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Energy Trends

Current Energy Use

A major transition in the modern energy age began in the 1970s, when the OPEC nations realized their power over the economies of the industrialized world. Overnight, oil prices shot through the roof, and the trend of ever-cheaper, ever-more-plentiful energy supplies seemed to come to an abrupt end.

But in the mid-1980s, the price of oil collapsed, as new suppliers reduced the market share of OPEC, and OPEC unity crumbled. Despite a slight price spike during the Persian Gulf War, oil prices are lower now than they have ever been. Gasoline, adjusted for inflation, now costs half what it did in 1980. While oil prices are low, the United States remains vulnerable to price and supply disruptions as the amount of oil imported to the United States has exceeded the amount produced domestically since 1995.

Another player on the modern energy stage is nuclear power. An industry that didn't exist 40 years ago is now at its peak of production, producing 20 percent of the nation's electricity. Ironically, though, the industry is fading out. New orders ceased 20 years ago, and as aging plants reach the end of their lives, they are closing, one by one.

Renewable energy use also surged in the 1970s due to high fossil fuel prices and favorable government policies. Hydroelectric power is the largest renewable energy source, generating 10 percent of the nation's electricity, followed by biomass, which is burned for heat, steam, and power in industries and homes and converted to ethanol for use in vehicles. Despite declining fossil fuel prices, renewable energy use steadily climbed to 8 percent of the nation's total energy use in 1996.

Despite the contributions of nuclear and renewable energy, we are still in the fossil era. Fossil fuels -- coal, oil, and natural gas -- are America's primary source of energy, accounting for 84 percent of US fuel use in 1996. Coal dominates the production of electricity, petroleum has a near monopoly on transportation fuels, and natural gas is the most common form of winter heating fuel.

Worldwide, the story is similar, except for the substantial contribution of biomass in the developing world. Globally, fossil fuels provide 75 percent, with biomass accounting for 13 percent of all primary energy.

In the United States, energy use is divided almost evenly among three sectors: with transportation accounting for 26 percent of energy use, the industrial sector for 38 percent, and the commercial and residential sectors combined for 36 percent. Energy use in all sectors stabilized in the 1970s and early 1980s, and even declined in the industrial sector. Since 1983, energy use has steadily increased in all sectors as energy prices have declined.

At the national level, energy use is measured in "quads" or quadrillions of British thermal units (Btus). Even though energy use in the United States rose from 66 quads in 1970 to 94 quads in 1996, a 42 percent increase, the US economy grew by 104 percent. Thus, the energy intensity of the US economy, as measured in energy use per dollar of gross domestic product (GDP), fell by 30 percent, indicating that economic growth is not strictly tied to energy use. However, since 1986, US energy intensity has stabilized, as energy use and economic activity have risen at about the same rate, which is similar to the pre-1970 trend.

After reaching its peak in 1978, per capita US energy use -- another measure of energy intensity -- declined dramatically for five years due to high energy prices. However, between 1983 and 1996, per capita energy use increased steadily back to 1978 levels, as fossil fuel prices fell. Despite this increase, the decline in the rate of growth has been dramatic, from 7 percent per year in the 1960s to about 2 percent today.

Evidence from Energy Innovations: A Prosperous Path to a Clean Environment, by the Union of Concerned Scientists and four other organizations, demonstrates that the United States can get back on track and achieve substantial reductions in energy intensity. The study shows that a decrease in national energy consumption can provide steady economic growth and job creation.


The Future of Energy

Until recently, most decisions about energy use were based solely on cost and availability. Now, with carbon emissions from fossil fuels contributing to global climate change, environmental concerns are becoming increasingly important. The United States must move away from fossil fuels, but American industry and government alike are resisting action to move in this direction.

Although wind energy is the fastest-growing source of electricity in the world right now, it is still a relatively small contributor. Turbine sales in 1998 were over $2 billion worldwide, and growing at an annual rate of 25%. Nonetheless, the Utility Data Institute estimates that of 665,360 megawatts of new power capacity planned for the next 10 years, 60 percent will be from coal, gas, and oil. Energy growth in Asia will account for over half of the new capacity, while North America contributes only 10 percent.

In the United States, natural gas is increasingly being used to generate electricity. The efficiency of gas turbines has increased in recent years, and natural gas prices have declined. Since they are inexpensive and easy to site and operate, utilities worried about restructuring see them as a safe short-term option. Whether gas supplies will be sufficient to support a "rush to gas" remains to be seen. Some see gas as a bridge to an energy system that relies on hydrogen, with the hydrogen made using wind and solar plants in remote areas. Natural gas and hydrogen can be used in fuel cells, a highly efficient device that converts fuel into electricity and water, with few or no pollutants.

The Energy Information Administration in the US Department of Energy projects coal use to rise, as it remains the dominant fuel used for generating electricity. Even though most of this increase is expected to come from low-sulfur western coal, coal combustion still produces the greatest amount of greenhouse gases and other toxic emissions per unit of energy generated. New, stronger emission regulations may limit its future use, as cleaner alternatives, such as natural gas and renewable energy, capture market share in electricity generation.

The Energy Information Administration also projects petroleum use to increase one-third by 2015. This is led by steady growth in transportation energy use, as the increase in vehicle miles traveled is predicted to outpace gains in vehicle energy efficiency. During this same period, crude oil imports are expected to climb to two-thirds of the nation's total supply, with OPEC capturing 60 percent of the world oil market. In spite of this, oil prices are projected to rise by only one percent per year above inflation.

Also, there is continued interest and research into fusion power. Since fusion generates temperatures of millions of degrees, the main difficulty in developing fusion power has been in containing the heat of the reaction. Although no breakthrough is in sight, $10 billion is being spent on the International Thermonuclear Experimental Reactor.

Of all energy futures, renewable energy provides the most promising path. With the help of modest government funding of research, and many dedicated entrepreneurs, solar, biomass, wind, and geothermal energy sources have become less expensive and more reliable in the last 20 years. All have developed important niche markets in the 1980s and 1990s, and as the 21st century begins, clean and sustainable renewable energy is more important than ever.


Sources

Energy Information Administration, US Department of Energy.Annual Energy Outlook, online at www.eia.doe.gov.

Union of Concerned Scientists, et al., Energy Innovations: A Prosperous Path to a Clean Environment

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