Business Insight Zone

The other day I was talking with a friend who’s convinced the U.S. is headed for a serious energy crunch — a point where we hit “national peak energy” — a point beyond which various sorts of societal mayhem may ensue. My pal is hardly from the scaremongering wing of the Peak Oil movement, but he sees this as a serious threat.

My take: this sort of things implies that American consumers (and energy utilities, regulators, etc.) will continue to insist on having their cake and eating it, too — or, in other words, that they will continue to drive up their energy use AND insist on cheap energy rates AND worry about (but not act upon) U.S. reliance on foreign energy sources. I may be missing a couple of AND-conditions there, but I think you take my point.

More likely, in my view: if energy prices continue to climb, then at various points along the way energy use will change for broad groups of consumers (and utilities). Our current standard operating practices that rely on cheap energy will change, tier by tier, as pricing mechanisms (or, in some cases, new regulations) kick in and make them too costly. Individuals and enterprises alike will start to view more and more once-ordinary activities — flying off to meetings at the drop of a hat, express-shipping everything, commuting an hour each way in a gas guzzler, and so on — as being too expensive anymore.

Mind you, I’m not a subscriber to the Whig theory of history, so I do think some substantial dislocation are likely. Long-haul trucking, for instance, may suffer if many enterprises switch to relatively more fuel-efficient options like railroads and barges. SUV makers may suffer. People may steer away from buying the biggest boats, pickups, ATVs, and so on. But I don’t think it’s going to be a crash.

A possible datum in my favor comes from this High Country News item:

A little could mean a lot

The Department of Energy just released a study showing that if you give people digital tools to monitor their power use, they’ll cut their electricity consumption during peak periods by 10 to 15 percent — and that modest amount eliminates the need for $120 billion worth of new power plants and transmission lines over the next 20 years. . . .

At some point, the opportunity to save that kind of money — to avoid that magnitude of cost — should lead individual and enterprise power consumers to change behaviors. It will also create winners among the makers of equipment that helps consumers monitor their energy use.

When the California electricity market blew up in 2001, many people who previously showed no particular devotion to “green” living suddenly found that they could cut their energy bills by a third or more with little effort. They used simple expedients like hanging their clothes up to dry instead of running them through the dryer. They shut off the air conditioning during the day when they were off at work, and they slept with the windows open at night.

The point is, we’re adaptable people. And we’re helped enormously in this case by the power of the free market.