THE BOTTOM OF IT ALL...

OUR ECONOMY IS BASED ON....

ENERGY

That's right...everything takes energy. Suppose you thought that you could become rich if you discovered gold. With amazing luck, stepping out into your back garden one day, you stub your toe on a huge nugget, previously dismissed as just another large stone. Does this make you rich? Not immediately...you must somehow transport it to someone who will give you money for your find. This is the least amount of energy you would need to exert to transform your nugget into wealth. Were all you needed to do was carry the nugget to a gold buyer, just doing so would invoke an intricate meshing of economic pathways to find energy (through eating). If the nugget were too heavy to carry, you would need to load it into a pick-up thereby using much more energy.

So it is with every resource transformed and traded. Nothing can happen without energy. Iron was once made by smelting ore using the heat of burning timber (a form of stored solar energy). Later charcoal (cooked wood, just another form of stored solar energy) was found to be more effective. At that time, coal was a despised fuel only used by some poor folks. When the forests were almost gone, we turned to coke ( a form of coal , stored solar energy). Once steam power was widely established, coal became the star fuel and remained so until the 1950s. From then, cheap oil replaced coal on many fronts. Coal remained king in power stations.

The association between energy used and the size of the economy is plain enough. If you want to get up to pace on energy, a great place to start is Robert Bryce's recent book (Gusher of Lies, The Dangerous Delusions of Energy Independence).

Over the past century the US Gross National Product (GDP) has grown 300 times and so has the amount of oil imported. Almost as spectacular is the 200 fold increase in the number of motor vehicles over the same period. The increase in GDP has been steady since 1950 and is exactly paralleled by the rising consumption of oil, increasing amounts of which have been imported since then. Transport accounts for almost all the oil consumption.

From this one might infer that, however the complex economic machine works, transport has played a critical role. Transport has ever been the basis of trade and trade is what generates wealth. As the structure of cities has evolved over the last 60 years to make automobiles basic to personal transport and access to employment, much oil is consumed in motor cars.

In the US and other developed countries, wealth has enabled us to live in large houses requiring air conditioning, filled with all sorts of electronic gadgets all of which require increasing amounts of energy. We have become car junkies, gadget junkies, and at bottom energy junkies. The average American uses 19 times more than the average energy use per person in the rest of the world. And we are using more and more each year.

Today, just over half of the energy the US consumes comes from non-renewable fossil fuels (oil, coal, and natural gas). The rest comes from nuclear and hydro-electric sources, with a very small amount coming from sources such as geothermal, solar arrays and wind farms. One can convert all the energy produced, from whatever source, into barrel of oil equivalents. In an article in Wall Street Journal, Robert Bryce has done this for us and shown that wind and solar currently contribute about 1% of all energy used in the US. The amount of energy from hydro-electric and nuclear is at a plateau and likely to continue so for decades to come and may even decrease due to problems such as silting of dams and disposal of radio-active wastes.

Unless the role of alternate energy sources grows enormously and quickly, reducing the contribution of fossil fuels would have a distressing impact on the economy. We can produce energy more efficiently (most goes off as heat), reduce the amount used (less air conditioning and more energy efficient appliances, turn off gadgets that use standby modes), reduce miles traveled in cars (that are more economical); these are are obvious ways to preserve wealth within a tightened energy budget. Beyond that lies the not-much-traveled land of alternate energy. This is the green collar economy of which Van Jones writes ("The Green Collar Economy; How one solution can fix our two biggest problems", Van Jones, Harper Collins, New York, 2008).

When you come right down to it, if somehow the 60% of oil consumed that we import suddenly slowed, the complex process we call the economy would quickly stall. Realistically, it will take decades of highly focused effort and immense expenditures before alternate energy sources catch up, if ever they can. In the meantime, we have little choice but to go on burning hydrocarbons, including oil from the Middle East where, long ago, most of it was laid down. Fortunately, the most efficient fuel, natural gas, is very abundant and to it we must increasingly turn.

In the realm of energy, it is easy to get apples and oranges mixed up. For the next decade, the only way to reduce oil imports is to use the cars we have now less. Probably 'the market' will take care of this for us. As oil demand the world over (especially in India and China) increases, the price of fuel will once again escalate and we will drive less and more frugally.

Every cloud has a silver lining, so the saying goes...the hard recession we are experiencing (not to mention the effect of impending serious drought) will slow energy consumption, giving a breathing space for new, necessary infrastructure to be built and the existing, precarious infrastructure to be repaired.