At the moment there are more than 112 million motor vehicles on the American road. Henry Ford II recently predicted that auto buyers in this country will purchase nearly eleven million new cars this year. And other Detroit executives look forward to 178 million registered vehicles in the United States by 1985.
Detroit's short-run forecasts may indeed prove accurate. But how long can this growth continue?
The environmental effects of the automobile are well known: motor vehicles cause, for example, as much as 75 percent of the noise and 80 percent of the air pollution in our cities, and the industry must face mounting pressure from environmentalists. There is another, even more compelling constraint on the proliferation of cars. Surprising as it may seem, American oil companies, which during the 1960s increased their production of gasoline by 64 percent, will not be able to provide enough petroleum to fill the gas tanks of some sixty-five million additional autos expected by 1985.
This prediction is based on data prepared by the oil industry itself. Reports by the prestigious National Petroleum Council reveal that U.S. oil production is at, or near, its peak. And the prospects for the discovery of huge new oil fields are so poor that Interior Secretary Rogers C. B. Morton has warned of a "frightening energy scarcity" in a few years if present U.S. production and consumption trends continue.
If there will in fact be 178 million motor vehicles on American highways by 1985, the NPC estimates that our oil needs will increase by about 85 percent. During the next decade total U.S. oil production, however, will continue to hover near the current level of eleven million barrels per day—even if the Alaska pipeline is put into operation. (It would contribute an extra two million barrels per day, thus helping make up for a falloff elsewhere.) Unless action is taken to slacken domestic demands, this huge petroleum gap will force the United States by 1985 to import roughly 60 percent of its oil, largely from the nations of the Middle East.
These projections, however, tell only part of the story. At the moment, global oil supplies appear plentiful. But the oil needs of the other industrialized countries are growing faster than ours: annual increases in world consumption are now so enormous that in the 1970s all of the world's oil-using nations will consume as much oil as was used in the hundred years from 1870 to 1970 (and these projected demands will redouble in the 1980s).
This surge of demand will soon begin to send shock waves through the American economy and transportation system. The impact of these tremors can already be anticipated: to the consumer they signal the end of a long love affair with the car, and to Detroit they offer an early warning that its 1985 growth aims are dangerously unrealistic. Unless we exercise foresight and devise growth-limits policies for the auto industry, events will thrust us into a crisis that will lead to a substantial erosion of our domestic oil supply as well as the independence it provides us with, and a level of petroleum imports that could cost as much as $20 to $30 billion per year. (This in turn would produce a staggering balance-of-payments problem for the United States, and give the Middle Eastern suppliers a dangerous leverage over our transportation system as well.) Moreover, we would still be depleting our remaining oil reserves at an unacceptable rate, and scrambling for petroleum substitutes, with enormous potential damage to the environment.
Given the fact that we are already at the edge of an energy crisis of this magnitude, why are our government and industry leaders not discussing appropriate growth-limits policies?
Plainly, any effort to limit economic growth violates our historic belief in progress. The President and his advisers have largely ignored this great and difficult issue, although, in his 1971 message to Congress, the President rightly called for the formation of a single agency to oversee the nation's energy policies. The stress of his message, however, fell not on limiting demand for energy but on developing new technology to meet growing energy "needs." Despite his expressed concern over energy shortage and air pollution, the President has chosen to shore up the economy by stimulating the production of automobiles. Too often the voice of government is the voice of industry. Hollis M. Dole, Assistant Secretary of the Department of the Interior, recently outlined the alarming facts of oil scarcity—only to urge that we avert the crisis by freshly aggressive efforts to discover and extract our remaining oil. Dole has predicted that there are, in the United States, "172 billion barrels of oil remaining to be discovered," and has pointed out that that figure is more than thirty times what the nation consumed in 1970, a fact that would seem to argue the case for restraint, not development, assuming we care about the oil needs of future generations.
For its part, the private sector has been dominated by oil and auto industries whose executives have been unable even to contemplate production plateaus and low horsepower engines. When James Roche retired last December as chief executive of General Motors, he expressed the belief and the faith of Detroit by predicting the inevitability of the auto industry's growth. He then observed: "I think the average American today would give up about anything before he gives up his automobile."
When one considers recent economic history, Detroit's faith in this gospel of growth becomes understandable. The future has indeed taken care of itself. The automobile industry directly or indirectly provides roughly one-fifth of all jobs in the United States. It is one of the pacesetters of our industrial system, and its executives are convinced that U.S. prosperity cannot be maintained unless Detroit's output continually expands. Auto executives have shunned the limits-of-growth issues and concentrated nearly all their energies on the next quarter's sales and next year's models.
The oil industry is a somewhat different case—or ought to be. As the managers of irreplaceable resources, its executives have a plain responsibility to think and plan generations ahead. But the oilmen, too, have been beguiled by their own success. For over thirty years, their industry has been the world's number-one can-do capitalist enterprise. Ever since a consortium of U.S. companies struck oil in the Arabian sands in the late 1930s, oilmen have accomplished supposedly "impossible" feats of exploration and development on all the continents and in such seemingly unpromising places as Arctic Alaska and the backcountry of Australia. With each new oil strike, the prospect of unlimited oil supplies "for our time" seemed assured.
Oilmen have heard cries of scarcity before—and the very oil discoveries which discredited the "doomsayers" of the past now blind these executives to their own end-game statistics.
Nevertheless, the energy crisis poses specific questions which leaders of the oil industry can no longer avoid. At what point will rising U.S. oil consumption endanger our whole economy? When does a national policy that accelerates oil depletion become a threat to the long-term future of the American people? When must we adopt and enforce a remedial policy of conservation?
The unwillingness of the oilmen to discuss such issues is illustrated paradoxically by last year's report of the National Petroleum Council. In one breath, this document describes a grave oil shortage; in the next, it says the shortage can be overcome. This report simply urges "new oil policies" which would enhance the short-run economic position of the major oil companies and hasten the depletion of the nation's petroleum resources. Give us the tools (in the form of new tax incentives and exploration advantages), the oilmen argue, and we'll produce twice as much oil.
How are we to meet the nation's galloping demands for more oil? The current "game plan" of the oil industry, as reflected in the National Petroleum Council reports, proposes these stratagems to make possible "dramatic increases in domestic production":
An increase of the oil depletion allowance.
Liberal new tax incentives for oil drilling and exploration.
Federal deregulation of controls over the price consumers pay for natural gas (to encourage new exploration).
Quick access—through expansive new Interior Department leasing programs—to the oil deposits below the Atlantic coastal shelf.
Aggressive development of Alaska's oil resources.
In my opinion, it is unrealistic to assume that any of these proposals could be put into effect in time to avert the energy crunch. Political signs point to a further reduction of the oil depletion allowance, and the tax incentive and gas deregulation proposals would certainly arouse a vigorous debate in Congress. When Secretary Morton proposed oil leasing on the Atlantic shelf last summer, every governor from Maine to Maryland (with a supporting chorus of sixty congressmen) stated opposition to such a move. As for Alaska, anyone familiar with the raging dispute over the Alaska pipeline knows that full-throttle oil exploitation in that state faces formidable environmental arguments. And Governor William Egan has warned that construction of oil rigs in the Gulf of Alaska will face physical obstacles more severe than those of any other continental shelf in the world.
To be sure, new oil provinces await discovery. But the days of cheap wildcatting are over (as all the oilmen already know), and the environmental risks and economic costs of tapping increasingly hard-to-reach deposits will be great.
It is disturbing to find that the oilmen have consistently ignored the one U.S. petroleum expert who has unerringly forecast the curve of our domestic production. M. King Hubbert, a former petroleum geologist for Shell Oil Company, is now a senior professional with the U.S. Geological Survey. More than a decade ago, his scientific calculations led him to forecast that our domestic production (excluding, admittedly, then unknown Alaskan deposits) would reach its ultimate peak in the early 1970s. This estimate has now been validated by events. Hubbert estimates that the oil fields already identified in the contiguous forty-eight states—including the continental shelves—probably represent 68 to 85 percent of the total U.S. reserves that will ever be discovered, and he is convinced that, at best, Alaskan production will not come on stream in sufficient quantities to increase the total annual output of U.S. oil fields.
Hubbert's projections over the past sixteen years have been remarkably accurate. His method of evaluating drilling statistics make him neither an optimist nor a pessimist. Today, however, other geologists have come up with estimates far more expansive than those of Hubbert (and of the conservative analysts who share his approach to petroleum forecasting). For example, while Hubbert doubts that the unexplored Atlantic shelf will ultimately yield as much as ten billion barrels of oil, a few "boomer geologists" have glibly predicted that it will provide us with 169 billion barrels.
This dispute raises a crucial policy issue: should we base our national planning on expansive assumptions, or on conservative estimates of our resource potentials? In Hubbert's opinion, caution obliges us to base our plans on the bedrock of proven data.
In my view, it is unfortunate that most oilmen are willing to take a final ride with the boomer geologists. They apparently believe that the country should base its energy policies on the bet that another round of big oil strikes is in the offing, that an acceptable oil shale technology can be developed overnight, or that last-resort foreign imports can bail us out.
Extracting enormous quantities of oil from Colorado oil shale may someday be possible, but I have not spoken with a single expert who believes that this process can be developed in time to fill the petroleum gap of the next fifteen years. Oil shale development is already the subject of intense controversy. There is no known technique for extracting the oil economically, and neither the federal government nor the oil industry is pursuing the kind of crash research that might produce a big breakthrough in oil shale technology. Moreover, it is abundantly clear that environmentalists will strenuously oppose any oil shale development plans that would turn huge sections of the Rocky Mountains into a conservation disaster area.
Many East Coast congressmen and governors advocate big increases in imports of "cheap" Middle Eastern oil as a solution to the current energy crisis. Such a policy might make sense for a few years. However, it ignores events that are changing the whole character of the international oil business. The newly militant organization of oil-producing and exporting countries (OPEC) is determined to end the era of cheap oil. Looking ahead, those countries know that oil in the ground is better than gold in the bank, and they are already contemplating extraction slowdowns which will lengthen the life-span of their oil fields. It is doubtful that these countries will be willing to increase the output to keep pace with our voracious appetite for foreign oil. Indeed, I am convinced that reliance on "cheap imports" is the riskiest course for the United States to follow. In all likelihood, such a policy would produce chronic fuel shortages that would lead to gas rationing and/or strict control of gasoline prices.
A few months ago, with candor rare for his industry, Wayne E. Glenn, president of the Western Hemisphere Petroleum Division of the Continental Oil Company, issued a somber warning to his fellow oilmen. Asserting that "the days of cheap foreign oil are a thing of the past," Glenn cautioned that it would be extremely unwise for the United States to count on filling any substantial part of its future needs from Middle Eastern sources. And more recently, Commerce Secretary Peter G. Peterson cautioned that importing twelve million barrels of oil per day in 1980 would not only saddle the United States with a $26-billion-a-year burden on its balance of payments, but would also cause "indigestion, both economic and political."
In short, common sense dictates that we begin a transition to policies designed to avoid an energy impasse that could cripple out transportation system and imperil our economy. We must set growth limits that will allow the automobile and oil industries to maintain economic stability while conserving our resources and preserving our environment. Of course, such a reorientation will require statesmanship as well as public pressure. It will not happen unless corporate self-interest yields to a responsible outlook that serves the broader interests of the nation as a whole. Above all, this shift requires a thorough redirection of the aims of these two industries.
The oil industry, in my view, must acknowledge that conservatism (not depletion) should be the keystone of our national energy policies. They themselves must now adopt specific growth limits on imports and domestic production, and a policy of substantial energy self-sufficiency.
The auto industry must acknowledge that a rational transportation policy should seek a balance between individual convenience, the efficient use of limited resources, and urban-living values that protect spaciousness, natural beauty, and human-scale mobility. Twice as many autos and freeways as we now have would be a sentence of death for our cities. A necessary shift in public policy toward effective mass transit systems (which consume relatively little energy per passenger mile) would ameliorate the problem, but Detroit still must recognize that the time has come to begin developing external combustion engines (like the steam engine), to build sturdy engines of smaller horsepower that will travel twice as far on a gallon of gas as do today's engines.
Some will argue that the changes advocated above are a prescription for unemployment and recession. I believe this argument is alarmist and specious. I am not proposing that we bring our oil and auto industries to a screeching halt. There is still time to begin a series of gradual steps toward new transportation and energy policies, livable cities, and more humane, efficient transit systems. These changes will require some industries to make steady adjustments, and others to set firm new limits on production and construction.
A leveling off of auto production would mean a return to the ideas that inspired Henry Ford a half-century ago. Autos would be built to be durable, safe, and easily maintained. Their low-horsepower packages wouldn't get us where we are going quite so fast, but they would conserve fuel and pollute the environment much less. For Detroit, such restraints need not mean economic disaster. The industry could respond to this challenge creatively by enlarging its production. It might, for example, branch out into the market for minibuses, innovative "people movers," urban mass transit cars, and air-cushion trains. The highway construction industry would also have to think creatively. Forgoing a "second" interstate highway system might disappoint the concrete and macadam contractors, but huge new programs to construct mass transit systems and air-cushion tracks will require many of the same construction skills.
A limit on the automobile population of the United States would be the best of news for our cities. The end of automania would save open spaces, encourage wiser land use, and contribute greatly to ending suburban sprawl. It would lead to the building of more compact, sensitively planned communities in the future—and it would prompt many cities to build quick, quiet, and convenient modes of transportation ranging from bicycle paths to mass transit systems. The "bad news" for Detroit would, in part, be offset by the good news for U.S. railroads. Transportation of freight and passengers by railway uses far less energy than transportation by trucks and autos. And the rebirth of the railroads—and their movement into exciting new variants of ground transportation such as the air-cushion train—would create solid economic and environmental benefits.
This entire exercise in restraint would teach us the most valuable lesson of all that the quality of our lives will be enriched if we make fewer demands on our resources. "Less is more" is a paramount tenet of environmental reform, and it is time for us to recognize its specific benefits.
Less horsepower, smaller cars, and fewer autos mean more safety, healthier urban environments, more constraints on suburban sprawl, more efficient use of fuel. Less oil consumption for fuel means more oil to share with our children and theirs, more energy self-sufficiency, more oil for use in basic industrial processes. Less investment in highways means more money for efficient public transportation, more open space, more investment in cheap, fast intercity trains.
The bonuses of "less is more" are vast. The choice facing the American people is not between growth and stagnation, but between short-term growth and long-term disaster. We can continue to pursue the growth policies of the past and let urban decay, exorbitant prices, and risks to our national security dictate stringent remedial policies a few years from now. Or we can exercise restraint and learn to live comfortably, within our means.
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