Energy Conservation: Successes and Failures

Energy Conservation: Successes and Failures

Energy Conservation: Successes and Failures

Energy Conservation: Successes and Failures

Excerpt

JOHN C. SAWHILL andRICHARD COTTON

The 1973 Arab oil embargo stimulated a wide-ranging response on the part of public officials. Policies were developed to curb the growth of energy demand, increase the domestic oil supply, and substitute alternative domestic fuels for imported oil. Now--more than a decade later-- it is apparent that some of these policies were very effective, while others were either counterproductive or had minimal effects. Yet the current oil glut suggests that on balance the country achieved its objectives of reducing oil imports, strengthening national security, and mitigating the effects of rising oil prices on the economy. Indeed, energy demand growth has slowed and energy consumption is now a significantly lower portion of GNP than it was in the early 1970s; the decline in oil production has been halted; the United States has diversified its sources of foreign oil supplies; and alternative fuels--primarily natural gas and coal--have been substituted for oil in a variety of boiler fuel uses.

We embarked on this project to gain a better understanding of the effectiveness of energy policy and to draw from this experience lessons for the future. We looked at the policies that had been aimed at curbing demand and asked what happened, what worked, what failed, and why? We were particularly interested in understanding the role that institutions such as public utilities, large energy-consuming corporations, governments, and financial intermediaries played in the adjustment process. To what extent did they impede or accelerate the efficient use of energy? What actions could policymakers have taken to help these institutions function more effectively?

Specifically, our objectives were to: (1) analyze and assess trends in energy use in the United States (and to a lesser extent abroad) over the decade from 1973 to 1983; (2) identify institutional barriers that impeded basic market forces from working to stimulate the more efficient use of energy; (3) identify steps that might be taken to remove these barriers; and (4) determine whether there are additional practical and realistic . . .

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