The report, America’s Energy Straitjacket, finds that the resulting high energy prices show no early prospects for relief, spurring inflation and threatening economic growth. This unprecedented situation, in which interrelated forces are squeezing oil, gas, coal and electricity markets at the same time, calls for a new and more aggressive policy response.
“When we look across all energy markets, we see an alarming picture,” says the report’s author, Neal Elliott, ACEEE’s Industrial Program Director. “In past energy crunches, U.S. consumers could switch to another fuel when supplies were tight. Today demand for petroleum fuels, natural gas and coal is surging beyond the markets’ ability to deliver. High coal and natural gas prices are in turn driving electricity prices higher in many regions.”
ACEEE finds not so much a “supply” crisis, but a “deliverability” crisis. This means that while in-ground resources are not fully depleted, the energy quantities delivered to market are not keeping up with demand. “The energy industry is investing in wells, mines, pipelines, and refineries,” says Elliott, “but energy demand is growing faster than most of these markets can add capacity.”
In this environment, the only near-term policy solution is to moderate demand through energy efficiency and conservation. Experience has shown that aggressive efficiency and conservation efforts can reduce demand growth and allow energy supply markets to catch up.
ACEEE recommends four steps that could be taken:
