Energy: A Balanced Perspective: Introduction

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Scanning the pages of the newspaper on any given day, you’ll find headlines like these:

“OPEC points to supply chains as cause of price hikes”.

“Business groups warn of danger of takeover proposals”.

“ U.S. durable goods orders jump 3.3%”.

“Dollar hits two-year high versus yen”.

“Credibility of WTO at stake in trade talks”.

“U.S. GDP growth slows while Fed fears inflation growth”.

If this seems like gibberish to you, then you are in good company. To most people, the language of economics is mysterious, intimidating, impenetrable. But with economic forces profoundly influencing our daily lives, being familiar with the ideas and principles of business and economics is vital to our welfare. From fluctuating interest rates to rising gasoline prices to corporate misconduct to the vicissitudes of the stock market to the rippling effects of protests and strikes overseas or natural disasters closer to home, “the economy” is not an abstraction. As Robert Duvall, president and CEO of the National Council on Economic Education, has forcefully argued: “Young people in our country need to know that economic education is not an option. Economic literacy is a vital skill, just as vital as reading literacy”. Understanding economics is a skill that will help you interpret current events playing out on a global scale or in your checkbook, ultimately helping you make wiser choices about how you manage your financial resources—today and tomorrow.

It is the goal of this guide to promote economic literacy and improve economic decision making. All content is written for the general reader high school and college student, or the business manager, entrepreneur, or graduate student in business and economics looking for a handy refresher. It has been written by experts in their respective fields for non-expert readers. The approach through out is at a “basic” level to maximize understanding and to demystify how our business-driven economy really works.

Energy worldwide is at least a seven trillion dollar a year business and expanding—not least because of energy prices that have defied conventional economic thinking. Energy profoundly affects our economy, society; and environment. The energy outlook in the United States is shaped ultimately by a host of people—including consumers, producers, business leaders, entrepreneurs, and investors, along with many types of government officials across the country. The principles spelled out in this guide apply in most cases to anyone and everyone, although the responses and actions they stimulate will vary a lot. That isn’t because there was a sly effort to please everybody, but because people act ultimately in what they see as their own self-interests—even when their intentions are objectively laudable as high-minded. The guide should help readers figure out what their own best interests are. That might help us all!

This is not your “ordinary” energy guide. It is not an advocacy work. It is neither a history nor a mere snapshot of the present, although it contains aspects of each. It is a good guide to read if you are concerned about the future, and it will help you pose questions to yourself and others that will help us all to get from where we are now to where we’d like to be.

While erasing energy myths and demystify some complex but critical energy technologies, it won’t burden the reader with too many statistics. Numbers change. One of its chief aims, however, is to clarify what the numbers you hear every day mean.

The guide doesn’t either glorify or dismiss any of our current or prospective energy sources. Instead, it explains how each fits into a kaleidoscope that changes continually for many reasons. This small volume, Energy, addresses “efficiency” throughout—in terms that allow successive interlocking sections to put new insights into everyday conversation, Investment discussions, or seminars among experts.

It also stresses and explains the value of consensus without trying to impose it in a specific way. Consensus is needed to formulate and implement a balance that is inevitably required.

The first section is a reference base for the rest of the guide, setting out some terms and concepts. The second section explores what we can count on from various energy resources—including energy efficiency—and why we need “all of the above.” Sections 3, 4, and 5 are compact but meaty examinations of cost, reliability of supply, and effects on human environment, respectively. These facets give rise to the most common questions about energy; but the answers given most often have come from commentators with some bias or another and thus don’t tell the more fully rounded story that can be helpful. Section 6 deals with something that is missing almost entirely from most public discussions of energy—how time affects all other factors, either positively or negatively. The seventh section defines “energy policy” in a way that this is rarely done, but which is crucial to understanding the business and economics of U.S. and global energy -- and why a call for “energy independence” is generally a scam. The final section proposes a sober, adaptive approach to a sustainable energy future that just might work.

All the sections intentionally mesh with each other and occasionally restate a point or two. This volume dispenses with the glossary that is customary in this series because a special effort has been made instead to define terms that are likely to be unfamiliar in context. This is important because some of these terms and distinctions among categories (e.g., primary energy vs. end-use energy, energy demand vs. energy consumption) are often indispensable in judging the extent to which claims being made for a policy; a product, or a potential investment may be valid. For those seeking a conventional and authoritative glossary of energy terms that is far more comprehensive than eight to ten pages here could have provided, the one at is only a couple of mouse-clicks away.

Overall, the approach this guide takes can lead to a somewhat meandering text, which insists that a serious reader take a look at the whole thing rather than just shuttle between the index and a few paragraphs here and there. Sorry--no apologies! This mirrors real-life, in which everything is connected to everything else.

Unless otherwise cited, statistics about the U.S. and world energy economies are drawn from the latest figures published by the Energy Information Administration, a semi-autonomous arm of the U.S. Department of Energy.

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