OPINION BY MATTHEW R. SIMMONS AND STEWART UDALL
Guest column: Time to discard fifty years of energy myths
Tucson, Arizona | Published: 11.20.2005
This summer's hurricanes have triggered the most serious energy emergency in the nation's history. With gasoline, natural gas and heating oil at near-record highs, many families face the chilly prospect of much higher energy bills in the future. The entire economy is at risk, but airlines, tourism, farmers, small business, seniors and the poor are particularly threatened.
Katrina and Rita ravaged the Gulf of Mexico's petroleum infrastructure, but a larger, more daunting crisis was already on the horizon.
To craft an intelligent response, we must begin by discarding 50 years of energy myths. Because our continent had huge reserves of oil, coal and natural gas, Americans have nurtured a set of energy illusions that have now come home, in biblical fashion, to haunt us.
The most dangerous myth is that cheap energy is our birthright, that the well would never run dry.
This illusion was born in the early 1950s, when U.S. oil fields provided two-thirds of the planet's petroleum. Oil was so abundant that domestic producers were required to curtail production to prevent a price collapse. For lack of a market, large plumes of natural gas, now our most precious heating fuel, were flared into the sky.
And atomic energy, the new kid on the block, promised an infinite supply of almost-free electricity. In this euphoric moment, our nation began to fashion a new way of living unlike anything ever seen on the planet.
For a half century, we designed skyscrapers, autos, cities and houses on the assumption that energy would remain inexpensive. In the '50s, we invented the suburb, the shopping center and the Interstate Highway System. In the '60s we bought Mustangs. In the '70s we visited the moon, and in the '80s we built the world's most powerful military. Between 1950 and 2005, the country's population doubled and the economy grew sixfold.
Although advanced technology, superb engineering and Yankee ingenuity played vital roles, it was cheap energy that invented U.S. prosperity. Even at today's prices, a dime buys enough electricity to lift a pickup truck 500 feet in the air. A gallon of gasoline contains as much energy as that expended riding a bicycle across the United States or hiking 300 miles across Arizona.
Because energy was affordable and abundant, we learned to consume enormous quantities. In recent decades our "burn rate" has been the equivalent of 100 pounds of coal per person-day. Americans now consume their body weight in petroleum products each week.
Energy may be a sliver of gross domestic product - but try running the rest of the economy without it. Energy, not money, is the original currency, the source of all wealth. We share this view even though we come from vastly different backgrounds.
Stewart Udall was elected to Congress more than 50 years ago, and served as secretary of the Interior during a vast expansion of the nation's wilderness areas. For the last 35 years, Matt Simmons has been one of the world's leading energy investment bankers, while writing widely on energy trends. One of us is a Democrat, one a Republican, but both of us believe that the nation can no longer afford fanciful, indulgent, "Alice in Wonderland" energy policies that place our economic prosperity and national security at risk.
The coming months will pose an enormous challenge, with the highest heating bills in U.S. history and the prospect of natural gas rationing. It is a time for bold, courageous leadership, but to date the political response can be summarized as "pray for a mild winter." Although the near-term challenges are dwarfed by those of the coming decade, our leaders continue sleepwalking.
Katrina showed us what happens when you unplug modern energy: Civilization unravels. Because energy is the prerequisite for economic prosperity, social stability and environmental well-being, we must discard the dangerous myths of the past and embrace the momentous challenges of the future.
Here are the key facts:
? U.S. oil production peaked 35 years ago and no amount of drilling can turn back the clock.
? Depletion rates in natural gas wells have reached alarming levels.
? The nation's energy workforce and infrastructure are aging.
? No new refineries have been built in 30 years.
? Our population is increasing by 30 million each decade.
? Chinese oil demand is surging.
? Finally, the cornucopian assumption that the Middle East holds unlimited amounts of oil is false. Approximately three dozen aging fields produce most of that region's supply. The thesis that the Saudis could open the tap as wide as necessary is appealing but fictitious. As a result, world oil production is likely to peak within the next decade, if not sooner.
In short, the era of cheap energy is over. Where to from here?
More drilling? Of course we will need to do more drilling, if only to stay where we are. But research shows that more than half the energy used in this country is lost in inefficient power plants, buildings and cars.
Efficiency must be the rallying call. Conservation is, well, conservative, the single most patriotic thing we can do. Longer term, we've got to acquire more accurate information about the true state of the world's aging oil fields, reorganize our work patterns, modernize our shipping and transportation systems, refurbish our aging energy infrastructure, weatherize tens of millions of buildings, and exponentially expand the production of domestic biofuels, wind and solar power, while replacing 225 million automobiles and light trucks with far more efficient vehicles. This scope of work is not optional: It is an urgent matter of national preservation.
If we ignore the current crisis or misread its message, the world as we know it is likely to become a far darker place for our children.
Stewart Udall, a former Arizona congressman, served as secretary of Interior in the Kennedy and Johnson administrations. Matthew R. Simmons is chairman of Simmons & Co. International, an energy investment banking firm. His recent book, "Twilight in the Desert," is an investigation of Saudi Arabia's oil industry.
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