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Tuesday, September 8, 2009

Recession's Green Lining: Energy Conservation!

Maybe George W. Bush really had an environmental agenda: his laissez-faire non-management of the economy led us into recession, but it also led us to real energy conservation. Factory use of natural gas is projected to drop 8.6% this year. Consumption of electricity may fall 2.6% this year, better than last year's 1.6% drop and the first back-to-back declines since 1949. Demand for all petrofuels in the U.S. dropped 7.1% last year.

(Note for Hyperion fans: the drop in gasoline consumption has driven refiner Flying J Inc. to bankruptcy and shuttered its Bakersfield refinery. That same article reports Sunoco is trying to sell a refinery in Tulsa and will shut it down if it can't find a buyer. As many of us saw last year, the market for Hyperion's "green" refinery in Elk Point is shrinking fast.)

Industrial energy usage usually tracks closely with the economic cycle, but this recession has brought an unusual drop in energy usage in the residential and commercial as well. This reduction in energy usage at the individual represents a laudable frugality, a new thriftiness that more observers think will remain the norm even after we fix this recession.

After a decade of SUV-mania, credit-card bingeing, and home-equity hijinks, we needed a good economic kick in the pants to remind us how to manage our fuel and our finances. If we can learn our lesson and leave more resources in the bank for future generations, the Bush recession may actually reflect well on its progenitor.


  1. Definitely shouldn't view this as a green lining. Decreased energy use is a sign of decline. It's not like everyone just put a bunch of insulation in their houses and became more efficient. It's a sign that people are doing less. Doing less never ends well. Historically it usually only happens after a severe war or plague.

    This is not a good thing.

  2. It makes sense that when usage declines, revenue to the utilities also declines. That might explain why the City of Madison, rather than reduce its expenses to meet lower revenue projections, are going to hit us with another 10% or more electric rate increase in January. If you buy the expensive energy-saving bulbs, shut off lights, install an energy-conserving thermostat, use less water, you're rewarded with higher utility rates each year so they can keep their revenue stream steady. We could perhaps exceed Sioux Valley Electric's rural electric rates for electricity with this increase right here in Madison, long known for its favorable electric rates. Residential and commercial rates are slowing growth and hurting economic development.

  3. Ah, but Tony, your position assumes that all consumption is good. The fact that I eat less now than I did when I was a teenager does not mean I'm less healthy. If I had to eat more every year, I would end up in bad shape.

    Isn't it possible that a decrease in energy consumption represents a decrease in waste? Even on the industrial side, how much of the decrease comes from shrinking demand for products people don't really need?

  4. CAH:

    Yes, but you have quit growing because of your genetics. Society itself can keep growing forever, it does not have any limitation.

    It's possible that a portion of the decrease in energy use could be due to reduced waste. But, I doubt that has been the prominent reason. People are simply doing without.

    Additionally, doing without has some seriously detrimental consequences. Consider our food options. If you go to the super market, the prepackaged garbage food is cheaper than the fresh and far better for you produce. As energy expenditures go down, transport costs dramatically increase the price of produce over the prepackaged junk. This causes people to buy the junk food because it's more affordable.

    This translates throughout the economy. When things get tight, people choose the option that appears more economical up front. Instead of buying a set of expensive plates that could last a lifetime, people grab the walmart special imported from china that will destroy itself in a few years.

  5. Tony,

    Are you sure that society can keep "growing forever"? I don't so! I think the world has too many people already.

    I think that humanity will, in the approaching decades, come to realize that the times of "endless growth" must end.

    If we (the human species) do not voluntarily change our thinking with respect to the "goodness of growth," I fear we will change our thinking at the point of "Gaia's dagger"!

    I believe that the world must adopt a new paradigm, stressing quality over quantity, substance over style, endurance over intensity, and cooperation over competition.

    Aw shucks. I'm starting to sound like a radical, but I agree with Cory here, and might even take his argument farther than he would. A viable "new world order" may involve "shrinking pains."

    Another inconvenient truth, is it?

  6. "Shrinking Pains" -- Stan, I think I hear a title for your next book. How would you like to take a break from textbooks and write a history of the beginning of the new era you foresee?

    Tony, I will agree that the drop in consumption we see now is in part from people doing less and buying inferior goods. Your junk food example is good. However, let's apply the same thinking to cars. Ten years ago, people were buying more big cars with extra cupholders. Now they're buying more small cars (Foci!) and scooters. Yes, that's a step down in functionality, but here the functinoality sacrificed is mostly superfluous: many drivers rarely if ever need four-wheel drive or eight cupholders. The change in vehicle buying is not a shift toward "junk food cars" but a shift away from false needs.

    The junk food vs. fresh produce example itself isn't perfect. Yes, in a tight economy, people may buy more cheap crappy food (I certainly choose the McDonald's $1 cheeseburger over organic bison... but I'm always a cheapskate). But notice that GDP analysis will not capture the number of people who give up buying long-distance produce at the store and grow their own veggies. GDP might show Florida and California growers taking a 5% hit, but it won't show the improvement in new home gardeners' diets. A decline in GDP could actually hide an improvement in quality of life.

    By the way, Stan, is there some Zero Population Growth somewhere in those lines? Sounds like we'd better build some rockets and colonize space so the growth of the species is limited only by the heat death of the universe. ;-)


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