What book would you recommend to our readers to help better understand the current world energy situation?
World Energy Outlook is an amazingly detailed report that is put out by the International Energy Agency division of the Organization for Economic Cooperation and Development (OECD).
Gusher of Lies is another great book that attempts to separate the rhetoric from the reason in the energy debate. It does not make any sense to put out the idea that alternative sources of energy (wind, solar, biomass etc.) are on the doorstep. They are not. We all have great hope for the alternatives, but nobody out there who is seriously looking at energy supply is predicting that alternatives will become a major source of energy before the year 2030. We need to keep studying and pushing hard for solutions, but it is going to take time.
Are conservation and efficiency enough to solve our problems?
No. There is just too much growth nationally and internationally for us to think that we can conserve our way out of this issue. It’s one critical side of the equation, and the government will continue to play a key role by legislating stricter standards on miles per gallon (MPG) for automobiles and better efficiency requirements for new appliances.
If the price of gas stays at $3 a gallon and above, it will certainly cause people to change their behavior when it comes to energy and force them to conserve.
What are some key factors driving the increase in demand for energy in the US?
There are so many things to mention, but here are a few of the interesting trends we have seen.
We live in larger houses that need more energy.
Appliances are more efficient, but we own way more of them. On average, each of us owns 25 separate devices that need to be recharged each night.
In any major metropolitan area, whether it’s Shanghai, Chicago, Manhattan or Columbia, SC, only 10% of the jobs are located in the downtown core. That means that 90% of the jobs are located in the suburbs, and that means that people need cars to get to work. The University of California did a study on the link between car ownership and the unemployment rate. If you want to reduce the unemployment rate, and thereby the poverty rate, people need cars. It’s very, very difficult to get the density of population needed to run a viable bus system in the suburbs.
What role do global demographic trends play in the global demand for energy?
In my opinion, the biggest factor that is driving energy demand worldwide is rising aspirations. Every country wants to get richer and they simply need more energy to do so. Population growth is a key part of that, but when you think of it, China is actually not growing that fast when it comes to population growth on a percentage basis. For years, they have implemented a one child policy. Yet, their demand for energy is increasing dramatically. China’s primary energy demand is projected to more than double between 2005 and 2030 – an average annual rate of growth of 3.2%.
The United States is growing faster than China! Not a lot of people know that and it is what really sets us apart from the rest of the developed world. Only Canada, New Zealand and Australia will experience similar population growth rates, and much of that has to do with immigration. Japan is actually predicted to shrink over the next 25 years.
Here is another factor in the worldwide demand for energy: urbanization. In order to improve their standard of living, we are witnessing a major movement of people from the rural areas to the cities.
With the upcoming election, what advice would you give to the next President on US energy policy?
The problem in the minds of the experts is not so much the lack of potential supply, it’s the restrictions on the supply. The advice I would give the next President is that we need to do everything that we can to increase the supply of energy.
Mr. Cox is currently working with the American Petroleum Institute (API) on energy demand trends. The opinions expressed here are his own and not those of API.