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Energy Use: The Human Dimension
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 1973–1974. 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-