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Oil Crises and Policy Trivia

by Michael Levi
March 9, 2011

Turmoil in the Middle East has focused Americans’ attention on oil in a way that happens only on rare occasions. That should be occasion for a serious discussion regarding what to do about U.S. dependence on oil. Instead, we have this on today’s New York Times op-ed page:

Virtually everything we consume — from hamburgers, running shoes and chemotherapy to Facebook, Lady Gaga MP3s and “60 Minutes” — is produced from or powered by fossil fuels and their byproducts, all of which could grow more costly as the price of petroleum rises. The problem is that there is no easy way to quantify how much total energy we consume. Fortunately, there’s a great model already in widespread use: the nutritional information that appears on the back of every food product. Why not create the same sort of system for energy?

Here’s why: It would be an expensive and cumbersome way to do approximately nothing.

We already have a “labeling system” for the most oil-intensive thing we consume: automobile fuel. We get to look at it on the pump every time we fill up our gas tanks. And yet somehow we still consume a massive amount of petroleum-based fuel. There’s a simple reason: we don’t care all that much about how much energy we use; we care about how much it costs. So long as fuel is relatively cheap – and, most of the time, it still is – we’ll keep using it in massive quantities. (Thought experiment: Eliminate the part of the fuel pump display that shows gallons consumed, but keep the part that shows how much the fuel costs. Now do the reverse: get rid of the price display, but keep the one that shows how many gallons have been pumped. Which scenario leads to less fuel consumption?)

Putting energy-content labels on a wider range of products would have even more underwhelming consequences. The author of the Times article points to the precedent set by UK retailer Tesco with its carbon labeling program. But take a look at the numbers. For example, Tesco explains that producing a 250ml orange juice generates 260 grams of carbon dioxide equivalent. Assume that all of that is due to oil consumption (which it isn’t): that translates to 0.03 gallons of gasoline. If someone can explain to me why knowing this will substantially change consumption, I’m all ears. But if people aren’t willing to change their driving habits in order to save, say, a measly gallon of gas each month, I’m not sure why they’ll eliminate their daily orange juice consumption to accomplish the same end.

This is just one instance of a pervasive problem in our thinking about energy: we are unable to distinguish trivia from things that matter. The energy content of our running shoes is trivia. The energy content in our gasoline is not. We will not have a serious debate about energy until we learn how to separate the two.

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  • Posted by abarrelfull

    I agree. Moreover how do we account for the fact that some of that energy might / might not have come from Wind / Solar / Geothermal etc.

    The answer is simply carbon pricing in one way or other. After all we don’t have to calculate how much of each precious resource goes into those things that we buy, we just make decisions based on cost.

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