National Commentary

A Gathering in Louisville

Every year the National Conference of State Legislators (NCSL) holds a conference where legislators from all over the U.S. gather for updates on major policy concerns. This year the organization found that issues surrounding the future of nation’s energy supply were becoming of such paramount importance to state governments that it set up a task force to study the issues; produced a report on meeting the energy challenges; and devoted a whole day prior to the annual meeting to an “Energy Policy Summit.”

America’s 50 state governments represent a wide spread of interests and concerns. Some such as Alaska and Louisiana are deeply involved in some aspects of oil production. Others such as West Virginia, Illinois, and Wyoming are large producers of coal. Still others are home to the increasingly controversial shale gas production. The mid-west is fertile ground for wind farms, the southwest – solar collectors.

Some states have large numbers of citizens who are deeply concerned about the threat of global warming, believing it must be stopped at any cost. In others, the majority of the people seem to be more concerned about their economic well-being, convinced that global warming is a fantasy.

Sorting a pathway through this thicket of special interests and concerns to reach a consensus for action is not an easy task. The common ground, however, that is shared by all is electricity. All states generate, distribute, use and regulate it. They are all connected to neighboring states through power pools. Emissions they produce may become a regional problem. Much of America’s electrical production and distribution infrastructure is aging and is due for replacement. The most cost-effective way of producing electricity is becoming murky. Nuclear plants are becoming incredibly expensive as are the cleaner ways to burn coal and control emissions. The best wind and solar resources are not where most consumers live. The litany of complexities runs on and on.

A key unstated issue was completely ignored at the Energy Policy Summit:  resource depletion.

In a general sense, the Conference did a good job in reviewing the pros and cons, costs, emissions, and geography of the various forms of electricity generation that are currently possible. The obvious conclusion is that the solution will be different in each state. To its credit, the task force studying energy latched on to energy efficiency as a source of major savings that is common to all states. The studies show that nearly 25 percent of U.S. energy demand could be met with energy efficiency by 2020, resulting in savings of over $1 trillion. While difficult to achieve, increasing efficiency is the most cost effective way to gain increased capacity.

State policy can play a pivotal role in increasing energy efficiency and reducing consumer and business costs. Such policies can include stronger energy codes, requiring utilities to meet annual energy efficiency targets, and decoupling utility profits from electricity sales. To many speakers, the latter policy is the most important because electric companies should be rewarded for how efficiently whatever source is used to generate electricity and not how much is sold.  What the conference’s task force, report and speakers presented and considered was well done and provided useful information and insights. However, a key unstated issue was completely ignored: resource depletion.

The Energy Summit started with a briefing from EIA on their current reference case – the one that foresees no shortages and cheap energy prices for the next 25 years. While the EIA does see current sources of oil depleting, new supplies will be discovered and produced so that when coupled with more efficient cars, oil prices will not reach $130 a barrel until 2035. Anyone not familiar with the research, discussions, and controversies over imminent shortages of natural resources would come away with the impression that all is fine.

For those of us following the peak oil story and are familiar with the possibility that readily producible supplies of coal, natural gas, and uranium may in reality be only a fraction of those cited by the NCSL study, something of overwhelming importance is missing. With world oil production on a plateau for the last five years and no obvious source of large quantities of new production in sight; with rapidly increasing oil consumption in Asia and domestic consumption growing within the oil exporting nations; and with increasing problems that may limit and inhibit deep water production, it is difficult to see how any serious study of future energy policy can avoid the probability, not just the possibility, of imminent energy shortages.

Expecting that the NCSL would take on an upheaval of the magnitude that will be caused by resource depletion is asking too much. The NCSL is a political body made up of elected officials that represent every stripe of America’s body politic today.  They seek to compromise by recognizing that their members represent the entire spectrum of electable political thought in the US and must be accommodated.

Did the NCSL task force, report, and policy summit say the right things? Of course! Maintaining adequate and affordable electricity supplies will be an important function of state government in coming years no matter what the pace of resource depletion or climate change. Is energy efficiency the quickest and most cost effective way to start protecting and enhancing our electricity supplies? Again the answer is a whole-hearted yes.

For the NCSL to sound the alarm about the imminence of economy-destroying oil price spikes without unambiguous evidence that is clear to everyone would set off a storm of controversy in advance of its time. Such controversy would detract from efforts to get important policies into place.  Apparently they believe it is better to let peak oil come of its own accord and in its own time – which will be soon enough.


Tom Whipple is a retired government analyst and has been following the peak oil issue for several years.