Ever since energy became a dominating national issue, there has been a curious disconnection of those who lobby for new supply programs from those who advocate conservation programs to make energy use more efficient. What has been forgotten is that "enough" energy does not mean so-and-so many barrels of oil and or tons of coal but rather enough energy to produce the amount of energy services the country needs -- homes heated, businesses fueled, passengers transported and so forth. How much energy that takes depends on how efficiently it is used.
In other words, production and use strategies are complementary aspects of energy policy, although you'd never know it to hear most debates on the subject.The link between the two that has been mostly missing, and the means to choose between a particular program to increase supply or one to improve efficiency, is cost -- and especially in these days of high interest rates, the amount of capital needed to follow one route or the other.
The amount of capital available to the national economy is flexible but by no means unlimited, and the energy-producing sector is consuming it at an alarming rate. This keeps upward pressure on interest rates for the whole economy, and ultimately could starve other industries of the capital needed for new investment. The percentage of total new plant equipment expenditures in the United States consumed by the energy-supply sector grew from an average of 24 percent in the 1960s to 43 percent in 1977 (the last year for which figures are available). In that year, the electric utilities alone accounted for 24 percent of the national total.
Obviously the country cannot sustain that rate of growth for very long. Yet many energy supplies will inexorably become expensive in the future: synthetic fuels plants cost a good deal more than drilling operations; new safety and waste disposal costs are slowly being added to the costs of nuclear power; large new resourses of natural gas are either very deep or trapped in geological formations that are expensive to tap.
The kind of question Congress needs to ask in the future is whether a particular investment of, say, $10 billion, will ultimately produce more useful energy if it is spent on producing synthetic fuels or on retooling Detroit to produce 60 mpg cars. This kind of analysis is difficult. But it is not impossible and it needs to be done. For comparisons and trade-offs will have regularly to be made if the country wants to hold to a minimum the damage done to the economy by the rising energy costs of the coming decade.