The Good News About Energy

Here is a real inconvenient truth.

High energy prices are a good thing.

High prices create an incentive to find more and use less. They create real economic growth for people selling insulation and low-energy appliances. Not to mention new (higher mpg) cars.  Higher energy prices even reduce pollution, because another word for pollution is waste, money going out the tailpipe or up the chimney.

But there is another inconvenient truth. For high energy prices to do their real job, they have to be sustained.

What we need right now, more than anything else, is a floor price for energy. This is something the U.S. didn't do in the 1980s, so as a result we not only got right back in bed with the oil exporters, but we killed all sorts of promising technologies and alternative fuels. It's all on the chart above, which shows Texas oil industry employment in the 1970s and 1980s.

What you're looking at there is lost opportunity. An entire generation of technology, and innovation, disappeared as we got addicted (again) to cheap oil.

Here is another inconvient truth. Most energy projects are big. They take years to complete. If you're talking about new forms of industry, they take new distribution channels. For these projects to get the go-ahead, they must be assured of a market. A floor price (which rises) gives them that assurance.

To most Americans, not to mention most politicians, this is a completely unpalatable solution. The idea that we have to become accustomed to these prices, change our lifestyles to fit these prices, is repugnant to most Americans.

Tough.

It's the only way to unleash creativity and economic growth.