[Editor Note: Carter's April 1977 energy speech was also reproduced and commented upon at MasterResource.]

Thirty-two years ago today, President Carter and his energy advisor James Schlesinger got it all wrong in an emergency television address to the nation. Their neo-Malthusian, government-as-engineer moment should never be forgotten but stand as timeless warning about the anti-market, anti-energy mentality.

In the summer of 1979, many Americans were stuck in the gasoline lines. There was a lot of lost time and nervousness. There was fighting and worse. The market as a buffer of civility was gone. Americans were not used to such a predicament and had the common sense to know that something was very abnormal and not to be tolerated. They were mad.

Here is the background of his energy speech, considered as the most important speech of his presidency:

On June 30, 1979, a weary Jimmy Carter was looking forward to a few days’ vacation in Hawaii, as Air Force One sped him away from a grueling economic summit in Tokyo. He had earned it. Two weeks earlier, Carter had successfully concluded the SALT II arms control negotiations with Soviet Premier Leonid Brezhnev in Vienna, the latest in a series of foreign policy achievements since the dramatic Camp David summit the previous September.

Aboard the plane, the phone rang. It was Carter’s pollster, Patrick Caddell. “I remember getting on the phone and saying, ‘You people have got to come home now,’” Caddell recalls. “We were all saying the same thing: ‘You have no idea how bad it is here.’”

The so-called malaise speech and crisis of confidence speech, Carter’s fifth address on energy to the nation, was different from the rest. As explained in the Wikipedia entry on Carter:

When the energy market exploded — an occurrence Carter tried to avoid during his term — he was planning on delivering his fifth major speech on energy; however, he felt that the American people were no longer listening. Carter left for the presidential retreat of Camp David.

For more than a week, a veil of secrecy enveloped the proceedings. Dozens of prominent Democratic Party leaders—members of Congress, governors, labor leaders, academics and clergy—were summoned to the mountaintop retreat to confer with the beleaguered president. His pollster, Pat Caddell, told him that the American people simply faced a crisis of confidence because of the assassinations of John F. Kennedy, Robert F. Kennedy and Martin Luther King, Jr.; the Vietnam War; and Watergate.

Where was Milton Friedman or just about any economist worth his or her salt? The gasoline shortages of early 1974 and the natural gas shortages in the winters of 1971/72 and 1976/77 came from the same cause: federal price and allocation controls that did not let supply and demand mesh.

—————————THE SPEECH————————–

Good evening. This is a special night for me. Exactly three years ago, on July 15, 1976, I accepted the nomination of my party to run for president of the United States.

I promised you a president who is not isolated from the people, who feels your pain, and who shares your dreams and who draws his strength and his wisdom from you.

During the past three years I’ve spoken to you on many occasions about national concerns, the energy crisis, reorganizing the government, our nation’s economy, and issues of war and especially peace. But over those years the subjects of the speeches, the talks, and the press conferences have become increasingly narrow, focused more and more on what the isolated world of Washington thinks is important. Gradually, you’ve heard more and more about what the government thinks or what the government should be doing and less and less about our nation’s hopes, our dreams, and our vision of the future.

Ten days ago I had planned to speak to you again about a very important subject — energy. For the fifth time I would have described the urgency of the problem and laid out a series of legislative recommendations to the Congress. But as I was preparing to speak, I began to ask myself the same question that I now know has been troubling many of you. Why have we not been able to get together as a nation to resolve our serious energy problem?

It’s clear that the true problems of our Nation are much deeper — deeper than gasoline lines or energy shortages, deeper even than inflation or recession. And I realize more than ever that as president I need your help. So I decided to reach out and listen to the voices of America.

I invited to Camp David people from almost every segment of our society — business and labor, teachers and preachers, governors, mayors, and private citizens. And then I left Camp David to listen to other Americans, men and women like you.

It has been an extraordinary ten days, and I want to share with you what I’ve heard. First of all, I got a lot of personal advice. Let me quote a few of the typical comments that I wrote down.

This from a southern governor: “Mr. President, you are not leading this nation — you’re just managing the government.”

“You don’t see the people enough any more.”

“Some of your Cabinet members don’t seem loyal. There is not enough discipline among your disciples.”

“Don’t talk to us about politics or the mechanics of government, but about an understanding of our common good.”

“Mr. President, we’re in trouble. Talk to us about blood and sweat and tears.”

“If you lead, Mr. President, we will follow.”

Many people talked about themselves and about the condition of our nation.

This from a young woman in Pennsylvania: “I feel so far from government. I feel like ordinary people are excluded from political power.”

And this from a young Chicano: “Some of us have suffered from recession all our lives.”

“Some people have wasted energy, but others haven’t had anything to waste.”

And this from a religious leader: “No material shortage can touch the important things like God’s love for us or our love for one another.”

And I like this one particularly from a black woman who happens to be the mayor of a small Mississippi town: “The big-shots are not the only ones who are important. Remember, you can’t sell anything on Wall Street unless someone digs it up somewhere else first.”

This kind of summarized a lot of other statements: “Mr. President, we are confronted with a moral and a spiritual crisis.”

Several of our discussions were on energy, and I have a notebook full of comments and advice. I’ll read just a few.

“We can’t go on consuming 40 percent more energy than we produce. When we import oil we are also importing inflation plus unemployment.”

“We’ve got to use what we have. The Middle East has only five percent of the world’s energy, but the United States has 24 percent.”

And this is one of the most vivid statements: “Our neck is stretched over the fence and OPEC has a knife.”

“There will be other cartels and other shortages. American wisdom and courage right now can set a path to follow in the future.”

This was a good one: “Be bold, Mr. President. We may make mistakes, but we are ready to experiment.”

And this one from a labor leader got to the heart of it: “The real issue is freedom. We must deal with the energy problem on a war footing.”

And the last that I’ll read: “When we enter the moral equivalent of war, Mr. President, don’t issue us BB guns.”

These ten days confirmed my belief in the decency and the strength and the wisdom of the American people, but it also bore out some of my long-standing concerns about our nation’s underlying problems.

I know, of course, being president, that government actions and legislation can be very important. That’s why I’ve worked hard to put my campaign promises into law — and I have to admit, with just mixed success. But after listening to the American people I have been reminded again that all the legislation in the world can’t fix what’s wrong with America. So, I want to speak to you first tonight about a subject even more serious than energy or inflation. I want to talk to you right now about a fundamental threat to American democracy.

I do not mean our political and civil liberties. They will endure. And I do not refer to the outward strength of America, a nation that is at peace tonight everywhere in the world, with unmatched economic power and military might.

The threat is nearly invisible in ordinary ways. It is a crisis of confidence. It is a crisis that strikes at the very heart and soul and spirit of our national will. We can see this crisis in the growing doubt about the meaning of our own lives and in the loss of a unity of purpose for our nation.

The erosion of our confidence in the future is threatening to destroy the social and the political fabric of America.

The confidence that we have always had as a people is not simply some romantic dream or a proverb in a dusty book that we read just on the Fourth of July.

It is the idea which founded our nation and has guided our development as a people. Confidence in the future has supported everything else — public institutions and private enterprise, our own families, and the very Constitution of the United States. Confidence has defined our course and has served as a link between generations. We’ve always believed in something called progress. We’ve always had a faith that the days of our children would be better than our own.

Our people are losing that faith, not only in government itself but in the ability as citizens to serve as the ultimate rulers and shapers of our democracy. As a people we know our past and we are proud of it. Our progress has been part of the living history of America, even the world. We always believed that we were part of a great movement of humanity itself called democracy, involved in the search for freedom, and that belief has always strengthened us in our purpose. But just as we are losing our confidence in the future, we are also beginning to close the door on our past.

In a nation that was proud of hard work, strong families, close-knit communities, and our faith in God, too many of us now tend to worship self-indulgence and consumption. Human identity is no longer defined by what one does, but by what one owns. But we’ve discovered that owning things and consuming things does not satisfy our longing for meaning. We’ve learned that piling up material goods cannot fill the emptiness of lives which have no confidence or purpose.

The symptoms of this crisis of the American spirit are all around us. For the first time in the history of our country a majority of our people believe that the next five years will be worse than the past five years. Two-thirds of our people do not even vote. The productivity of American workers is actually dropping, and the willingness of Americans to save for the future has fallen below that of all other people in the Western world.

As you know, there is a growing disrespect for government and for churches and for schools, the news media, and other institutions. This is not a message of happiness or reassurance, but it is the truth and it is a warning.

These changes did not happen overnight. They’ve come upon us gradually over the last generation, years that were filled with shocks and tragedy.

We were sure that ours was a nation of the ballot, not the bullet, until the murders of John Kennedy and Robert Kennedy and Martin Luther King Jr. We were taught that our armies were always invincible and our causes were always just, only to suffer the agony of Vietnam. We respected the presidency as a place of honor until the shock of Watergate.

We remember when the phrase “sound as a dollar” was an expression of absolute dependability, until ten years of inflation began to shrink our dollar and our savings. We believed that our nation’s resources were limitless until 1973, when we had to face a growing dependence on foreign oil.

These wounds are still very deep. They have never been healed. Looking for a way out of this crisis, our people have turned to the Federal government and found it isolated from the mainstream of our nation’s life. Washington, D.C., has become an island. The gap between our citizens and our government has never been so wide. The people are looking for honest answers, not easy answers; clear leadership, not false claims and evasiveness and politics as usual.

What you see too often in Washington and elsewhere around the country is a system of government that seems incapable of action. You see a Congress twisted and pulled in every direction by hundreds of well-financed and powerful special interests. You see every extreme position defended to the last vote, almost to the last breath by one unyielding group or another. You often see a balanced and a fair approach that demands sacrifice, a little sacrifice from everyone, abandoned like an orphan without support and without friends.

Often you see paralysis and stagnation and drift. You don’t like it, and neither do I. What can we do?

First of all, we must face the truth, and then we can change our course. We simply must have faith in each other, faith in our ability to govern ourselves, and faith in the future of this nation. Restoring that faith and that confidence to America is now the most important task we face. It is a true challenge of this generation of Americans.

One of the visitors to Camp David last week put it this way: “We’ve got to stop crying and start sweating, stop talking and start walking, stop cursing and start praying. The strength we need will not come from the White House, but from every house in America.”

We know the strength of America. We are strong. We can regain our unity. We can regain our confidence. We are the heirs of generations who survived threats much more powerful and awesome than those that challenge us now. Our fathers and mothers were strong men and women who shaped a new society during the Great Depression, who fought world wars, and who carved out a new charter of peace for the world.

We ourselves are the same Americans who just ten years ago put a man on the Moon. We are the generation that dedicated our society to the pursuit of human rights and equality. And we are the generation that will win the war on the energy problem and in that process rebuild the unity and confidence of America.

We are at a turning point in our history. There are two paths to choose. One is a path I’ve warned about tonight, the path that leads to fragmentation and self-interest. Down that road lies a mistaken idea of freedom, the right to grasp for ourselves some advantage over others. That path would be one of constant conflict between narrow interests ending in chaos and immobility. It is a certain route to failure.

All the traditions of our past, all the lessons of our heritage, all the promises of our future point to another path, the path of common purpose and the restoration of American values. That path leads to true freedom for our nation and ourselves. We can take the first steps down that path as we begin to solve our energy problem.

Energy will be the immediate test of our ability to unite this nation, and it can also be the standard around which we rally. On the battlefield of energy we can win for our nation a new confidence, and we can seize control again of our common destiny.

In little more than two decades we’ve gone from a position of energy independence to one in which almost half the oil we use comes from foreign countries, at prices that are going through the roof. Our excessive dependence on OPEC has already taken a tremendous toll on our economy and our people. This is the direct cause of the long lines which have made millions of you spend aggravating hours waiting for gasoline. It’s a cause of the increased inflation and unemployment that we now face. This intolerable dependence on foreign oil threatens our economic independence and the very security of our nation. The energy crisis is real. It is worldwide. It is a clear and present danger to our nation. These are facts and we simply must face them.

What I have to say to you now about energy is simple and vitally important.

Point one: I am tonight setting a clear goal for the energy policy of the United States. Beginning this moment, this nation will never use more foreign oil than we did in 1977 — never. From now on, every new addition to our demand for energy will be met from our own production and our own conservation. The generation-long growth in our dependence on foreign oil will be stopped dead in its tracks right now and then reversed as we move through the 1980s, for I am tonight setting the further goal of cutting our dependence on foreign oil by one-half by the end of the next decade — a saving of over 4-1/2 million barrels of imported oil per day.

Point two: To ensure that we meet these targets, I will use my presidential authority to set import quotas. I’m announcing tonight that for 1979 and 1980, I will forbid the entry into this country of one drop of foreign oil more than these goals allow. These quotas will ensure a reduction in imports even below the ambitious levels we set at the recent Tokyo summit.

Point three: To give us energy security, I am asking for the most massive peacetime commitment of funds and resources in our nation’s history to develop America’s own alternative sources of fuel — from coal, from oil shale, from plant products for gasohol, from unconventional gas, from the sun.

I propose the creation of an energy security corporation to lead this effort to replace 2-1/2 million barrels of imported oil per day by 1990. The corporation I will issue up to $5 billion in energy bonds, and I especially want them to be in small denominations so that average Americans can invest directly in America’s energy security.

Just as a similar synthetic rubber corporation helped us win World War II, so will we mobilize American determination and ability to win the energy war. Moreover, I will soon submit legislation to Congress calling for the creation of this nation’s first solar bank, which will help us achieve the crucial goal of 20 percent of our energy coming from solar power by the year 2000.

These efforts will cost money, a lot of money, and that is why Congress must enact the windfall profits tax without delay. It will be money well spent. Unlike the billions of dollars that we ship to foreign countries to pay for foreign oil, these funds will be paid by Americans to Americans. These funds will go to fight, not to increase, inflation and unemployment.

Point four: I’m asking Congress to mandate, to require as a matter of law, that our nation’s utility companies cut their massive use of oil by 50 percent within the next decade and switch to other fuels, especially coal, our most abundant energy source.

Point five: To make absolutely certain that nothing stands in the way of achieving these goals, I will urge Congress to create an energy mobilization board which, like the War Production Board in World War II, will have the responsibility and authority to cut through the red tape, the delays, and the endless roadblocks to completing key energy projects.

We will protect our environment. But when this nation critically needs a refinery or a pipeline, we will build it.

Point six: I’m proposing a bold conservation program to involve every state, county, and city and every average American in our energy battle. This effort will permit you to build conservation into your homes and your lives at a cost you can afford.

I ask Congress to give me authority for mandatory conservation and for standby gasoline rationing. To further conserve energy, I’m proposing tonight an extra $10 billion over the next decade to strengthen our public transportation systems. And I’m asking you for your good and for your nation’s security to take no unnecessary trips, to use carpools or public transportation whenever you can, to park your car one extra day per week, to obey the speed limit, and to set your thermostats to save fuel. Every act of energy conservation like this is more than just common sense — I tell you it is an act of patriotism.

Our nation must be fair to the poorest among us, so we will increase aid to needy Americans to cope with rising energy prices. We often think of conservation only in terms of sacrifice. In fact, it is the most painless and immediate way of rebuilding our nation’s strength. Every gallon of oil each one of us saves is a new form of production. It gives us more freedom, more confidence, that much more control over our own lives.

So, the solution of our energy crisis can also help us to conquer the crisis of the spirit in our country. It can rekindle our sense of unity, our confidence in the future, and give our nation and all of us individually a new sense of purpose.

You know we can do it. We have the natural resources. We have more oil in our shale alone than several Saudi Arabias. We have more coal than any nation on Earth. We have the world’s highest level of technology. We have the most skilled work force, with innovative genius, and I firmly believe that we have the national will to win this war.

I do not promise you that this struggle for freedom will be easy. I do not promise a quick way out of our nation’s problems, when the truth is that the only way out is an all-out effort. What I do promise you is that I will lead our fight, and I will enforce fairness in our struggle, and I will ensure honesty. And above all, I will act. We can manage the short-term shortages more effectively and we will, but there are no short-term solutions to our long-range problems. There is simply no way to avoid sacrifice.

Twelve hours from now I will speak again in Kansas City, to expand and to explain further our energy program. Just as the search for solutions to our energy shortages has now led us to a new awareness of our Nation’s deeper problems, so our willingness to work for those solutions in energy can strengthen us to attack those deeper problems.

I will continue to travel this country, to hear the people of America. You can help me to develop a national agenda for the 1980s. I will listen and I will act. We will act together. These were the promises I made three years ago, and I intend to keep them.

Little by little we can and we must rebuild our confidence. We can spend until we empty our treasuries, and we may summon all the wonders of science. But we can succeed only if we tap our greatest resources — America’s people, America’s values, and America’s confidence.

I have seen the strength of America in the inexhaustible resources of our people. In the days to come, let us renew that strength in the struggle for an energy secure nation.

In closing, let me say this: I will do my best, but I will not do it alone. Let your voice be heard. Whenever you have a chance, say something good about our country. With God’s help and for the sake of our nation, it is time for us to join hands in America. Let us commit ourselves together to a rebirth of the American spirit. Working together with our common faith we cannot fail.

Thank you and good night.

“The oil and natural gas that we rely on for 75 percent of our energy are simply running out.… World oil production can probably keep going up for another 6 or 8 years. But sometime in the 1980′s, it can’t go up any more. Demand will overtake production. We have no choice about that.”

“To some degree, the sacrifices will be painful—but so is any meaningful sacrifice. It will lead to some higher costs and to some greater inconvenience for everyone. But the sacrifices can be gradual, realistic, and they are necessary.”

“We must not be selfish or timid if we hope to have a decent world for our children and our grandchildren.”

- Jimmy Carter, Energy Address to the Nation, April 18, 1977

Will Obama and his ilk learn the lessons of history?

One such lesson is don’t count conventional energy out. In the 1970s, oil and gas shortages experienced in many parts of the U.S. were erroneously blamed on resource exhaustion rather than government price and allocation controls.

These shortages can be traced back to two presidents who made damning decisions that cost their country plenty. President Eisenhower fathered the natural gas crises of the 1970s when he unexpectedly vetoed a natural gas wellhead decontrol bill in 1956 (1); President Richard Nixon fathered the oil crisis with his wage and price control order of August 1971.

Peak oil, peak gas? The speech below is just another data point of warning against those who are wed to the fixity/depletion view of minerals rather than open-ended resourceship.

——————————————THE SPEECH————————————–

Tonight I want to have an unpleasant talk with you about a problem that is unprecedented in our history. With the exception of preventing war, this is the greatest challenge that our country will face during our lifetime.

The energy crisis has not yet overwhelmed us, but it will if we do not act quickly. It’s a problem that we will not be able to solve in the next few years, and it’s likely to get progressively worse through the rest of this century.

We must not be selfish or timid if we hope to have a decent world for our children and our grandchildren. We simply must balance our demand for energy with our rapidly shrinking resources. By acting now we can control our future instead of letting the future control us.

Two days from now, I will present to the Congress my energy proposals.. Its Members will be my partners, and they have already given me a great deal of valuable advice.

Many of these proposals will be unpopular. Some will cause you to put up with inconveniences and to make sacrifices. The most important thing about these proposals is that the alternative may be a national catastrophe. Further delay can affect our strength and our power as a nation.

Our decision about energy will test the character of the American people and the ability of the President and the Congress to govern this Nation. This difficult effort will be the “moral equivalent of war,” except that we will be uniting our efforts to build and not to destroy.
Now, I know that some of you may doubt that we face real energy shortages. The 1973 gas lines are gone, and with this springtime weather, our homes are warm again. But our energy problem is worse tonight than it was in 1973 or a few weeks ago in the dead of winter. It’s worse because more waste has occurred and more time has passed by without our planning for the future. And it will get worse every day until we act.

The oil and natural gas that we rely on for 75 percent of our energy are simply running out. In spite of increased effort, domestic production has been dropping steadily at about 6 percent a year. Imports have doubled in the last 5 years. Our Nation’s economic and political independence is becoming increasingly vulnerable. Unless profound changes are made to lower oil consumption, we now believe that early in the 1980′s the world will be demanding more oil than it can produce.

The world now uses about 60 million barrels of oil a day, and demand increases each year about 5 percent. This means that just to stay even we need the production of a new Texas every year, an Alaskan North Slope every 9 months, or a new Saudi Arabia every 3 years. Obviously, this cannot continue.

We must look back into history to understand our energy problem. Twice in the last several hundred years, there has been a transition in the way people use energy.
The first was about 200 years ago, when we changed away from wood–which had provided about 90 percent of all fuel—to coal, which was much more efficient. This change became the basis of the Industrial Revolution.

The second change took. place in this century, with the growing use of oil and natural gas. They were more convenient and cheaper than coal, and the supply seemed to be almost without limit. They made possible the age of automobile and airplane travel. Nearly everyone who is alive today grew up during this period, and we have never known anything different.

Because we are now running out of gas and oil, we must prepare quickly for a third change—to strict conservation and to the renewed use of coal and to permanent renewable energy sources like solar power.

The world has not prepared for the future. During the 1950′s, people used twice as much oil as during the 1940′s. During the 1960′s, we used twice as much as during the 1950′s. And in each of those decades, more oil was consumed than in all of man’s previous history combined.

World consumption of oil is still going up. If it were possible to keep it rising during the 1970′s and 1980′s by 5 percent a year, as it has in the past, we could use up all the proven reserves of oil in the entire world by the end of the next decade.

I know that many of you have suspected that some supplies of oil and gas are being withheld from the market. You may be right, but suspicions about the oil companies cannot change the fact that we are running out of petroleum.

All of us have heard about the large oil fields on Alaska’s North Slope. In a few years, when the North Slope is producing fully, its total output will be just about equal to 2 years’ increase in our own Nation’s energy demand.

Each new inventory of world oil reserves has been more disturbing than the last. World oil production can probably keep going up for another 6 or 8 years. But sometime in the 1980′s, it can’t go up any more. Demand will overtake production. We have no choice about that.

But we do have a choice about how we will spend the next few years. Each American uses the energy equivalent of 60 barrels of oil per person each year. Ours is the most wasteful nation on Earth. We waste more energy than we import. With about the same standard of living, we use twice as much energy per person as do other countries like Germany, Japan, and Sweden.

One choice, of course, is to continue doing what we’ve been doing before. We can drift along for a few more years.

Our consumption of oil would keep going up every year. Our cars would continue to be too large and inefficient. Three-quarters of them would carry only one person—the driver—while our public transportation system continues to decline. We can delay insulating our homes, and they will continue to lose about 50 percent of their heat in waste. We can continue using scarce oil and natural gas to generate electricity and continue wasting two-thirds of their fuel value in the process.

If we do not act, then by 1985 we will be using 33 percent more energy than we use today.

We can’t substantially increase our domestic production, so we would need to import twice as much oil as we do now. Supplies will be uncertain. The cost will keep going up. Six years ago, we paid $3.7 billion for imported oil. Last year we spent $36 billion for imported oil—nearly 10 times as much. And this year we may spend $45 billion.

Unless we act, we will spend more than $550 billion for imported oil by 1985—more than $2,500 for every man, woman, and child in America. Along with that money that we transport overseas, we will continue losing American jobs and become increasingly vulnerable to supply interruptions.

Now we have a choice. But if we wait, we will constantly live in fear of embargoes. We could endanger our freedom as a sovereign nation to act in foreign affairs. Within 10 years, we would not be able to import enough oil from any country, at any acceptable price.

If we wait and do not act, then our factories will not be able to keep our people on the job with reduced supplies of fuel.

Too few of our utility companies will have switched to coal, which is our most abundant energy source. We will not be ready to keep our transportation system running with smaller and more efficient cars and a better network of buses, trains, and public transportation.
We will feel mounting pressure to plunder the environment. We will have to have a crash program to build more nuclear plants, strip mine and bum more coal, and drill more offshore wells than if we begin to conserve right now.

Inflation will soar; production will go down; people will lose their jobs. Intense competition for oil will build up among nations and also among the different regions within our own country. This has already started.

If we fail to act soon, we will face an economic, social, and political crisis that will threaten our free institutions. But we still have another choice. We can begin to prepare right now. We can decide to act while there is still time. That is the concept of the energy policy that we will present on Wednesday.

Ten Principles

Our national energy plan is based on 10 fundamental principles.

The first principle is that we can have an effective and comprehensive energy policy only if the Government takes responsibility for it and if the people understand the seriousness of the challenge and are willing to make sacrifices.

The second principle is that healthy economic growth must continue. Only by saving energy can we maintain our standard of living and keep our people at work. An effective conservation program will create hundreds of thousands of new jobs.

The third principle is that we must protect the environment. Our energy problems have the same cause as our environmental problems—wasteful use of resources. Conservation helps us solve both problems at once.

The fourth principle is that we must reduce our vulnerability to potentially devastating embargoes. We can protect ourselves from uncertain supplies by reducing our demand for oil, by making the most of our abundant resources such as coal, and by developing a strategic petroleum reserve.

The fifth principle is that we must be fair. Our solutions must ask equal sacrifices from every region, every class of people, and every interest group. Industry will have to do its part to conserve just as consumers will. The energy. producers deserve fair treatment, but we will not let the oil companies profiteer.

The sixth principle, and the cornerstone of our policy, is to reduce demand through conservation. Our emphasis on conservation is a clear difference between this plan and others which merely encouraged crash production efforts. Conservation is the quickest, cheapest, most practical source of energy. Conservation is the only way that we can buy a barrel of oil for about $2. It costs about $13 to waste it.

The seventh principle is that prices should generally reflect the true replacement cost of energy. We are only Cheating ourselves if we make energy artificially cheap and use more than we can really afford.

The eighth principle is that Government policies must be predictable and certain. Both consumers and producers need policies they can count on so they can plan ahead. This is one reason that I’m working with the Congress to create a new Department of Energy to replace more than 50 different agencies that now have some control over energy.

The ninth principle is that we must conserve the fuels that are scarcest and make the most of those that are plentiful. We can’t continue to use oil and gas for 75 percent of our consumption, as we do now, when they only make up 7 percent of our domestic reserves. We need to shift to plentiful coal, while taking care to protect the environment, and to apply stricter safety standards to nuclear energy.

The tenth and last principle is that we must start now to develop the new, unconventional sources of energy that we will rely on in the next century.

Now, these 10 principles have guided the development of the policy that I will describe to you and the Congress on Wednesday night.

1985 Goals

Our energy plan will also include a number of specific goals to measure our progress toward a stable energy system. These are the goals that we set for 1985:

—to reduce the annual growth rate in our energy demand to less than 2 percent;
—to reduce gasoline consumption by 10 percent below its. current level;
—to cut in half the portion of U.S. oil which is imported—from a potential level of 16 million barrels to 6 million barrels a day;
—to establish a strategic petroleum reserve of one billion barrels, more than a 6-months supply;
—to increase our coal production by about two-thirds to more than one billion tons a year;
—to insulate 90 percent of American homes and all new buildings;
—to use solar energy in more than 2 1/2 million houses.

We will monitor our progress toward these goals year by year. Our plan will call for strict conservation measures if we fall behind. I can’t tell you that these measures will be easy, nor will they be popular. But I think most of you realize that a policy which does not ask for changes or sacrifices would not be an effective policy at this late date.

Conclusion

This plan is essential to protect our jobs, our environment, our standard of living, and our future. Whether this plan truly makes a difference will not be decided now here in Washington but in every town and every factory, in every home and on every highway and every farm.

I believe that this can be a positive challenge. There is something especially American in the kinds of changes that we have to make. We’ve always been proud, through our history, of being efficient people. We’ve always been proud of our ingenuity, our skill at answering questions. Now we need efficiency and ingenuity more than ever.

We’ve always been proud of our leadership in the world. And now we have a chance again to give the world a positive example.
We’ve always been proud of our vision of the future. We’ve always wanted to give our children and our grandchildren a world richer in possibilities than we have had ourselves. They are the ones that we must provide for now. They are the ones who will suffer most if we don’t act.

I’ve given you some of the principles of the plan. I’m sure that each of you will find something you don’t like about the specifics of our proposal. It will demand that we make sacrifices and changes in every life. To some degree, the sacrifices will be painful—but so is any meaningful sacrifice. It will lead to some higher costs and to some greater inconvenience for everyone. But the sacrifices can be gradual, realistic, and they are necessary. Above all, they will be fair. No one will gain an unfair advantage through this plan. No one will be asked to bear an unfair burden.

We will monitor the accuracy of data from the oil and natural gas companies for the first time, so that we will always know their true production, supplies, reserves, and profits. Those citizens who insist on driving large, unnecessarily powerful cars must expect to pay more for that luxury.

We can be sure that all the special interest groups in the country will attack the part of this plan that affects them directly. They will say that sacrifice is fine as long as other people do it, but that their sacrifice is unreasonable or unfair or harmful to the country. If they succeed with this approach, then the burden on the ordinary citizen, who is not organized into an interest group, would be crushing.
There should be only one test for this program—whether it will help our country.

Other generations of Americans have faced and mastered great challenges. I have faith that meeting this challenge will make our own lives even richer. If you will join me so that we can work together with patriotism and courage, we will again prove that our great Nation can lead the world into an age of peace, independence, and freedom.

Thank you very much, and good night.

——————————————

(1) President Eisenhower veto in 1956 came two years after the Supreme Court’s decision that “just and reasonable” public-utility ratemaking under the Natural Gas Act of 1938 could be extended from interstate transmission to gas producers with supply dedicated in interstate commerce. As time wore on and new price control regimes introduced, production dried up in the interstate market and major gas pipelines curtailed their wholesale customers (gas distribution companies in the major non-gas-state cities).

Such criticism reflects a extremely selective memory and a fundamental misunderstanding of the nation’s energy challenges.

Carter Was Pro-Coal, Nuclear Too

In recent years, true, some of Carter’s energy policies have been rehabilitated in the name of “energy independence” and addressing the alleged human influence on global climate. The implication—not always stated explicitly—is that Carter’s energy plan was primarily about renewable energies. The solar thermal panels he had installed on the White House roof, indeed, epitomized the differences between him and Reagan—who had the panels removed.

But selective memory comes into play, especially in overlooking the Carter-era push to increase coal and nuclear in power generation. This policy arose from his misguided view that the natural gas resource was “simply running out,” which is clearly refuted by the fact that more than three decades later the industry finds itself in a gas glut.

Coal was the energy future for the next decades in Carter’s energy thinking. The Powerplant and Industrial Fuel Use Act of 1978 , for example, restricted gas burning in the named facilities, targeting coal and fuel oil for the “low priority” market to save natural gas for “high priority” homes and commercial establishments. Gas distribution companies, organized as the American Gas Association,  supported the law. (1) Exemptions were granted in the law’s early years, however, and it was effectively repealed in 1987. (2)

Running Out of Gas?

Still, the fired 39th president of the United States might be praised for relaxing price controls on natural gas, except that it was done from the obvious economic distortion of artificial shortages–and because he thought higher prices would husband a “depleting” resource.

Given that belief, Carter signed an agreement to pay Canada and Mexico a price of $12/Mcf (adjusted for inflation) for natural gas imports–versus today’s roughly $4/Mcf in depreciated dollars. Carter also insisted that the Alaska Natural Gas Transportation System (yes, ANGTS) was vital to ensure America’s gas supply.

Three and a half decades later, ANGTS it is still unneeded. Had it been built for an estimated $20–40 billion (current dollars), it would have been one of the greatest white elephants of all time. And the color has not improved with age.

His views were supported by various studies that predicted future shortages of oil, and his Secretary of Energy, James Schlesinger, went so far as to say in 1979 that global oil production was unlikely to ever rise above then levels. (This is overlooked by peak oil believers who extol his current concurrence with their thinking.)

Pessimism about oil supply led Carter to create the Synthetic Fuels Corporation, whose goal was to pour billions of dollars in loan guarantees into shale oil and coal gasification projects, little of which was actually spent, fortunately for taxpayers. (3)

Bad Thinking–Unrevised

Which highlights Carter’s second conceptual mistake, namely in thinking that markets were myopic. Since prices were not high enough to reflect the cost of supposedly crucial supplies like shale oil, which all the models insisted needed to be developed, then the market price was ‘wrong’. Although a lot of good energy economics was performed in the 1970s by the Federal Energy Agency and its successors, most of it was ignored by Carter and Schlesinger.

And the underlying Malthusian bias—or pessimism about resources—was phenomenally wrong, as it continues to be today. The presumption that the energy problems were physical in nature, essentially resource scarcity, rather than due to price regulations and political disruptions of supply, led the Carter Administration (and other governments and countless academics) to believe that global power was shifting to the commodity producers. Sound familiar?

Subsidizing the Highly Uneconomic

The enduring belief that heavy subsidies for uneconomic technologies will make them competitive in the marketplace led him to promote through subsidies the installation of what would now be considered primitive technologies. Research money went into many places, some helpful, others political pork like the fast breeder reactor.

Unfortunately, this idea still has significant currency. In the case of electric cars, the Obama Administration proposed rebate would cost nearly $1 billion if sales reach 100,000 vehicles. (4) This is intended to make the technology more commercially viable, but the need for such massive subsidies is evidence that the technology is not yet mature.

Encouraging consumers to buy wildly uncompetitive technology is not the way to promote technological advance. The proposed increase in spending on research will undoubtedly prove far more effective than higher subsidies. But will budget spending cuts leave this as a priority?

(2) Robert Bradley and Richard Fulmer, Energy: The Master Resource. Dubuque, Iowa: Kendall/Hunt, 2004. p. 136.

(3) Robert Bradley, Oil, Gas, and Government: The U.S. Experience (Lanham, MD: Rowman & Littlefield, 1996), pp. 31, 578–85, 1843.

(4) The direct federal government rebate is $7,500 per car. Other expenditures, such as financial support for battery technologies would add several hundred million to the budget, and the Department of Energy provides a 50% tax break for charging stations purchased by consumers, up to $2,000, although the cost appears to be about $2,200. State tax breaks are often in the range of $2,000 per vehicle.

Carter Was Pro-Drilling Compared to Obama

The last Democratic President to acknowledge the need for exploration was Jimmy Carter, under whom I served as Deputy Assistant Secretary for Oil and Gas. Carter pushed both an offshore 5-year leasing plan and production from the Naval Petroleum Reserves. I know–I was in charge of both.

So despite the Windfall Profits Tax and much hyperbolic rhetoric, President Carter had a foot, or at least a few toes, in the pro-production camp. And it was none other than Carter who set up the Arctic National Wildlife Refuge (ANWR) for drilling (after adequate study) as one of his last acts in office.

The 39^th President also initiated both the decontrol of gas dating from the 1950’s and the (phased) decontrol of crude oil and oil products that began with Richard Nixon in 1971 which Reagan simply accelerated with his famous decontrol executive order of January 1981.

Democrats vs. Drilling

But no more! Democrats today seem to want to fly in the face of reality by espousing phantom sources of energy and working at cross purposes with American interests:

Democrats today tend to:

• Believe in Peak Oil and the imminent end of the hydrocarbon age
• Accept Global Warming Alarmism unquestioningly
• Exaggerate the decline in the state of the environment when it is actually improving
• View hydrocarbons as a threat to modern civilization rather than its creator and preserver and to viscerally oppose oil and gas exploration
• Exaggerate the environmental impact of oil drilling both on and offshore

All this leads Democrats to support and subsidize trendy new sources of power (e.g. switchgrass!) without acknowledging how limited or how environmentally damaging they are when implemented on a large scale.

This has only a little to do with “free market” ideology. I assert that a centrist–or if you like a moderate liberal–who believes in moderate government intervention (securities regulation, social security, Medicare, single payer health, etc.) can:

• Continue the intangible drilling cost deduction(In place during the last ten administrations)
• End ethanol subsidy($22/bbl)
• End wind subsidies(2 cents/kWh)
• Eliminate “green” power mandates
• Renew offshore drilling off the east  and west coasts
• Drill the small proposed ANWR acreage
• Curtail the over-rated “green jobs” program
• Put a hydrocarbon realist in the Energy Department
• Treat the domestic oil and gas industry as one of the most successful drivers of the US economy. (Any bailouts for Chevron etc?)
• End petroleum related international sanctions except when absolutely necessary (keep Iran; end Syria and Sudan)
• Provide reasonable support abroad for domestic energy companies now locked in competition with state owned companies.

Democrats are willing to see a Goldman Sachs man in treasury, but you can imagine the howl if Rex Tillerson (Exxon CEO) was tapped to head the Department of Energy?

And all this anti-hydrocarbon cant has been going on since the 1980s—three decades now.

Where’s an Energy-realist Democrat to Turn?

So I find myself applauding institutions such as Cato, IER, and the American Petroleum Institute and wishing for the day when we could have some Democrats in the White House, Senate and House who understand how the real energy world works.

———————–

R. Dobie Langenkamp (BA, Stanford; JD, Harvard Law School) was Deputy Assistant Secretary for Oil and Gas, U.S. Department of Energy (1977–81) and deputy assistant secretary for Naval Petroleum Reserves, U.S. Department of Energy (1996–97).

He has consulted for the Department of Energy and the State Department on Iraqi energy law and policy and was Director of the National Energy-Environment Law and Policy Institute at Tulsa University Law School. He now practices and lectures on international energy law. His entire resume is here.

Thirty years after President Carter declared that our energy crisis was the “moral equivalent of war,” forever known as “meow,” we are faced with another federal potentate who is sure that he knows what is best for us. At a Smart Grid conference in Washington, D.C., Energy Secretary Stephen Chu opined that “The American public … just like your teenage kids, aren’t acting in a way that they should act.”

Just as President Carter declared that our country’s failure to conserve natural gas and oil was a symptom of a “malaise,” not heaven forefend, the low prices for fuels sold at (federally) regulated prices, so does the current Energy Secretary believe that our citizenry is incapable of making rational decisions about energy use.

Why would the smartest guy in the room (read: central planner) say such a thing–a mistake his press office now says?

Incentives Matter

We consumers respond to economic incentives all the time. If the government offers an incentive to get rid of a car that was already paid for, then we will take the $4,500 and walk away with a new one; when the price of oil and gas rise people put on sweaters and turn down the thermostat, install new windows and think about shorter commutes to work; if the government encourages banks to lend money at very low rates to anyone with a pulse, then people will borrow money to purchase houses they cannot afford; if the government pays companies to generate electricity using wind then they will try to do so regardless of its specific utility in the energy mix. Incentives run the world of personal choices. People can only make rational decisions about the real alternatives that face them, not about some theoretical concerns far in the future.

Obviously, the Secretary thinks he was the only person to grow up in a household where dad told us to turn off lights, shut the refrigerator door, close windows in the winter and other staples of energy-conscious behavior. Only it was not really energy-conscious behavior that motivated dad, it was the gas and electric bills at the end of the month.

I’ve got news for you, Mr. Secretary, a lot of us grew up with this dad, made fun of him at the time for his “light bulb fetish,” and now tell our children exactly the same things (and don’t track mud on the floor, while you’re at it!).

School Indoctrination: Will Cod Liver Oil Beat Incentives?

But if you are not going to use the market, then you have to use the children. How better than by scaring the daylights out of them with tales of global warming disasters that are imminent. As Dr. Chu’s boss, the president, said today in New York, “time is “running out” to fix the problem” of climate change and we risk “irreversible catastrophe.”

To reverse the generational direction of energy-related nagging the US government launched this month a partnership between the Environmental Protection Agency and the Parent Teacher Organization focusing on ‘real[i] children’ with a cross-country tour of 6,000 schools to teach students about climate change and energy efficiency.  (Having already been on the receiving end of this sort of thing, I wish all you thirty-somethings the very best of luck, especially when your child comes home with some sort of carbon footprint scorecard that will, of course, remain entirely confidential.) This is a kind of “take it, it’s good for you” doled out by our children – perhaps we will have to retaliate by teaching them the joys of discounted cash flow analysis of energy conservation investments.

So, if I understand the government logic, their policies in energy are going to cut utility bills just by “making a few small changes.”   This may work very well in some households, especially if the parents are already energy-conscious. The rest of us will take a look at the bottom line and say “hmmm, if my utility bill is going down on account of all this efficiency, then maybe I can afford to add that extra room to the house and put a flat screen in there and watch the game in shorts and T-shirt.”

Put another way, making energy more affordable will increase consumption of the services provided by energy, not decrease it. If enough schoolchildren can nag enough parents into reducing energy use (demand falls[ii]), then the price will go down and the people impervious to the entreaties of their kids will use more energy. If you force me to scrap my furnace and buy a better (more efficient) one, then I will take my revenge with a more comfortable house, eating up a lot of the energy savings, which are a lot less expensive per cubic foot, now that the cost of using energy (as opposed to purchasing energy) has fallen.

Back to Incentives

No, that won’t work, and they know it. The Waxman-Markey bill is full of mandates and fines and timetables for whole classes of energy consumers. They will not only raise the price of energy, but also propose to interfere in willing buyer-willing seller transactions, such as those involving vehicles, houses and appliances. Prices will go up for electricity and oil products, as they must with any kind of carbon tax. In Western Europe compliance with the carbon régime has led to electricity prices for households even higher (16-44 cents/kWh) than those in California (15 cents/kWh, as opposed to 8.5-11.4 cents nationwide). So Europeans use less electricity – rational consumers responding to price signals.

What about heating your home? Londoners pay about $18.60/mmbtu for residential gas. In Stockholm, gas will set you back more than $56/mmbtu. In the US residential natural gas prices have averaged about $11.50-13.50/mmbtu so far this year. Guess who lives in the small houses, with sweaters on all winter? In the US the average new house is 2,330 square feet (up from 1,400 in 1970[iii]); in Europe the figures range from 730 square feet in the UK to 1320 square feet in Denmark. You see, the technology available to Europeans to heat their houses is not all that different from what we have here, it’s just that the fuel costs a lot more and regulations limit size and style of new dwellings. There are no magic technologies that can keep us warm and run our economy using a lot less energy. There are only tradeoffs – housing choices, car purchases, industrial structure (yes, you can save a lot of energy if you do not make anything). The government mandarins may talk as if there is special knowledge of energy known only to them. But the behavior of the DOE itself, with its ongoing problems implementing simple energy conservation measures in its own buildings, belies that claim.

Conclusion

So the Secretary is actually correct: we will behave like teenagers when the government tells us what size house we can have and what sort of windows and the like must go into it. We are probably not going to like it because it does not make sense to dad, who pays the bills, unless the bills go up as well (and they will). If you have to use subterfuge, force, regulations and falsehoods to get your way on energy policy you are probably not the smartest guy in the room.

Apparently, Secretary Chu has taken to heart the arguments of the Hirsch report, which was essentially a survey of expectations by various forecasters, primarily peak-oil advocates, with little sense of the history of similar warnings or resource economics. Because the forecasters assumed that production would decline after the peak, without regard for prices, and because they assumed that the recoverable portion of resources would not expand, and because they assumed that methods which had always failed before were now reliable, they came to conclusions that were counter to both theory and history. So much for that report.

Secretary Chu’s thinking is reminiscent of the comments of former President Jimmy Carter, who, in his famous Moral Equivalent of War (MEOW) speech in 1977 stated that the problem was that the oil and gas supplies we rely on are simply running out, a thesis that led him to ignore the real problems, such as U.S. price controls on domestic natural gas, which suppressed production, created occasional shortages, and increased oil consumption and imports, and, thus, U.S. vulnerability.

Of course, President Carter was informed by the best and brightest minds of his time, relying on a combination of the Hotelling and Hubbert theories, as well as “top” intelligence from the Central Intelligence Agency. Its former Director, James Schlesinger, subsequently Carter’s first Secretary of Energy, flogged these arguments endlessly, arguing in 1979 that oil production would never surpass the 65 million barrel a day level (it’s now 85 mmb/d). Of course, Schlesinger is one of those now arguing that oil production has recently reached a peak and that the debate has been won by peak-oil advocates.

While supplies of nonrenewable resources like oil, gas, and coal are, in theory, finite and will, in theory, peak and/or plateau and decline, the lack of relevance of this fact is well established but often ignored by those with a Malthusian bias and especially by those in the peak-oil community. Resource economists like M. A. Adelman have often pointed out that the absolute amounts do not matter, rather the costs of the supply compared to competing fuels and other substitutes (particularly capital, i.e., more efficient technology) determines whether and when we cease to produce and consume a particular fuel.

Many examples exist, from anthracite in Pennsylvania to coal in Britain, both of which have peaked and declined—and left consumers with cheaper supplies of energy. Indeed, even in the United States, when oil production peaked, prices dropped as cheaper imports came in (albeit not cheaper for long).

And as for the idea that it is “forward-looking” companies that recognize the need to be prepared for ever-rising prices: In reality, many in the industry have become inured to constant warnings of impending resource scarcity. Much of the energy-efficient investment done by companies is not based on their expectations of a resource-poor future, but in response to economic signals, including tax breaks.

One can only hope that the economic crisis prevents too many companies from being ‘forward-looking’ enough to invest foolishly, for example, in biofuels, fuel cells (hydrogen and other), electric vehicles, and photovoltaics.

Actually, you can’t. The United States is still a nation of laws, and without strong political support, the acts of one administration cannot be easily reversed or undone by the next.

But there is more to the story than simple inertia and political head-counts. Each new administration enters with an agenda of positive goals. Spending time and political capital on your predecessor’s agenda can often find its way to the bottom of the to-do list. Moreover, a new president has only a limited circle of advisers. They cannot know everything about what the last guys did (Hayek’s revenge).

So it is that we find ourselves saddled with a whole series of outmoded, inappropriate, and just plain counterproductive energy laws and regulations. What is astonishing is the longevity of policies that prevent the United States from developing and implementing a constructive approach to energy, an approach that could use the totality of our resources to fashion a constructive, efficient and clean energy system.

The Bad Past

The U.S. political class in the 1970s was not one to let a good crisis go to waste. Indeed, this is what was done in the 1970s:

First, Nixon and Ford set the stage with price controls and product allocation rules, including:

• Price controls on oil and gas at the wellhead and at the consumer level
• Encouragement to build small, inefficient oil refineries (the Entitlements Program)

But the Carter Administration really got the ball rolling toward ill-conceived, disincentivizing, counterproductive policies. Some of the greatest hits of that era included:

Nuclear Non-Proliferation Act (1978) – under that benign banner lurked a prohibition on reprocessing the spent fuel from civilian nuclear power reactors (the other 95% of the energy in the fuel rods), leading to the waste storage “problem” that inhibits development of nuclear power to this day;

Natural Gas Policy Act (1978) – established 8 different pricing tiers for gas and set them on a path to converge with oil by the mid-1980s, preventing the emergence of a natural gas market until the 1990s; prohibited the use of natural gas for new electric power plants (except for cogeneration);

Solar Tax Credits (1979) – encouraged significant spending on immature and inefficient solar technologies;

Windfall Profit Tax (1980) – Intended to raise more than $100 billion by taxing the “excess” profits of oil producers in the United States, raised only $40 billion before it was repealed in the late 1980s, but reduced domestic oil and gas production by 6-10 percent over that period;

Energy Security Act (1980) – established the Synthetic Fuels Corporation, a public-private partnership intended to improve the technology of coal and shale liquefaction/extraction and eventual commercialization. This act was repealed in 1986, after spending just $1.2 billion on 3 projects. In one of the supreme ironies of the entire 1970s energy policy frenzy, this $1.2 billion was perhaps the most cost-effective technology funding by the U.S. Government in that period. Though it was not used to produce shale oil or coal-based liquids, the technology to convert heavy, dirty feedstocks to light refined products was used by U.S. refiners to produce a slate of valuable light products from less expensive, heavy crudes, saving U.S. consumers many billions of dollars in crude acquisition costs over the years.

With the coming of the Reagan Administration in 1981 some of these measures were swept away, including price controls, entitlements, and some provisions of the Natural Gas Policy Act. For others, including the Synfuels Corporation, Solar Tax Credits, and Windfall Profit Tax, legislative relief was required, which did not come until late in President Reagan’s second term.

For the domestic oil and gas industry the Malthusian gloom of the Carter years inhibited interest in readily available oil and gas reserves, hiding behind a belief that oil and gas were doomed to run out soon in any event. Jimmy Carter was a fan of Peak Oil Theory before the current decade’s bandwagon was ever conceived.

In the end, the energy policies of that past 30 years that had significant positive effects were mostly of the “first do no harm” variety. Most of those policies were enacted during the 1980s, so as to undo some of the most egregious acts of the 1970s. With the exception of the spectacular unintended consequences of the (relative) pittance in Synfuels Corporation funding, all of the careful mandatory allocations, use restrictions, production restrictions, punitive taxes, price controls and technology development showed either negative impacts on the supply of energy or no discernable effects on energy supply and use.

A number of the Carter era policies have remained part of the US Government’s official approach to energy: restrictions on offshore oil and gas production, “catch-22” type regulation of spent nuclear fuel, reliance on overall manufacturer fuel economy standards rather than prices to encourage conservation of gasoline, and last, but not least, the ethanol tax credit.

The price that we have paid for these interventions – less domestic energy production, more price volatility, aging network infrastructure – far exceeds any of the supposed benefits of such policies. Now we have a new president who wishes to make his name by even more massive intervention in energy markets – since it worked so well the last time. We face grandiose plans that start from the assumption that markets do not work and private firms cannot be trusted to make the “right” types of investments, when, in fact, most of our “remnant” problems result from ignoring rather than following market pricnciples. If the 1970s are any guide we will live with the consequences of our follies for many years.

It is much better to choose wisely than quickly.

So get ready for the end-of-growth mantra from the Left as time marches on and Obama’s economic recovery plan keeps the economy from recovering.They will say that government tried and failed with his stimulus plan, so now we need to adapt to a economically constrained but environmentally ‘richer’ lifestyle.  Maybe this is just what a lot of anti-capitalist environmentalists mean by “sustainability.”

But history should not be forgotten. Jimmy Carter bought into the “limits to growth,” and a new voice emerged who spoke of a new morning in America.

In the 1980 presidential campaign, candidate Ronald Reagan dismissed Carter’s call to address energy shortages with “sacrifices and changes in every life.” “People who talk about an age of limits are really talking about their own limitations, not America’s,” Reagan said.

But President Malthus spoke of the dangers ahead in his farewell address:

There are real and growing dangers to our simple and our most precious possessions: the air we breathe, the water we drink, and the land which sustains us. The rapid depletion of irreplaceable minerals, the erosion of topsoil, the destruction of beauty, the blight of pollution, the demands of increasing billions of people, all combine to create problems which are easy to observe and predict, but difficult to resolve. If we do not act, the world of the year 2000 will be much less able to sustain life than it is now.

Reagan cast an altogether different light toward the nation’s problems in his inaugural address of January 1981:

We’re too great a nation to limit ourselves to small dreams. We’re not, as some would have us believe, doomed to an inevitable decline. I do not believe in a fate that will fall on us no matter what we do. I do believe in a fate that will fall on us if we do nothing. So, with all the creative energy at our command, let us begin an era of national renewal. Let us renew our determination, our courage, and our strength. And let us renew our faith and our hope. We have every right to dream heroic dreams.

Reagan also rejected the central planning mentality that had grown alongside energy problems and asked a question:

In this present [energy] crisis, government is not the solution to our problem; government is the problem. From time to time we’ve been tempted to believe that society has become too complex to be managed by self-rule, that government by an elite group is superior to government for, by, and of the people. Well, if no one among us is capable of governing himself, then who among us has the capacity to govern someone else?

Reagan walked the talk by deregulating petroleum a week later. “Ending price [and allocation] controls is a positive first step towards a balanced energy program,” he announced, “a program free of arbitrary and counter-productive constraints, one designed to promote prudent conservation and vigorous domestic production.”

All this was quite different from pessimism and despair’s call to action. Noted one historian at the time:

The contrast with both traditional conservatism and post-Humphrey liberalism could not be more striking. Gone are the dour conservative prescriptions of austerity and self-sacrifice and returning to the past. Gone is the Carter-era pall of limited resources, complexity, and a world in which “more is not better.” Reaganism is kinetic, expansive, and endlessly (critics would say mindlessly) optimistic about the future.

[This post is taken from chapter 11, "New Light," of my new book, Capitalism at Work: Business, Government, and Energy. Citations can be found on p. 403]