0191-9067/83 $3.00 + .00 Copyright ® 1984 SUNSAT Energy Council THE CHANGING ENERGY MIX IN THE UNITED STATES 1980 TO 2000: BRIDGING THE TRANSITION GAP ARNOLD B. BAKER Manager of Strategic Planning ARCO Oil & Gas Co. P.O. Box 2819 Dallas, TX 75221, USA INTRODUCTION There has been no shortage of studies dealing with alternative energy futures, nor any shortage of assumptions and methodologies underpinning those futures. One recent paper in fact documented and compared some 78 such studies (1). The purpose of this paper is not to add yet another study to this list, but rather to explore some of the economic policy implications of a range of plausible energy mixes for the United States between now and the early part of the next century, when many presume that ample supplies of renewable energy resources will be available. BACKGROUND Since the OPEC embargo of 1973/1974, the “energy crisis” has become an all too familiar phrase, yet one which has been subject to a variety of interpretations and misunderstandings. For some, it implied that we are running out of energy. Yet, an examination of available energy resource data clearly shows there are abundant energy resources both nationally and internationally. To others, the “energy crisis” has meant that the world's ultimate geological oil reserves have shrunk to dangerously low levels. Many would consider this proposition a generally accepted fact. In 1978 the Free World had only a little over 31 years of proven reserves left at current production rates, down from an average of 40 years of proven reserves during 1955-1959 (2). Perhaps it should also be pointed out, however, that during 1950-54 the Free World averaged 27 years of proven reserves at then current consumption rates. In 1949 it had only 23 years left, and in 1938 it had only 16 years left (2). Whether we are significantly more accurate in assessing remaining oil reserves than we were in the past is an open question. The important point, however, is that the “energy crisis” is not so much a function of the geological scarcity of oil reserves as it is the artificial political manipulation of oil prices by a group of petroleum exporting countries known as OPEC. Basic economics indicates that as scarce natural resources are depleted their price will rise to reflect higher production or transport costs from inferior quality reserves or reserves that are farther from the consuming market. What OPEC has done is to accelerate that process and price oil at much higher levels much sooner than would have occurred in the absence of OPEC. As a
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