THIS COUNTRY is still in a rather early stage of its adjustment to high prices for energy. But patterns of growth and use are changing in ways most people would have thought, as recently as five years ago, were impossible. It's been a bad five years for conventional wisdom--and for the people who invested in it.
One particularly striking example is the rate at which the electric utilities generate power. For many years, up to the first sharp jump in oil costs in 1973, electric output grew consistently at about 7 percent a year. Currently, electric output is rising about 1 percent a year. For the utilities, the difference has been traumatic. At 7 percent a year, the load doubled every 10 years. In those circumstances, utilities built new generating plants as fast as they could--and the bigger the better. But at 1 percent, the utility industry's whole strategy is turned upside down.
Suddenly expansion has become dangerous, and the major risks all lie in the possibilities of overshooting demand. Instead of designing very large generating plants, utilities have reversed the trend and are increasingly planning small ones that represent less expensive commitments to an uncertain future.
It is this shift to much smaller plants, and not the no-nukes movement, that is causing the slow death of the industry that builds civilian nuclear reactors. If a company wants to build a giant generator on the scale that had become common by the early 1970s, a nuclear plant is still well worth considering. But if the company has scaled back to plants a third that size--as, for example, Pepco has done--then the intricate and demanding nuclear technology makes little sense.
Americans proved to be much more adaptive in their needs and demands for energy--not only electricity, but all forms of energy--than seemed conceivable a decade ago. In those years a strong body of opinion held that there was a fixed and inherent ratio between energy input and total output of the economy. If, the argument went, energy use was held down artificially, whether by boycotts abroad or conservation at home, the whole economy would be similarly constrained and standards of living would fall.
It turns out that the idea of the fixed energy-to- output ratio was wrong. That ratio has dropped sharply since the pivotal year 1973, and the drop now seems to be accelerating. Americans are making more, and doing more, with less energy than seemed possible until very recently. Amid all the current complaints about the performance of the economy, it's worth noting that one of the great surprises of the past decade has been its resilience and the flexibility of its response to the oil shocks of the 1970s