand remains so high. Specifically, several studies reveal that substantial investments have not been made that would, by substituting technology for energy, lower overall costs for energy users (e.g., Office of Technology Assessment, 1982; Ross and Williams, 1981; Sant, 1979; Solar Energy Research Institute, 1981; Stobaugh and Yergin, 1979). There is also reason to believe that even if present market conditions and levels of government involvement persist for many years, much of this investment will not be made. For example, a panel of experts convened in 1981 at the National Academy of Sciences estimated that only between 30 and 80 percent of economically justified investment would be induced by energy price signals (National Academy of Sciences, 1981). Similarly, a detailed study of city buildings by the Office of Technology Assessment (1982) concluded that by the year 2000 only 38 percent of the energy savings achievable by investments that are economically justified under present conditions will occur in that sector.1 There is much left to learn about the behavior of energy users in the United States. The evidence of this imperfect understanding comes at a critical time for U.S. energy policy because recent changes base policy even more on assumptions about the behavior of energy producers and users that are increasingly being questioned. In particular, current policy assumes that the profit motive will encourage producers to develop and market technologies that will save users money at current energy prices and that economic motives will also spur energy users to purchase and use those technologies. This belief in the market persists in spite of the evidence that institutional barriers to investment in energy efficiency do not yield to clear market signals (e.g., Bleviss, 1980; Blumstein, Kreig, Schipper, and York, 1980; Office of Technology Assessment, 1982; Schip

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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. SOME BARRIERS TO ENERGY EFFICIENCY Fig. 1 . Energy Trends in the U.S. Economy SOURCE: Office of Policy, Planning, and Analysis (1982) 34

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SOME BARRIERS TO ENERGY EFFICIENCY 35 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, per, 1976) and that energy users, even within their range of choice, are often less than fully responsive to price signals or to information about how they can cut and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. energy costs. ENERGY INVISIBILITY AND ITS LEGACY Because of the way energy-using technologies work, it is often difficult for energy users to take effective action when rising prices provide a strong economic motive to save energy. This is in large part because the history of material progress over the last century has made energy sources less costly in real terms and has made energy flows invisible to energy users. This history has had two major consequences, which can be called energy unawareness and energy invisibility. We can illustrate this history with the example of home heating. In the nineteenth century most homes were heated by wood stoves. Frequently the person heating the home was also the person who chopped and stacked the wood, and the wood also had to be retrieved from stacks and loaded into the stove at fairly frequent intervals. The energy required to heat the home was quite visible to the homeowner, and the effort required to chop and stack the wood and load the stove was roughly proportional to the energy used to heat the home. Next came the coal-fired furnace. Coal was delivered by a company rather than obtained by a homeowner. However, the coal still needed to be shoveled into the furnace, so personal effort was still required. And the daily ritual of feeding the coal furnace made the householder aware of the decreasing stack of coal; the energy flow was still quite visible. Next came the development of the oil-fired furnace, which was marketed on the basis of its increased convenience over the coal-fired stove. The oil furnace did not require the daily tending that the coal furnace did: the component of personal effort was removed. And the flow of oil from the storage tank into the furnace was invisible to the homeowner; all that was visible was the occasional arrival of the oil truck to deliver the oil. Next came the furnace fed with natural gas. Here the inconvenience of delivery was removed: fuel transfer was entirely effortless and entirely invisible. Finally, electrically heated homes were introduced. Like gas, electricity offered effortless, invisible heat. In fact, this effortless invisibility has been a major source of the popularity of electricity as an energy source. And not surprisingly, it formed a good part of the successful marketing effort for electricity. Per capita consumption of electricity in the United States doubled every ten years for decades. Today, the only visible aspect of energy for most households is the bill. This long trend has had various effects. It has allowed people to be isolated from discomforts in the physical environment and to increase their

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SOME BARRIERS TO ENERGY EFFICIENCY 36 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, sense of well-being. People commute from thermostatically controlled heated or cooled homes to heated or cooled workplaces in heated or cooled private cars. At and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. home, people use picture windows to let in the visual aspect of the outside world without letting in any of its nuisance properties. This style of life implies the consumption of great amounts of energy, but when prices were low, there was no pressing need to be concerned about energy costs. The low economic cost and easy availability of energy made energy users relatively unaware of energy. As a result, energy was not a salient feature in family decisions about purchasing homes and automobiles or in organizational decisions about designing buildings or maintaining equipment—decisions with major implications for energy use. This sort of energy unawareness can be reversed, given time, if price increases or other stimuli are strong enough to make energy salient. But the consequences of low-cost energy and material progress go deeper than unawareness. Energy has became invisible to consumers, so that even with some heightened awareness, they may be unable to take effective action. This is what we mean by the legacy of energy invisibility. Some Roots of Misinformation Consider the fact that for most households the only visible thing about energy is the bill. In some ways, there is less useful information in an energy bill than in the actual flow of fuel into a furnace. Energy bills are received relatively infrequently, and they generally aggregate a variety of uses into a single number. To illustrate the effect of this, Kempton and Montgomery (1982:817) ask people to imagine the parallel situation for grocery bills in a store without prices on individual items, which presented only one total bill at the cash register. In such a store, the shopper would have to estimate item price by weight or packaging, by experimenting with different purchasing patterns, or by using consumer bulletins based on average purchases. Obviously, few shoppers in such a store would be well informed about which changes in their purchases would most effectively lower grocery bills without sacrificing their essential items. Yet for energy bills, especially electricity bills, that is the situation. A single bill combines the charges for several appliances, for lighting, and possibly for water heating, space heating, and cooling. It is impossible to tell, without careful monitoring and experimentation, how much of the bill results from each use or how much the bill could be decreased by using any particular appliance less or replacing it with another model. The evidence shows that many energy users are ill-informed under this billing system. For example, most people cannot correctly rank the energy consumption of various household appliances and heating and cooling systems (Becker, Seligman, and Darley, 1979; Kempton, Harris, Keith,

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SOME BARRIERS TO ENERGY EFFICIENCY 37 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 Weihl, 1982; Mettler-Meibom and Wichmann, 1982). Some of the inaccuracies are explicable in terms of energy visibility: when energy use is and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. visible, people think relatively more energy is being used. For example, people tend to overestimate the energy consumed by household lighting, which is literally visible, and their awareness is reinforced when they turn lights on or off. They tend to underestimate the much larger amount of energy used by water heaters—whose energy consumption occurs out of sight and takes place without human intervention. A survey of 400 families in Michigan found that the average householder believed erroneously he or she could save twice as much money by reducing lighting as by using less hot water (Kempton et al., 1982).2 In addition, householders are generally unaware of technical options for saving energy, especially by modifications in the house heating plant. This pattern, which is understandable in terms of energy visibility, was also observed in a study in West Germany (Mettler-Meibom and Wichmann, 1982). The trend toward automating energy use for space heating and cooling and other purposes has bought convenience and freedom from an unpleasant environment at the cost of knowledge of energy systems. The price was small when energy was cheap, but now that consumers have a strong economic motive to cut energy use, they do not have the vital knowledge needed to do so. Not only do people make systematically wrong estimates about the energy use of various appliances, but when they act on this misinformation, (by turning off lights, for example) and find their actions have little or no discernable effect on energy bills, they tend to reject the whole idea of energy saving. Energy invisibility also makes it difficult for an energy user who wants to save energy to learn what to do by trial and error. In a wood stove, the fire burns longer when the logs are placed properly; this can be demonstrated with only a few armloads of wood. In a modern gas or oil furnace, however, it is much harder to see the results of attempts to save energy: the effects of adjusting a burner or replacing a filter are directly observable only by a trained technician with the proper equipment. Energy saved by adjusting a thermostat or adding insulation is only observable by careful monitoring of energy use over time, and it is not usually possible for the user to assess the saving without great effort. The energy bills that supply most information about energy use do not give high-quality information. Gas and electric utilities bill monthly (or bimonthly) for heating fuel, and fuel oil suppliers usually bill irregularly, with each delivery. These billing systems tie energy use to payments, so householders typically measure their use of electricity and gas in “dollars per month” rather than the more technically useful “kilowatt-hours (or therms) per degree-day” (Kempton and Montgomery, 1982). It is likely that many organizational managers also use such a budget-based unit of measurement. Insulation, thermostat adjustments, and furnace overhauls may reliably save therms per degree-day, but such savings may not be

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SOME BARRIERS TO ENERGY EFFICIENCY 38 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 reflected in dollars saved per month. A building owner who insulates in October may see rising heating bills for months and not be able to tell if the and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. investment was worthwhile. Even if the owner is careful enough to make year- to-year comparisons, changes in weather and fuel prices will almost certainly confuse the message. When monthly bills are kept at the same level year-round through the use of a budget payment plan, the effects of energy-saving actions are even harder to observe and evaluate. Energy invisibility does not make it impossible to monitor the effects of attempts to save energy in buildings, but it does make it very difficult. If high prices or personal interest provide sufficient motivation, it is possible to look beyond the bottom line of the energy bill and combine the energy-use information from a bill to weather information from a local newspaper to get a useful index of energy use. But only a very small percentage of energy users will make such efforts. The majority, who do not take this trouble, are disappointed with the results of their attempts to save energy (Kempton and Montgomery, 1982). This disappointment frequently leads to discouragement and a feeling of helplessness that makes future action less likely. Structural Effects of Invisibility Another part of the legacy of energy invisibility is a diminished technical capacity of energy users to respond effectively to the stimuli of price and shortage. Freedom from concern about energy has produced structural changes in energy- consuming equipment. Central heating and cooling systems, for example, allow people to move freely from one room to another without thinking about energy. But now when consumers are motivated to save energy, few people have the option of saving fuel by closing off unused rooms while retaining comfort in a smaller space. When it became possible to achieve effortless control of the internal environment, architects began to design apartment and office buildings with windows that cannot be opened. Thus, residents and workers cannot save energy in these buildings by using natural ventilation; the need for air conditioning was literally built in. Because of such changes in the national stock of energy-using equipment, no amount of energy awareness can quickly or easily reverse the effects of years of energy invisibility. Finally, energy invisibility stands in the way of decisions to invest in energy efficiency because “seeing is believing.” The design and construction features that make buildings, automobiles, appliances, and industrial equipment more energy-efficient also tend to be invisible. Insulation in walls, flame-retention heads on oil burners, aluminum in automobile bodies, and extra windings on electric motors—all save energy without being visible. But because people can’t see them, they are less likely to believe they save energy. Building contractors report that it is easier to sell a new home

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SOME BARRIERS TO ENERGY EFFICIENCY 39 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, with visible solar collectors on the roof than one with passive solar design, added insulation, or other less visible energy-conservation features, even though yet and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. those conservation features are generally more cost-effective than active solar equipment. The problem of energy invisibility is greater with some fuels or uses than others: the effects of invisibility are greater in buildings than in transportation. While most energy users think of gas and electricity in dollar units, gasoline is typically understood in gallons (Kempton and Montgomery, 1982). This is a more useful unit for understanding and modifying energy use. In addition, for many energy users, gasoline is purchased more frequently than other fuels, and the payment is visibly connected to the act of consuming energy. With the advent of self-service gasoline stations, more drivers are even pumping their own gas. Because gasoline use is probably more visible than most energy uses in buildings and, possibly, in industrial production, gasoline consumption is more responsive to price signals than energy for residential consumption. In summary, the legacy of energy visibility makes it difficult for energy users to act effectively, even when rising prices make them keenly aware of energy. How much difference does this make? Winkler and Winett (1982) reviewed nineteen sets of data from experimental studies in which households were informed frequently (daily, in most of the studies) about how much energy they were using. Such feedback makes energy more visible in that it allows people to modify their habits and quickly see what changes will effectively cut their bills. Feedback led to savings of up to 20 percent, compared with similar households adapting to the same energy prices without the feedback on their use of energy. Furthermore, the effect of feedback was greatest when the cost of energy was highest (see Figure 2). When costs were calculated as a percentage of income, the relationship was even stronger. Thus, although rising costs produce energy savings, they produce much greater savings when energy users can see the effects of their actions. To put it another way, the cost of energy invisibility rises even faster than the cost of energy. The policy implications of energy invisibility are discussed in Chapters 4 and 5. PROBLEMS OF ENERGY INFORMATION It is important for energy users to have accurate information as a basis for action, and such information is available from many sources. But energy users are skeptical about most of what they see and hear. And no matter how carefully data are collected and estimates are double-checked, information alone generally will be insufficient to get energy users to change their stock of energy-using equipment or to use it differently, in ways that will save them money.

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SOME BARRIERS TO ENERGY EFFICIENCY 40 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. Fig. 2 . Effectiveness of energy use feedback in reducing consumption as a function of household cost for targeted energy source SOURCE: Data sets analyzed by Winkler and Winett (1982) A central problem with information for energy users is uncertainty: accurate estimation of the net costs of energy options depends on future economic conditions in general and, in particular, on future energy prices and availability. Both of these variables have recently been difficult to predict. Thus, large investments in energy-using equipment are seen as speculative. Their payoff depends on future energy prices in general, future prices of specific fuels relative to each other, future inflation rates, equipment costs, and changes in governmental incentive programs. The best an energy user can hope for is to reduce uncertainty to a calculated risk. But householders and small business operators rarely have the time and money to estimate all the important variables; it is too difficult and time- consuming to search out and evaluate the available information. Consequently, they are likely to avoid making costly errors of commission by continuing past practices. People may also make decisions on the basis of the closest, rather than the best available, information. For example, a

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SOME BARRIERS TO ENERGY EFFICIENCY 41 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, homeowner might act on the passing comment of a neighbor to the effect that even with new attic insulation, energy bills did not go down, or on the experience and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. of warmth and light in a friend’s solar greenhouse, or on the good feeling he or she gets from the idea of having solar collectors on the roof, or on the sales pitch of a contractor. In an uncertain environment, decision makers often take shortcuts in gathering information. As a consequence, they have usually made fewer investments in energy efficiency than would be justified if they had and used accurate knowledge about the best available equipment. And the investments that they do make may not be those most likely to save money. The irony is that with the present level of uncertainty, energy users need information more than ever: about whether to be concerned about shortages, about whether or how to prepare for price increases; and about the initial and operating costs of available energy-using equipment. An alternative to detailed calculations is to receive credible information—information about the future from an expert, reliable source that can be believed. For several reasons, however, information is not credible for most consumers, no matter how well documented it is. Diversity of Consumers Energy information is often discredited because it is not appropriate for many of the people who receive it. This is almost unavoidable because the needs of energy users vary so widely: what saves energy for some users is wasted effort for others. Automobile and truck drivers vary in the ways they use their vehicles, their needs for cargo space, and the kinds of traffic they confront, so the same advice will have different effects for different drivers. Commercial buildings vary greatly in their uses, hours of operation, and methods of management—so general advice is probably useless. And there is also a tremendous variation among household energy users. In homes, different fuels are used for different purposes, and the price of the same fuel may vary widely from one area to another. Energy needs vary greatly with climate, the size and manner of construction of the home, and the ages and employment status of the occupants. Local regulations or policies may promote a particular energy-saving practice (such as passive solar design) in some areas while impeding it elsewhere. Households have different appliances and different habits of using them. Some households pay directly for all the energy they use, some for none of it. Some have direct control over their heating and cooling systems, and others, chiefly in multifamily dwellings, do not. And some homes come close to their blueprint specifications while others, because of age, disrepair, or faulty construction, do not. In the language of marketing, the residential energy market is “highly segmented.” With a great deal of variability, most simple rules of thumb,

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SOME BARRIERS TO ENERGY EFFICIENCY 42 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, such as “the first thing to do is weatherstrip,” will be wrong for some households. Other advice, such as to turn down thermostats on furnaces and water heaters, and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. although generally applicable, will be irrelevant for those who lack control over the equipment. A longer list of supposedly informative statements might include some information that is wrong for almost every household. Because of the market segmentation, people who accept general energy advice, from whatever source, risk disappointment. The disappointment tends to discredit the source of the information. There has been an attempt to circumvent the segmentation problem by offering energy audits of private homes and other buildings in order to make recommendations appropriate for the climate and the special features of the building. While such information is almost certain to be more accurate than general advice, even it is attended with uncertainty. There is evidence, for example, that actual buildings do not use energy the way simple physical models predict (Beyea, Dutt, and Woteki, 1978). There is also the evidence that even in identical buildings some families of the same size use twice the energy others use, as a function of behavioral differences that are only partly understood (e.g., Sonderegger, 1978). Thus, even sophisticated and individualized recommendations by trained auditors or other energy experts will be wrong some of the time. Energy users who know this will be appropriately wary of information; those who do not will sometimes be satisfied, but other times they will become disillusioned. The disillusionment, when transmitted to neighbors, family, and friends, increases the general skepticism. Conflicting Information and Policies Despite the limitations of information, expert advice can help energy users who are concerned with minimizing energy costs. And many formal information sources exist: various governmental agencies at federal, state, and local levels offer conservation information, as do many electric and gas utilities, heating oil suppliers, heating and insulation contractors, and representatives of the petroleum, automobile, and building industries. Private energy service companies that claim to offer expert information are also available in some communities. Unfortunately, these sources offer conflicting expertise, and it is inevitable that they will continue to do so. Since there can be no incontrovertible source of knowledge in a fluid situation, there is room for disagreement—and incentive for disagreement continues to be provided by conflicting economic interests and divergent bureaucratic and disciplinary points of view. In the Northeast, for example, heating oil suppliers emphasize the savings from improving furnace efficiency, while gas suppliers have stressed lower fuel costs in an attempt to get people to switch from oil heat to gas heat. Neither supplier, however, has much interest in showing how much

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SOME BARRIERS TO ENERGY EFFICIENCY 44 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, ommend all “cost-effective” energy measures but one—householders were not to be advised to switch to less expensive fuels. That information had proved to be and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. too politically sensitive.3 When the Reagan Administration came to power in 1981, pressure for deregulation from the utility industry led to new regulations that further reduced the list of recommended conservation actions.4 Similarly, the official position on whether rail transportation is, in fact, more energy efficient or less energy efficient than automobile transportation changed when the administration changed.5 We do not mean to suggest that the federal government has no credible energy information to offer. On the contrary, several federal agencies are highly credible sources of certain kinds of energy information. The Energy Information Administration is the best source of information on current patterns of energy use in both residential and commercial buildings, and the Census Bureau collects credible information on fuels used in residences and the distances people travel to work. Such information is obviously essential for major policy decisions affecting energy use. The conflicts in government go beyond information; they are embodied in policy—and news about policy becomes part of the information available to energy users. In transportation, for example, the federal government has set standards for the fuel efficiency of new cars, yet it offered financial support for Chrysler Corporation, a company that was in trouble partly because of its failure to produce fuel-efficient cars. The government also fought hard for the agreement to limit imports of relatively fuel-efficient cars from Japan. Similarly, Amtrak advertises the fuel efficiency of rail transport, yet the government has cut back its rail subsidies, and supports highway programs. At the municipal level, budget constraints limit support of energy-efficient public transit systems. We are not concluding that any of these policies were wrong or misguided; conflicting priorities are inevitable in a complex government. But it is important to be aware that such decisions produce profound, if unintended, effects on perceptions, attitudes, and behavior of energy users by implying that government officials do not take energy efficiency very seriously—beyond making public pronouncements. How are energy users to know which agency experts to believe or which policy best promotes their own interests or local or national needs? Could the problem of inconsistency be solved by forcing government officials to promote a common view? We think not. Even if government could be internally consistent, private parties could and would dissent. There is adequate expert opinion available on different sides of the energy issue to confuse most energy users. And with the powerful interests that are involved in the energy debate, the conflicting opinions will be broadcast: if government does not discredit itself, others will. It is safe to assume that individuals and organizations will continue to receive conflicting information on how to get their energy services most economically. Energy

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SOME BARRIERS TO ENERGY EFFICIENCY 45 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, users will have to cope with this situation by choosing one of the conflicting sources; by using political pressure to obtain information they can trust; by and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. creating institutions that will provide the information they want; by rejecting all the expert advice and relying on nonexperts; or by doing nothing. Trust in Information Sources We have pointed out that since energy users cannot get accurate information about the ultimate comparative cost of different energy options, they will rely on the most credible available information. In fact, there is a large body of well- controlled experimental literature showing that the effectiveness of a given message depends on the credibility of the source of the message (Hovland, Janis, and Kelley, 1953; McGuire, 1969, 1983). Credibility involves a combination of expertise in the content of the message and trustworthiness. Other things being equal, the greater the expertise and trustworthiness of the communicator, the greater the impact on the audience. A given message, when attributed to a person of high credibility, produces greater attitude change in the target audience than the identical message when attributed to a person who is generally regarded as either inexpert or untrustworthy (Hovland and Weiss, 1951; Aronson and Golden, 1962; Aronson, Turner, and Carlsmith, 1963). Many of the sources offering energy information to households are considered by the public to be expert, so in this sense, they are equally likely to be effective. When the experts disagree, however, users are most likely to rely on the sources they trust. Trust in sources of energy information does seem to make a difference. There is some anecdotal evidence on the trust issue drawn from the experiences of community-based programs that offer energy conservation services for households. In low-income communities, both in cities and rural areas, grass-roots energy groups have gained the trust of residents because of their personal contact with the community, where more formal institutions might well have been ignored (Stern et al., 1981). But more convincing evidence comes from experimental research. In one study that has experimentally investigated the source of energy information, Craig and McCann (1978) sent a pamphlet describing how to save energy in home air conditioning to 1,000 households in metropolitan New York. Half the households received the information in a mailing from the local electric utility, the other half in a mailing from the state regulatory agency for utilities. The following month, households that had received pamphlets from the regulatory agency used about 8 percent less electricity than households that had received the identical pamphlets from the local electric utility company. Since air conditioning accounts for only part of each household’s use of electricity, the 8 percent savings is clearly an under

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SOME BARRIERS TO ENERGY EFFICIENCY 46 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, estimate of the effect of the information source on behavior. And since utilities are often perceived as particularly untrustworthy (see, e.g., Brunner and Vivian, and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. 1979; Milstein, 1978), the trustworthiness factor has potential policy implications for energy information programs. Craig and McCann’s (1978) findings also suggest that some organizations may be unable to influence some consumers, no matter how expert they are and no matter how accurate their information. This finding should not be taken to suggest that all utilities will always be ineffective in delivering information; trust in utilities varies from region to region. But it is a warning against placing too much reliance on expert information alone. People respond not only to information, but also to their perceptions and evaluations of the source of the information. Are there any generally trustworthy sources of information? Levels of trust in sources of energy information are not uniform. Different subgroups have been affected differently by their experiences with particular institutions. Some homeowners have well-founded impressions of building contractors, for example, and people on welfare have some basis for judging how much to trust an energy program administered by the local welfare agency. Consumers’ experiences with conflicting information about energy and with receiving irrelevant information, such as detailed information on home insulation that is offered to apartment renters, also affect the willingness of different groups to trust information from particular sources. For these reasons it is a mistake to believe that some agency or organization can be found that could, given good information, effectively inform the public. THE SYMBOLIC MEANINGS OF ENERGY USE Public debate on energy issues is couched in symbolic language: “the moral equivalent of war,” “freezing in the dark,” “energy independence,” and so forth. Much of this symbolic debate seems to associate energy with control, power, and freedom. In the traditional view, these values are associated with ever-increasing energy supplies and consumption: energy confers goods and services, upward social mobility, and “the good life”. Shortages of energy are seen to portend national weakness, economic stagnation, and an end to “the good life.” The rhetoric of energy independence was used to argue for energy production, and the “moral equivalent of war” was a national mobilization of capital to produce energy and of consumers to sacrifice for a common good. Rhetoric about getting government “off the backs” of individuals and private enterprise suggests that industry, freed of certain regulations and tax burdens, will produce more energy and that more energy will mean national strength and individual prosperity.

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SOME BARRIERS TO ENERGY EFFICIENCY 47 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, There is another view of the relationship between energy use, freedom, and control. In this view, large-scale energy development does not enhance personal and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. or familial control; rather, it shifts control from individuals, families, and neighborhoods to large-scale corporate organizations and to state, federal, and foreign governments. Efficiency in energy use and the development of locally available renewable energy sources are seen as essential to retain or regain control. Shortages of supply are the proof that energy means vulnerability and dependence; “freedom” is freedom from control by distant suppliers of fuel and electricity. The rhetoric of self-help and local self-reliance has been used to motivate local energy conservation efforts in cities such as Fitchburg, Massachusetts and St. Paul, Minnesota. It also figures prominently in the title of a recent study that argues for the value of energy efficiency: Our Energy: Regaining Control (Ross and Williams, 1981). Freedom and control are powerful psychological symbols. Accordingly, the battle over symbols—the association of control and freedom with energy use or with energy saving—is almost certain to have tangible implications for the behavior of individual energy users and for the public acceptability of alternative energy policies. Experimental research in laboratory and field settings has shown that when external demands or regulations put pressure on people against making a particular choice, people resist this threat to their freedom—by increasing their preference for other options (Brehm and Brehm, 1981; Mazis, 1975) and even by increasing the behavior the pressure was intended to prevent (Reich and Robertson, 1979). So, all other things being equal, it is predictable that public response will be negative when a program to modify energy use is seen as a threat to freedom. The loud public outcry when President Carter proposed to raise gasoline taxes if the nation failed to meet conservation targets was one good example of the results of threats. By contrast, the public readily accepted a five- cents-a-gallon gasoline tax proposed in 1982, when the tax was not presented as a punishment for failing to conserve energy but as a necessity. Another example was the 1975 army experiment with a device that created physical resistance when drivers tried to accelerate cars or trucks too rapidly. The device was soundly rejected by drivers, and in about 10 percent of the cases the drivers simply disconnected the gadget (Thomas, Petter, Spurway, and Etzler, 1975). Possibly as a result, there was no net energy saving, and the device was quickly abandoned. There is also the positive side of freedom and control. Just as forced restrictions tend to cause “psychological reactance,” allowing people to make choices—even in simple situations—can have quite powerful effects on their well-being (e.g., Langer and Rodin, 1976; Rodin and Langer, 1977). Researchers at the Center for Energy and Environmental Studies at Princeton University have applied this principle to energy conservation (Becker, Seligman, and Darley, 1979). The researchers were studying peo

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SOME BARRIERS TO ENERGY EFFICIENCY 48 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, ple’s resistance to installing automatic day-night thermostats. Reasoning that the resistance was due to people’s not having enough control over the temperature and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. settings, the researchers had the thermostat redesigned so that residents could temporarily override the system. That simple modification made the automatic thermostats much more attractive to users: it gave residents control by enabling them to adjust the system whenever they deemed it essential. Such evidence suggests that public response to new energy policies and technologies may be greatly influenced by the way innovation is related to freedom and choice. The symbolic meaning of energy innovations depends partly on the intent of policy makers, but it also depends on the state of the energy system at the time a new technology or policy appears. On one hand, conservation measures that occur in response to shortages and within tight timetables are likely to be seen as coercive. They underscore the linkage of conservation with loss of control and are likely to meet with resistance. On the other hand, conservation in response to the relatively slow pressure of rising prices may lead most consumers to associate conservation with increased control.6 Policies that facilitate conservation through efficiency improvements can be expected to reinforce the linkage of conservation and control, while policies that make it more difficult to get money to invest in energy efficiency are likely to lead to an association of conservation with dependence and loss of freedom. Thus, the symbolic meaning of energy consumption and conservation affects public reactions to energy policy—and policy, in turn, has some influence over what the symbolic meanings are. LIMITED CHOICE Most of this discussion implicitly assumes that consumers are basically free to choose among actions that imply different amounts of energy use. However, as many writers on the subject have noted (e.g., Schipper, 1976), consumers’ choices are limited in several important ways. We alluded to some of these limitations in the discussion of energy invisibility; here, we briefly describe some of the commonly recognized limitations. The Roles of Intermediaries It is well known that consumer choice about energy use is limited in many ways by the various actors that we refer to as intermediaries (see Chapter 5). Intermediaries are individuals or organizations that effectively make choices for energy users but whose interests may not coincide with those of the people or organizations that pay for energy. Intermediaries limit choice when they foreclose options. Some intermediaries make actual purchases for the ultimate consumers, as when builders or building owners

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SOME BARRIERS TO ENERGY EFFICIENCY 49 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, select heating and cooling equipment and built-in appliances for new homes or rental units. Other intermediaries limit choice indirectly. Owners of existing and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. rental buildings, for example, make it difficult for occupants who pay for heat to lower their heating bills because the occupants are unlikely to make investments to improve the operating efficiency of someone else’s property. Household energy use is also constrained by the past actions of local governments, which decide what transit services to provide and where to allow stores and work places to be built. Standard-setting organizations affect energy use by others when they set requirements for manufacturing products such as heaters, and for constructing buildings. Manufacturers of Consumer Products Energy users have limited control over the assortment of energy-using products from which they can choose. While lack of consumer interest can guarantee the failure of a product, consumer interest cannot guarantee that a new product will be manufactured. The producers have the initiative, and producers do not necessarily profit by marketing energy-saving products. In the home appliance market, for example, highly energy-efficient products are usually more costly to produce because of the extra materials needed to provide insulation and to make more energy-efficient motors. Some people would purchase such appliances despite the added initial cost. But without expensive advertising to educate energy users, a manufacturer who chooses to produce an efficient appliance might well lose the market to the manufacturer of an inefficient machine with a lower price tag.7 Because consumer preferences for energy efficiency cannot reliably be expected to induce manufacturers to produce efficient equipment, government programs have recently required energy efficiency labels to be attached to major household appliances. The rationale for this approach is that a mandated program to educate purchasers about the lifetime costs of owning and operating appliances will make consumer preferences more effective in the market. But even with some knowledge about the energy cost of a product, consumer preferences for efficient equipment are not easily translated into the manufacture of such products. Producers may seek less expensive alternatives to filling consumer desires. In 1979, when motorists became concerned about gasoline shortages and began to demand more fuel-efficient vehicles, one response by U.S. manufacturers was to advertise large cars by emphasizing their ability to get many miles per tankful; of course, these ads downplayed the size of the tank. Another response was to hold down the prices of large models so that advertising could truthfully show that even though a large car costs more to run, it is noticeably cheaper over its useful life than some small, more fuel-efficient, but higher-priced models.

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SOME BARRIERS TO ENERGY EFFICIENCY 50 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, Congress recognized the importance of automobile manufacturers’ influence on energy use when it established fuel economy standards for the industry. At and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. least one prominent study (Hirst, 1976) concluded that this was the single most effective available policy for conserving energy in the transportation sector. It took this government pressure of legislated standards combined with regulations requiring the posting of fuel economy data on new cars, fierce foreign competition, and intense and persistent consumer nonresponse to available U.S. models to prod the U.S. auto industry to produce fuel-efficient models. Long-Lived Capital Stock Housing is the best example of long-lived capital stock. Buildings last a long time, and it is often difficult to reinsulate them or to adapt their heating systems for different fuels. It is very costly, for example, to convert from electric resistance heating to more energy-efficient heating systems. Similarly, natural gas is available only where there are lines for it, so conversion from oil to gas is not always possible. The choices available to prospective purchasers and renters in a housing market are limited by the stock of existing housing; with high mortgage rates and construction costs, there is less building and the stock is replaced more slowly. A shortage of new buildings further limits consumers’ ability to choose energy-efficient housing. The Needs of Changing Households Some demographic shifts affect both the patterns and the magnitude of energy use. With fewer persons in each household—the trend in the 1970s—per capita energy use generally rises even though smaller households may occupy smaller dwelling units. This is because certain energy expenditures are fixed regardless of household size (Abrahamse and Morrison, 1981). The increasing prevalence of dual-earner families has also changed energy demand. Wives and husbands may need to be in different places at the same time, prompting frequent trips by automobile (Abrahamse and Morrison, 1981). Also, because of the premium they place on their time, two-earner families may be more inclined than their one- earner counterparts to substitute energy for labor in housework through such labor-saving devices as dishwashers. The present trends have increased the need for housing units, automobiles, and appliances, as well as the demand for transportation during rush hours. These trends not only increase energy consumption, they also carry considerable inertia, since work patterns, living arrangements, and commuting patterns are highly resistant to change. Other demographic trends may decrease energy use, however, at least as compared with past rates of growth. Many major household appliances have nearly saturated the market, and the increasing number of

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SOME BARRIERS TO ENERGY EFFICIENCY 51 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, elderly people in the population should bring decreased per capita energy demand, at least for transportation (Zimmerman, 1980). and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. Limited Access to Capital for Energy-Efficient Equipment Usually, the most effective means of saving energy for residential consumers involve capital investments, while saving energy without using capital tends to involve the loss of amenities (Stern and Gardner, 1981). This is also likely to be true in the commercial and industrial sectors. As a result, users who wish to limit energy use must often choose between using capital and sacrificing comfort, mobility, or other values. Consumers who cannot afford to invest are forced to sacrifice. The fact of limited access to capital has severe implications for low-income households because their economic need to improve energy efficiency is so great. Partly because these households tend to be in old and energy-inefficient housing, the proportion of household income they spend for energy is relatively high. One study found that people in the lowest 10 percent of the income distribution spent 30 percent of their income on energy for home and for transportation, while the median household spent only about 9 percent (Joint Economic Committee, 1977). More recent data show that the poorest households spend about 25 percent of their income on energy for home use, excluding transportation, while the richest households spend only about 2 percent (Energy Information Administration, 1982). Another study found that low-income households spend at least three-and-a-half times as great a proportion of their incomes on heating fuel as the average household (calculations from Community Services Administration, 1980), and the disparity is increasing. Between 1978 and 1980, home energy expenditures for the lowest-income households increased 48 percent; they increased only 17 percent for the highest-income households (Energy Information Administration, 1982). This economic pressure provides motivation while limiting the capital available for taking appropriate action. The ability to make capital investments, either from saved or borrowed funds, is not only limited by income and assets, but is also affected by the policies of governments and lending institutions. Federal energy credits have lowered the eventual cost of energy-efficient equipment to homeowners and businesses, although not to the owners of rental housing. Tax credits, however, do nothing to make capital more readily available, nor do they provide a significant benefit to low-income households (Ferrey, 1981). Some utilities have sponsored low-interest and interest-free loan programs for energy efficiency, and these have had some limited success in getting capital to homeowners. One likely implication of a scarcity of capital for energy efficiency is that different groups of energy users will respond differently to increasing

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SOME BARRIERS TO ENERGY EFFICIENCY 52 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, energy prices. The more affluent are more able to make needed investments with little sacrifice of the services that energy provides. The less affluent have more and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. limited options available, and so often respond with curtailments. Thus, a recent report (Oskamp, 1981) found that large chemical companies tended to invest in energy-efficient operations earlier than smaller companies, and another report the same year (Mills, 1981) found that large retail chains took more energy-saving actions than smaller chains. Another example of segmentation is the fact that in the Northeast, homeowners have saved more energy by efficiency improvements than renters. (Stern, Black, and Elworth, 1982a). Both groups have curtailed energy use about equally by lowering indoor temperatures. But because homeowners have been able to save more overall, they have less often been compelled to fall behind in paying energy bills, to take extra jobs, or to make other economic sacrifices to pay energy costs. These experiences may be shifting the symbolic meaning of energy conservation in different directions for different groups and may also leave some groups with limited ability to respond to shortages of needed fuels.8 Thus, the affluent may have greater ability to adapt in an emergency, in the sense that their past sacrifices have not been as severe. Summary Several important properties of the energy environment keep energy users from making the decisions their economic self-interest would dictate, even if they want to make self-interested decisions and even if accurate information is available. Energy users often do not know what responses are effective in their situations because energy and energy savings are invisible to them. Experience gives people good reason to distrust energy information, and they are likely to distrust the useful information as well as the misleading. People sometimes respond to the symbolic significance of energy, which is separate from its economic meaning. Finally, many of the important decisions about energy use have already been made by intermediaries, preempted by past decisions, dictated by demographic factors, or determined by limited access to necessary capital. Some of these properties of the energy system can be changed, and we offer some suggestions in the next two chapters. We also discuss energy users themselves, to provide further grounding for policy in an understanding of the human dimension of energy use. Notes 1. Investments are considered economically justified when they provide the services energy is used for at the lowest possible cost to the users. This is only one of several possible criteria for an ideal

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SOME BARRIERS TO ENERGY EFFICIENCY 53 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, level of energy demand—one that derives from a view of energy as a commodity and a criterion of economic efficiency for the allocation of commodities. Criteria based on other views of energy would imply other ideal levels of energy use. For example, a concern with energy resources might lead to a and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. desire to drastically curtail demand for nonrenewable energy sources, which account for over 90 percent of current energy demand, and a willingness to pay more for energy services to achieve that. Concern with national security might lead to a desire to decrease the demand for imported energy and a willingness to pay more for domestic energy—a national security premium. And concern with energy as a necessity could lead to a desire for an increased ideal level of demand if some consumers are believed to be deprived of energy services. 2. The relative overestimation of the importance of events that come frequently into awareness is an example of a well-documented general phenomenon in cognitive psychology (Tversky and Kahneman, 1974). 3. Of 443 written comments received on the very long and detailed regulations proposed in 1979 for the RCS, 159 discussed a single definition—that of “furnace efficiency modification.” These comments reflected a conflict between electric and gas utilities. Many of the former argued that heat pumps should be considered as energy-efficient replacements for all types of furnaces; many of the latter argued that heat pumps should be considered as conservation improvements only when replacing electric resistance heating. The Department of Energy simply passed this controversy on to the states. Arguing that energy savings from fuel switching can vary greatly with climate, the department decided not to require energy auditors to consider fuel switching, but to allow states to institute such a requirement. (Federal Register, November 7, 1979, 44:64604). 4. The RCS had been a major target of pressure for regulatory relief, and its regulations were high on the list of those set for review by Vice-President Bush’s Regulatory Relief Task Force in 1981 (see, e.g., Hershey, 1981; Berry, 1981). The result of the pressure for deregulation was a policy of eliminating all features of RCS that had not been specifically enacted into law by Congress (Fed eral Register, November 12, 1981). 5. The technical issues involved in comparing the energy use per passenger-mile of automobiles and passenger trains are rather complex, with the outcomes of the comparison dependent on a variety of assumptions about the technologies and the ways they

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SOME BARRIERS TO ENERGY EFFICIENCY 54 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, are used by passengers. However, during the Carter Administration, the conclusion that rail transportation is more energy efficient was accepted as fact. It was supported by a number of careful studies, and it was the conclusion of the Transportation Energy Conservation Data Book (Kulp, and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. Shonka, Collins, Murphy, and Reed, 1980), published with the support of that administration. Nevertheless, when the Reagan Administration presented its first budget proposals for Amtrak, Transportation Secretary Drew Lewis referred to the energy efficiency of passenger trains as a “myth.” (New York Times, March 11, 1981). 6. However, this reaction will not be universal. For low-income households and poorly supported public services, even a slow increase in energy prices will be experienced as a forced choice between sacrificing the services energy offers and sacrificing other essentials. The less painful options of cutting back excess or wasteful use and investing in energy efficiency are not available. This situation is already evident in the rapid rise in the last few years in the proportion of income that low-income households spend on energy (Energy Information Administration, 1982). 7. Unlike energy-efficient appliances, however, energy-efficient automobiles tend to cost less to produce because energy efficiency is gained primarily by decreasing the weight of the automobile, and, therefore, the cost of materials. Producers of such automobiles tend to gain a market advantage through lower price. 8. The notion of limited ability to respond to shortages rests on two assumptions: first, that curtailment is the most effective quick response in an emergency; and second, that there are limits to curtailment—such as the human physiological response to cold.