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july 1973
A Plan for Energy Independence
Carroll L. Wilson
Volume 51 Number 4•
1973
FOREIGN AFFAIRS
Vol. 51 JULY 1973 No. 4
A PLAN FOR ENERGY INDEPENDENCE
By Carroll L. Wilson
IBELIEVE the United States is facing a national energy
emergency. It arises from our extravagant and wasteful use
of energy and from a shift in the sources of fuels. Per capita
consumption is three times that of Western Europe, and we may
ask ourselves whether our greater use enriches the quality of life
by any such margin. Our cars are twice as heavy and use twice
as much fuel as European cars which run about the same mileage
each year, and the ratio is getting worse because of the sharp
drop in fuel economy on recent models of American cars, owing
to emission controls and air conditioners. We keep our houses and
buildings too hot and use large amounts of fuel in air-conditioning
everything. We have not given a thought to fuel conservation
and efficiency since the days of rationing in World War II—an
era which only 30 percent (those over 45) of the population can
remember. These are some of the reasonswhy with six percent of
the world's population the United States uses 33 percent of the
world's energy—and why Europe and Japan are unlikely to be
sympathetic to our plight as we ask them to share with us their
traditional supply sources in the Middle East.
The costs and perils of dependence upon Middle East nations
around the Persian Gulf were eloquently stated by James Akins
of the State Department in the last issue of this journal.1
His
analysis of the expected scale of payments to Middle East countries
and the inability of the largest producer, Saudi Arabia, to
absorb or use a significant fraction of these payments for internal
purposes underscores the perils of open-ended dependence
upon these nations for our oil. The most critical aspects of the
national energy emergency are the shift to such dependence and
the enormous foreign-exchangedrain it must progressively entail
1
"The Oil Crisis: This Time the Wolf Is Here," Foreign Affairs, April 1973.
658 FOREIGN AFFAIRS
by the late 19703 alone. Recent "symbolic'* interruptions by some
Middle East countries, in protest against U.S. policy toward
Israel, may be one hint of what the future holds; the continued
hard bargaining on price is another. Although we will have to
live through a period of substantial reliance on Middle East oil,
it is hardly an acceptable national policy to leave the emerging
situation in this highly unsatisfactory state. There are simply too
many cumulative problems and dangers involved.
The question, of course, is what could we do about it. The
time has come to propose solutions. I propose a strategy to overcome
this emergency, a program of action to implement such a
strategy, the machinery needed for implementation, and an assessment
of the global and environmental consequences of the adoption
and execution of such a program by the United States. Obviously,
the number of variables is immense and only by gross
simplification can one define a strategy and program; there
should be alternative strategies and plans. But this may be a place
to begin.
II
The objectives of my proposal are to achieve, by 1985: first,
the independence of the United States from critical reliance on
imports of energy in any form—defining critical reliance as anything
more than ten percent of our needs; second, energy costs
below some target level, in dollars per million British Thermal
Units (BTU), which is a common energy pricing unit for all
fuels. I suggest as a goal keeping energy costs for premium fuels
such as gas or oil below $1.00 per million BTU. This is equivalent
to oil at $6.00 per barrel, roughly twice present prices, or to
gas at $1.00 per thousand cubic feet, twice present wellhead
prices on new contracts. The current cost of coal is very low in
relation to its heat content, and the proposed ceiling gives great
latitude for its use.
To see how we might reach these goals, let us start by examining
the components of energy supply in the United States—past,
present and future. Current projections make three key assumptions—that
total energy consumption will continue to grow at
the rate of 4.5 percent a year that has prevailed in the past decade,
that the present pattern of use of particular energy sources will
continue, and that nuclear power will be rapidly developed. As
we shall see, all three of these assumptions can be challenged. If
A PLAN FOR ENERGY INDEPENDENCE 659
they were the case, however, the currently projected picture
(seen in relation to present and past) would look as follows:
TABLE I
U.S. ENERGY SOURCES AT STATED PERIODS
Actual Actual Projected Projected
1960-63 *97o-73 1980-83 1985
Oil 44% 44% 44%
Natural Gas 29% 33% 28%
Coal 23% ' 18% 17%
Hydro/Geothermal 4% 4% 5%
Nuclear .5% i% 6%
r
o
o
As the table shows, the crux of the problem is that oil has had
to assume a large and slowly increasing share of the total. Natural
gas appears to have reached its peak and will decline as a
proportion of total supply even if higher prices produce increased
exploration and discovery. Hydro sources can at most
hold their place.
There remains, of course, the question whether present geothermal
sources can be expanded to a greater degree and whether
new "miracle" sources of energy can be found from solar energy,
nuclear fusion, hydrogen broken down by nuclear methods, or any
other. In all of these there is hope if we look ahead on a 3O-year
projection—and in the most promising areas there is justification
for much greater research and development effort. But if one puts
together the theoretical possibilities and the best available sense
of what it would take to develop any of these "miracle" sources
to major production levels, the honest judgment at this stage must
be that they will contribute nothing by 1985 nor be substantially
operative before roughly the year 2000, if then. And we simply
cannot wait that long.
Rather, then, we have to look to our present sources of energy
within the 1985 time frame. Obviously, we must have the maximum
possible expansion of domestic oil and natural gas production,
but the increases cannot be large in relation to total need. In
addition, we should establish synthetic oil industries based on
shale and on coal, building some large-scale plants to demonstrate
feasibility and costs and to test features that minimize environmental
impact. Such developments might yield a few million
barrels per day, and we might require refineries to mix such
oil with regular crude oil for a fraction of their feedstocks—even
if initial prices of synthetic crude oil exceeded the $6,00 per bar-
660 FOREIGN AFFAIRS
rel ceiling target for 1985 energy costs.
Looking at all the technological possibilities, however, it is my
conclusion that the best sources of energy that can be greatly expanded
in this time frame, at reasonable cost and with an impact
on resources and on the environment that we can bear, are nuclear
fission and the production of gas from coal through gasification—
a process which produces from coal a clean, all-purpose and
readily transportable gaseous fuel. For this purpose, some of the
necessary technology now exists, but some still requires additional
development. Gasification itself has been demonstrated, and technologies
are already in use that produce low-BTU gas. However,
the technological obstacles to producing gas of pipeline quality
from coal are still formidable; a massive crash program of parallel
pilot and demonstration plants for the four or five processes
that now appear possible should permit construction to start in
two to three years on production plants that make use of whichever
process or processes then look best.
This selection of technological possibilities is the first element
in the proposed strategy. The second—at least equally important
and urgent—is a program effectively to reduce the rate of growth
in our energy consumption. Actually to lower our consumption
substantially is not, I believe, acceptable without far too drastic
changes in our whole society. But I believe it is feasible, and
should be our target, to achieve and maintain a rate of growth in
our energy consumption of three percent per year, rather than
the present 4.5 percent. In arithmetic terms, instead of our energy
consumption in 1985 being 70 percent greater than it is now, it
would be "only" 43 percent greater—a large and critical difference
without which no action program can, I believe, do the job.
This is still a drastic target. To achieve it requires a recognition
and acceptance that we are in a national emergency. Since
shortages are upon us, we will have to begin to practice conservation
not because of price but because of shortages. Although the
first guidelines for voluntary "sharing of shortages equitably"
have been issued by the government, we have no rationing machinery
except to give priority to domestic heating and to drop
other loads if not enough energy is available. There are not even
the rudiments of machinery for rationing fuel. The only serious
study of an emergency program has been made by the Office of
Emergency Preparedness, which has produced two very useful
studies indicating measures that could be taken if the will existed
A PLAN FOR ENERGY INDEPENDENCE 661
to diminish significantly our energy demands, thereby reducing
our dependence upon imported oil. Yet, before the year is out,
shortages of gasoline and heating oil in many parts of the country
will make it clear that a national emergency exists and that
appropriate steps must be taken.
Some of the necessary measures will involve presently extravagant
uses and waste, and some an increase in efficiency. Here
it is striking to note how little scientific and technical effort now
goes into this latter question; a very modest improvement in our
present low fuel efficiency may turn out, over time, to be in itself
sufficient to bring us close to the three percent growth rate. But
in the meantime we must surely cut back painfully.
Ill
On the whole we do very well in dealing with national emergencies.
Many examples come to mind from World War II when
we created the machinery; gave it the necessary authority; provided
the money; mobilized the parts of the society, public and
private, which were needed to overcome the emergency or meet
it; energized the program by a system of contracts; and achieved
the target results.
A notable example was our action in dealing with the abrupt
cessation of the natural rubber supply. We carried out a crash
program to set up a synthetic rubber industry, quickly creating
the necessary machinery, authority and money. The results were
dramatically successful. Another example was the decision to
produce an atomic bomb in time to be usable in World War II.
The decision was taken at a time when there were four or five
possible routes to securing fissionable material from uranium and
only some clues as to how to make a weapon from fissionable material.
Special machinery was set up with the needed authority,
with superb leadership and organizing capability, and within the
tradition of mobilizing the private sector by contract. The Manhattan
District then conducted that remarkable program of carrying
forward simultaneously four different approaches to producing
fissionable material and two simultaneous approaches to making
a weapon, while building everything from cities to railroads
to huge and completely novel factories, all in the space of less
than three years. It worked.
Another example of how we can mobilize resources against an
explicit target was the space program. In 1960, for reasons then
66a FOREIGN AFFAIRS
considered sufficient, we decided that we should put a man on the
moon before the end of the decade. To accomplish this, we created
a special agency with great authority and lots of money and
manned it with extraordinarily capable leadership. The fantastically
complex and difficult scientific, technical and logistical
problems were overcome, and, indeed, we put the first man on
the moon in July 1969.
These are a few examples of how we have acted successfully
when we have accepted the existence of a national emergency and
taken the necessary actions (through Congress and the President)
to provide the authority, the money, the machinery and the leadership
to meet and overcome it. It is our national style to be most
effective in tackling concrete programs, or working toward specified
goals. Sometimes that approach is not appropriate as, for
example, in solving the problem of cancer; in this case, however,
it is the right one.
What might be the action program aimed at 1985—the Decade
Program if you will—if we accepted the existence of a national
energy emergency and then took the necessary steps to cope with
it through meeting the specific targets suggested?
The first element in any such program must concern the use of
oil. To limit our oil imports to ten percent of energy requirements
by 1985—using now the target three percent annual growth
rate to estimate total 1985 energy consumption—would mean
that we would be importing no more than five million barrels of
oil per day at that time (compared to the roughly 15 million barrels
now projected).2
In the total energy picture shown in Table
I, oil (domestic and imported) would have to drop markedly
from its projected 47 percent to a proportion of roughly 30 percent
in 1985.
This at once suggests the first component of the action program.
Thirty percent is roughly the proportion of our energy
that now goes to transportation, especially automotive uses—for
which, of course, oil is uniquely suited. It will take work to keep
our transportation uses down to this proportion, for they are now
expanding faster than total energy consumption and this tendency
2
Oil would not, of course, be the only energy source imported. As we know, substantial
possibilities exist for the importation of natural gas from Canada and of liquefied
gas from Algeria, the Soviet Union and perhaps other sources. Without judging the
wisdom of expanding any of these sources, their proportion of total energy is not likely
to add much to the ten percent of total energy represented, for this program, by imported
oil. We would still be within reasonable overall margins of import dependence.
A PLAN FOR ENERGY INDEPENDENCE 663
will be accentuated by lowered efficiency due to tighter emission
controls—not to mention the current sales rate of a million passenger
cars a month I But if the proportion can be kept down—actually
slightly reduced—then it can and should be met from oil,
and oil should be withdrawn from other energy uses such as heating.
This is a harsh measure but an indispensable one—the keystone
of the whole program in fact.
The next component of the action program concerns nuclear
power—currently providing one percent of our total energy, and
projected in Table I to provide ten percent by 1985. In this respect,
Table I reflects technological possibilities with proven
techniques, but it does not reflect current political realities, nor,
in my judgment, the true difficulty of meeting valid safety and
environmental objections to the kind of major expansion it would
take to achieve the projected figure.
Like others who have followed closely the development of nuclear
fission as an energy source for more than 25 years now, I
originally and for some time believed that it could, without undue
difficulty, become the most important source of energy we
have, especially for electricity. But problems have mounted, and
delays, restrictions and technical uncertainties have dogged
nearly every one of the many steps needed to bring a new nuclear
plant into full operation, thus drastically slowing down the
nuclear input to our energy system. The determined opposition
of states and localities and citizen action groups, plus rising caution
by the Atomic Energy Commission, has stretched out to ten
years the interval between application for a plant permit and
bringing the plant "on line" at an economic power level.
In part, the political forces at work reflect an exaggeration of
the problems, or at least a failure to weigh fully the inevitable
trade-offs between energy supply and other factors. But these
politically reflected concerns do have a substantial basis, both as
to safety and as to unnecessary and unacceptable environmental
consequences. Only if we deal with these factors can nuclear fission
play the role I believe it must play in our total energy picture
by 1985.
On safety, a real uncertainty now exists concerning possible
accidents which could have disastrous consequences—especially
the failure of liquid cooling systems resulting in a meltdown of
the highly radioactive core and release of the gaseous fraction of
these radioactive products into the atmosphere. A year of hear-
664 FOREIGN AFFAIRS
ings by the AEC has not persuaded the critics that current reactor
plans are safe against such accidents, and the problem exists
as well in the liquid-metal-cooled breeder reactor designs.
As I see it, the only way to meet these objections and so resolve
the current impasse is to put all new plants underground. This is
an entirely practicable course of action. Studies indicate that
placing nuclear power plants underground would add only a
small fraction to their cost. The extensive know-how of the mining
industry plus that of the underground gas storage industry
could be applied in placing such plants in suitable geological
formations 500 or more feet underground near load centers. So
located, with suitable locks in the elevator shafts to contain and
hold back any pressure of radioactive gas in the event of an accident
or a meltdown, these plants could meet the requirements for
nuclear safety. Placed in a suitably impermeable geological formation,
a meltdown, even if it buried itself below the underground
chamber level, would not leak radioactive products into
underground water or into the atmosphere.
The second big nuclear production problem today is primarily
environmental; it concerns the effects of the water discharge from
large reactors in heating up streams and larger bodies of water,
thus altering the ecology in many harmful ways. Here Europe
has pointed the way to the answer—large cooling towers, built
on the surface to recycle and cool the hot water discharges with
very low net water heating.
Finally, there are problems in the safety and security of handling
and transporting plutonium, and in the perpetual storage
of radioactive wastes. In these areas, risks cannot be totally eliminated,
but they can and should be sharply reduced to an acceptable
level by determined action—as we enter an era of massive
production, transport and handling of plutonium, which is one
of the most toxic substances known.
All in all, the measures required to permit expansion of nuclear-fission
plants will not be cheap or easy. But if the necessary
steps are taken, nuclear-fission plants should be able to provide
roughly ten percent of our total 1985 energy needs at tolerable
levels of risk and bearable costs. And experience in this next
decade should tell us much about the degree to which we can
hope to expand, by the end of the century, our use of nuclear fission,
especially through the breeder reactor; in the 1985 time
frame, the breeder is not likely to make a significant contribution.
A PLAN FOR ENERGY INDEPENDENCE 665
If roughly ten percent is the best we can hope to get from
nuclear sources by 1985—the figure used in our original Table I
—it follows that there remains a very large shortfall from the
proposed reduction in overall oil use. Even if we now assume
that total consumption would be less than assumed in Table I,
the proportion to be made up is on the order of 15 percent. Indeed,
on my own best guess about the amount of domestic natural
gas we shall be able to find by 1985, I should think that
natural gas (even with some imports) should not be counted
on for more than 15 percent of the total, and perhaps as little as
ten percent; perhaps new gas reserves will be found on a large
scale, but at the moment much expert opinion doubts this. We
would do well to plan prudently on a figure not exceeding ten
percent, or a total shortfall of roughly 25 percent of the total
to be made up from sources other than oil or gas.
Inevitably, we are drawn to coal—and to greatly expanded
coal production and gasification as the third central element in
an action program. To whatever extent possible, coal as a
solid fuel should be expanded in its own right, especially in
electric power plants—using processes to remove the sulfur from
stack gas such as the Japanese now employ. But for every reason
—adaptability, transportability and environmental consequences
—gas from coal is particularly important.
Available options for processing coal include conversion
to low-BTU gas,high-BTU pipeline-quality gas,oil or various
combinations. Technical, economic and time criteria should
guide the choices made. But the great advantages of pipelinequality
gas for most uses justify major emphasis on this choice.
A massive crash program is needed to move present process
options forward. Current estimates indicate that the cost of
capital investment in new gasification plants should be on the
order of $20,000 per ton of daily coal feed to process coal into
pipeline-quality gas,
Any program to increase coal mining must face up fully
to the problem of environmental impact. The necessary coal
must come overwhelmingly from surface mines, predominantly
west of the Mississippi. In the past, such strip mining has rightly
acquired a bad reputation. Fortunately, a large part of the coal
reserves in the West are located on public lands. Therefore, the
federal government is in a position to set the conditions for
mining operations. I believe it essential that such conditions
666 FOREIGN AFFAIRS
include provision for restoring the land after the coal is extracted,
putting solid waste from the mining process back underground
and creating a land surface that must be at least as stable,
fertile and valuable as the original. An allowance of $2,000 per
acre for such purposes may be a fair approximation of what it
would take, and this cost would have to be considered a basic
cost of production. Underground mines must control pollution
and use several practices which might increase costs up to a dollar
per ton.Similarly, coal gasification plants can and must incorporate
controls to avoid air and water pollution. Altogether,
while the mere existence of the plants means that the countryside
can never be quite the same in the future, the problem of environmental
impact can at least be reduced to bearable proportions in
view of the stakes involved.
Building up our reliance on coal would involve capital costs
for mining production as well as for the gasification plants.
In 1970 U.S.coal production was about 500 million tons and
accounted for roughly 20 percent of our energy needs. To meet
50 percent of total energy needs in 1985 (at the three percent intervening
growth rate) would require a production level of two
billion tons per year—a quadrupling of the 1970 level and an
average growth rate for the next 12 years of 12 percent per year.
Investment needed to produce this basic production increase can
be roughly estimated at $10 per ton, or $15 billion. If two-thirds
of the increase, or one billion tons, went to gasification, the plant
investment would be approximately $60 billion, and there
would be a major additional investment in gas pipelines. Finally,
for the one-third of increased coal output burned directly in
power plants (to replace present oil and natural gas supplies),
a substantial railway transport investment would be required,
as well as costs of conversion to coal where feasible, and desulfurization
of stack gases.
Obviously, such a buildup of coal production and coal gasification
is a truly major undertaking, difficult from a technical
standpoint and costly and complicated in terms of the mix of
private and public effort involved. It is a big job, but no bigger
than the Manhattan or Apollo projects—in fact substantially less
in proportion to the scale of the American economy in the 19708
and 19803.
One crucial question remains—the adequacy of reserves. Before
embarking on a course designed to make coal our principal
A PLAN FOR ENERGY INDEPENDENCE 667
source of energy by 1985 and thereafter, we need to assess the
scale of our coal reserves and how long they might last. While
I have stated my proposal purely in terms of 1985, it is obvious
that we would not wish to mount an effort on this scale and
then change course quickly thereafter; on the contrary, it is my
own belief that we should plan tentatively at this stage to meet
not just 50 percent but as much as 75 percent of our energy needs
from coal by the year 2000. It is now forecast that natural gas
reserves will be gone before 2000 and that global oil reserves
will be declining fast (even with less U.S. consumption than now
forecast). Thus, coal and nuclear power could be our overwhelming
energy sources by that time, with coal by then being
converted on a large scale to oil for transportation needs. Oil
from shale might also have become a substantial source; present
reserves of oil shale are such that we could produce five million
barrels of oil a day for more than 300 years before such reserves
were exhausted. We need not be quite this futuristic for concrete
planning—but we do need to assess reserves on the basis of large
assumptions, to be sure of what we are doing in the 1985 time
frame.
Happily, the coal reserve picture is reassuring even if all this
comes true. The current Bureau of Mines estimate (1970) of
U.S. coal reserves is 1,600 billion tons. If coal use now moves up
steadily to 50 percent of total energy by 1985 and to 75 percent
by 2000 (again allowing for a small but steady annual increase in
energy use), then total consumption in the entire period from
1974 to 2000would be on the order of 70 billion tons, or four and
one-half percent of known reserves. Exhaustion of reserves would
be roughly 100 years away in 2000, even if the use continued to
increase at a steady rate.8
In sum, coal reserves are ample to meet the projected needs
through the balance of this century and to leave us with supplies
to last another century. Through the use of coal on this scale,
coupled with the restriction of oil supplies to transportation uses
and the regaining of our momentum on nuclear power, we could
meet the strategic goals stated at the outset: minimal dependence
on overseas supplies and reasonable rises in energy costs—to
8
The actual calculation here is that 17 billion tons of coal would be consumed between
now and 1985 and 50 billion in the next 15 years. The latter figure assumes that
growth in total energy needs (in terms of BTU content of fuels) would have been reduced
to two percent per year, versus the three percent target of the Decade Program
and the present 4.5 percent.,
668 FOREIGN AFFAIRS
levels not over two or three times present rates. This is the best
action program now available. It would get us through this
period and buy crucial time for whatever innovations may develop,
while allowing us to continue with expanded coal use if
such innovations do not appear on a large scale.
IV
I have outlined this "Decade Program" first in order to define
the key elements in our effort between now and 1985. These key
elements are essential, they take time to bring about, and we must
get started on them at once.
But as we do so we must also reckon that the required changes
cannot be brought about immediately. The program needs at
least the whole decade to take full effect, and in the meantime—
even if we have cut our energy growth rate to three percent—
we face extraordinarily serious problems. Hence, in addition to
our Decade Program, we must have what might be called an
"Emergency Program." This would dovetail as well as possible
with the Decade Program but inevitably would not be wholly
consistent with it.
Oil remains the crux of our present problem. The standstill
on new refinery construction, partly for environmental and related
political reasons and partly because of unattractive return
on investment, may compel some rationing of gasoline this summer
and of fuel oil next winter. And even if new refinery capacity
existed today, an adequate supply of crude oil from abroad
could not now be landed without at least one new "superport"
and also large-scale new tanker construction. As for domestic oil
development, the Alaska pipeline is still in abeyance, and offshore
exploration is inhibited by state opposition and disputes
with the federal government about royalties. Also significant is
the public belief that all offshore operations are as disastrous
as the Santa Barbara episode (which disregards the large-scale
operations conducted in the Gulf of Mexico and the North Sea
for years without major accidents).
The fact is that we cannot avoid a continuing increase, for
some years to come, in our imports of oil—especially from the
Middle East. In 1973 we shall be importing 3.4 million barrels
a day from the Middle East and North Africa, and two million
from Latin America. These figures are bound to rise—for some
years well above the Decade Program goal of only five million
A PLAN FOR ENERGY INDEPENDENCE 669
barrels a day of imports by 1985.
Finally, there is a basic policy question that must be faced—
whether in common prudence the United States should now have
a strategic reserve of crude oil or refined products to protect
against interruptions. Crude stocks are currently below 20 days
and refined products in the form of working inventories in the
distribution system are less than 40 days—essentially minimum
working levels with no strategic reserve. Such a reserve is something
individual Americans have quietly urged on Europe for
years, and in 1968 the members of the European Community
accepted the obligation to build up oil stocks equivalent to 65
days' use. Now it has been proposed that this reserve be raised to
90 days. In the case of the United States, the targets need not be
defined in terms of such periods of total oil use,but as our imports
increase we should at least have a strategic reserve equal to
perhaps 90 days of our imports, to cushion the shock of any interruption
for political or bargaining reasons. To urge this does not
indicate the slightest degree of hostility to the supplying countries;
it is what businessmen all over the world prudently do in
order to negotiate on a relatively even keel with suppliers.
Solving all of these emergency problems will take both resources
and ingenuity. In the case of refineries, I believe inland
sites must be found, and new refineries must adopt available technology
which produces virtually no air or water pollution. Such
refineries exist in Europe; they can be matched here, and not at
excessive cost. Similarly, superports must be built with expensive
safeguards—their cost would be perhaps as high as $1.5 billion
to unload ten million barrels a day, with additional pipeline costs
to bring the oil to inland refineries, and conceivably an investment
of $15 billion for tankers adequate to haul the ten million
barrels a day from the Persian Gulf. It is a daunting prospect—
and underscores the vital importance of preventing our maximum
import dependence from going beyond roughly the ten million
figure at any time, and the importance of reducing dependence
as soon as possible to our target ceiling of five million
barrels. The painful fact is that some part of total refinery
capacity, and as much as half of the planned superport capacity,
will become obsolete or surplus as we carry out the shift to coal
and the reduction in the proportion of our energy needs supplied
by oil imports.4
When a problem has been neglected as long as we
4
It seems likely that substantial strategic reserves of crude and refined products may
still be important to protect against the effects of important interruptions.
670 FOREIGN AFFAIRS
have ignored or misjudged the energy situation, the short-term
requirements may not mesh with the requirements for the
medium and longer term—and so it is in this case. We have to
fix the roof and build a new house at the same time.
w
In short, it will take a two-fold crash program to master the
situation, part directed to a transformation in our energy pattern
by 1985, part directed to getting along in the meantime. The dual
task involves a series of massive new efforts, some of them within
the capacity of private companies, some beyond that capacity,
some which will be so clearly uneconomical that private companies
would be reluctant or unable to undertake them with their
own funds. No one can now say just what the mix of public and
private effort will be—but what seems absolutely clear is that a
much larger public role will be required than now exists, partly
to pull together all the strands of both parts of the program}
partly to support private effort, partly to undertake those aspects
that cannot be handled by private companies.
I see no alternative to new government machinery at the federal
level. Accordingly, I propose a National Energy Authority
(NEA) with a ten-year life and with appropriate powers to deal
with the national emergency. This will mean authority to override
obstacles in regard to land acquisition, siting, environmental
impact, and other areas as necessary to carry out the program,
This should not relieve the NEA of a very serious obligation to
make environmental assessments of its proposed projects and to
hold public hearings to develop the best available means to minimize
the environmental consequences and risks of the actions it
takes, but it would authorize the NEA to proceed with its program
and not be stopped by the obstacles which stall so many
things today.
Under the NEA it would be essential to create a National
Energy Finance Corporation (NEFC) to provide funds for
parts of the program which may not be privately financeable,
including the superport, a billion-barrel strategic stock and its
storage facility, sites for refineries, offshore production units,
tankers, coal gasification plants, and gas, oil and coal pipelines.
Large amounts of capital are going to be needed. An important
obstacle today is that some of these essential investments are not
attractive to private capital. In designing the NEA and the
A PLAN FOR ENERGY INDEPENDENCE 671
NEFC we have many examples such as the TVA and the New
York Port Authority, the Reconstruction Finance Corporation
and the Export-Import Bank. There are ample precedents for
the kinds of authority needed and the appropriate legislation,
controls and accountability.
The NEA should be an independent agency, perhaps modelled
on the original Atomic Energy Commission, in any event as resistant
to political pressures as that Commission was. I propose
that NEA have a ten-year life and go out of existence in 1985
except for the NEFC, which is likely to be needed beyond that
time. There are several reasons for this proposal. First, the exercise
of emergency powers is anomalous in our system and should
be limited to as short a time as required to overcome the emergency.
I believe the job will take a full ten years, but can be done
in ten years if the program is geared to such a timetable. Second,
when the job is done most of the programs should be carried forward
by industry on a commercial basis, and necessary continuing
governmental functions can be transferred to other agencies.
Third, the best period in the life of any agency is the first ten
years. After that the sclerosis of bureaucracy sets in and we certainly
do not need any more bureaucracies. No one should seek
a career in NEA—only the excitement and satisfaction of doing
a critically important job and finishing it. Meeting numerical
targets and being measured on performance in meeting them
through frequent public reports is the kind of a challenge which
should attract the kinds of people needed.
The NEA will have to undertake extensive research and development
and pilot plant and demonstration operations. It
should, for example, underwrite the incremental costs and use
its authority to clear the way for the first two or three nuclear
power plants which are built underground. It should back the
construction of several demonstration units of large offshore oil
production operations incorporating the maximum safeguards
in technology and procedures and should use these for public
education and to provide a model for the industry. NEA can
work out with the AEC appropriate joint activities in regard to
the underground power plants, waste disposal, plutonium shipment
handling and so on.
In addition, in the Program for the Decade and beyond, conservation
should be an important component; this might include
the creation of a national fuel efficiency service to effect econ-<
672 FOREIGN AFFAIRS
omies in the use of fuels. Currently, there is an almost complete
absence of professional interest, activity, or expertise in this subject—whether
in universities, engineering firms, business enterprises
or the government. A major task of NEA would be to
stimulate such expertise and put it to work. As a result of coping
with limited fuel supplies during the next few years, we may
discover economies which are not only relatively painless but
which reveal to us better life-styles. Adopting such life-styles
might substantially reduce per capita energy use.
In the Emergency Program of NEA,one of the first projects
will be a superport. It may be sufficient for the NEA to exercise
the authority to establish the superport and to supplement its
financing. Clearly the NEA must work in close collaboration
with the oil industry in many of the things it does. It must be
shown that gas and oil pipelines can come ashore on their way
inland and leave no offensive trace of their transit across the
coastline. A second project is to acquire inland sites for oil storage
and refineries. It should be noted that even packed closely
together a billion barrels of oil storage would take 10,000 acres,
or 15 square miles. Inland sites will save our finite coastline for
better public uses. Another major project is the question of supplementary
finance for tankers—at a time when world shipyards
are solidly booked.
The NEFC will have much to do. To repeat, one problem in
the financing of facilities such as the superport, tankers and perhaps
the refineries is that at the end of the Decade imports are
to be brought down again to only five million barrels per day.
Thus, the success of the Decade Program may mean a fairly early
obsolescence for part of the capacity of the superports and tankers—hence
one key need for significant public financing.
VI
In laying out this proposed program, I have indicated some
specific steps to minimize its consequences for the physical environment.
In some areas we should be better off in the new 1985
situation: our cars should be smaller and have reduced volumes
of emissions; most fossil-fueled electric power plants would be
taking sulfur out of the stack gases or burning clean non-polluting
gas; new nuclear power plants would be safely underground
and out of sight save for their enormous cooling towers; most
important, a declining rate of energy expansion would make a
A PLAN FOR ENERGY INDEPENDENCE 673
great difference to the environment all across the board, at least
as compared to what we are headed for at our current rate of
expansion. This would represent a sensible modification of our
past craze for growth, and the environment would be the gainer
in some respects.
But not in others. Up to now we have behaved as if we had the
luxury to have the best of both worlds. We have not made the
tough choices. Now the energy emergency makes us choose, and
the choices are few.Some environmental prices must be paid:
one or more oil superports off the East coast, and added refineries
(however pure) inland; the Alaska pipeline with residual risks
that even the safest design and procedures cannot avoid; much
increased offshore oil development, and much increased coal
mining largely from surface sources—which even with the best
possible measures would tend for a time to deface the particular
area. I do not minimize these costs, but feel them keenly as one
who has been active for several years in the scientific effort in
support of national and international environment measures. In
each case, the trade-off has been weighed, and it seems to me that
the gain outweighs the loss.
VII
What I have proposed is a national program for the United
States, calculated on the basis of particular American resources
and American needs. One of its major purposes is, of course, an
international one, to shorten the duration of the costs, pain and
strain—and of the dangers to world harmony and peace—that lie
in a situation of growing American dependence on external
energy sources, especially Middle East oil. But it is primarily
the United States that would be hitching up its belt and putting
its energy house in order, by measures that do not in themselves
harm any other nation.
Is the program, however, not only national but nationalistic?
Would it affect the world energy picture indirectly to the disadvantage
of others, whether suppliers or consumers? Does it
mean an increase in American autarky, fortifying the tendency
other countries now see for the United States to take care of its
own needs and let the rest of the world go hang?
The answer to all these questions is a resounding "No." This
is most obvious if we look at the relations between the United
States and the other major industrialized countries, which are
6-74 FOREIGN AFFAIRS
also the major consumers of energy. As things now stand, Western
Europe and Japan are inescapably dependent, far more than the
United States and far longer into both past and future, on imported
oil and gas; if the United States becomes a vastly increased
buyer of both, the effect can only be, at best, friction, and,
at worst, price wars and preemptive deals that would cut at the
very roots of cooperation between the United States, Europe and
Japan. This danger is indeed already visible, and it will take a
good deal of statesmanship to avoid it as things stand now; by
1980 or 1985, on present trends, the seeds of strife could be beyond
control.
Yet Japan and most of Europe have no alternative comparable
to what coal can be for America. Only the United Kingdom,
among the major European countries, can meet a significant part
of its needs from coal and from North Sea natural gas—and the
latter only at the expense of its neighbors' expectations.
Hence these countries should welcome a determined American
effort to reduce dependence on the oil sources that are a "must"
for them. And the same should hold true for the oil-consuming
developing countries, now being badly hurt by the price rises of
Middle East oil.
But does this mean that the oil-producing countries would be
hurt? I think not. If Mr. Akins and others are correct, the 1980
prospect already assumes that at least two key countries (Saudi
Arabia and Iran) will produce more oil, and tap a higher proportion
of their predicted reserves, than they may like,6
To prolong
the life of these reserves and to space out the income of the
producers can mean a net benefit to most of the producing countries.
Their prices will rise in any event in the years to come,
but the present prospect of runaway increases in production cannot
be attractive compared to a more orderly expansion that prolongs
their assets.
Indeed, I would go one step further. I believe that an American
program such as I have described could be an essential ingredient
in a new approach to the energy situation by the whole
international community. On any rational look at the production
and consumption of energy all over the world, the United States
represents not only a statistical discrepancy and target for the
role of villain (six percent consuming 33 percent, and getting
greater), but a potential disruptive force in almost every market
Sj IGC. cit.s p. 480,
A PLAN FOR ENERGY INDEPENDENCE 675
day by day; only if this is brought under control can the United
States play any responsible role in the effort that may have to be
undertaken within the next decade, or at least by the end of the
century—to balance and distribute world energy supplies much
more fairly and reasonably than nature or men have ever done
to date. For unless we do this there is scant hope for human
progress and peace in the long run.
Thus, I propose a program based in the first instance on American
national interest. But I deeply believe that this program
could make a vast difference to international relations in the next
10 to 20 years, and serve as a step toward a more rational world
use of energy for the benefit of man.