Dark Clouds in America's Energy Future

THE apparent collapse of hopes for an energy breakthrough in cold-fusion technology is only the latest in a series of dark clouds on America's energy horizon. Whether we examine the environment, economics, or security, the need to abandon complacency is long overdue. Consider the following: Environment: The Exxon Valdez oil spill in Alaska illustrates the perils of shipping large amounts of oil through one of America's last pristine nature areas. Mounting evidence about the greenhouse effect and global warming trends has also caused concern about the long-term consequences of fossil fuel combustion.

Economics: Recent trade data show oil imports accounting for more than one-third of America's foreign trade deficit. Inflation figures for 1989 have been propelled by oil prices that have climbed to their highest level in four years. The weight of these increases is not yet fully reflected in the inflation numbers.

Security: American oil production in 1988 fell to its lowest level in 24 years. Imports rose to 42 percent of total consumption - a level greater than during the 1973-74 oil shock. The United States Department of Energy has warned that by the mid-1990s imports could amount to between 50 percent and 60 percent of consumption. Meanwhile, proven US oil reserves have shrunk to 3.7 percent of the world total. By contrast, more than two-thirds of these reserves are now found in the Persian Gulf - one of the most unstable regions on earth.

All these developments have one thing in common: They reflect the dangers of increasing dependence on imported oil. By responding in time, the US can avoid trouble in the 1990s, but to do so it must recall the lessons of the two oil shocks of the 1970s. These not only exposed the country to political blackmail, but resulted in inflation, unemployment, economic disruption, and the worst recession in a half century. To reduce such risks, we must adopt policies aimed at lowering dependence on foreign oil. Thus the US must plan now to revitalize domestic energy sources. This requires more emphasis on locally produced energy and electricity, including coal, nuclear power, and energy efficiency.

All too often we approach energy issues as though some magical option will provide unlimited energy at little or no cost and without the slightest environmental ripple. The momentary excitement about cold fusion appears to have been only the most recent case in point. But we can make use of a diverse and robust energy mix to lessen American dependence on imported oil.

Among possible steps, increases in the existing gasoline tax and in automobile fuel efficiency are essential. So are additions to the Strategic Petroleum Reserve to be drawn on in an emergency, as well as enhanced research on future energy technologies.

It is the role of electricity that is critical, however, since problems are likely to arise first here. In the years since the 1973 oil shock, the US gross national product has grown 45 percent. Though overall energy use has climbed just 7 percent, electricity demand has outpaced economic growth, climbing 50 percent over the same period. A high-technology economy is electricity intensive. Yet at current growth rates, electricity demand is likely to overtake reliable supplies in the early 1990s.

Meanwhile, long lead times pose a problem. Decisions being taken now affect America's energy balance for the late 1990s. If electrical utilities are unable to make adequate provision for major additions to base-load capacity using new cleaner coal technologies and nuclear power, they are likely to resort to a series of quick fixes: imported power, natural gas, and - most ominously - more oil. The added demand, from older mothballed plants and from newer units to be built quickly, could amount to between 1 million and 2 million barrels of oil a day by 1995 - at a time when the national and global oil picture is likely to be much less favorable. Thus, using imported oil as a quick fix to generate electricity increases the longer-term risks to the country's economic well-being and national security by increasing the balance of trade deficit and exposing the US to future price increases.

In sum, local energy issues must be seen in a broader global framework.