William Stanley Jevons, a British economist during the mid 1880s, argued that technological breakthroughs relative to energy efficiency would increase rather than decrease fuel consumption. Improving efficiency of coal would lessen the amount used to achieve energy objectives (e.g. the production of power) and also lower costs to the intermediate and end users. Up to this point, Jevons would become a candidate for environmental and economic sainthood.
According to Jevons’s thesis, increased oil efficiency resulting from technology would extend the life of existing oil supplies and lead to reduced costs of fuel at the pump. By implication, both would result in reduced oil dependency. Sounds too easy and it is. Unless I am mistaken, Jevons (were he still with us) and lots of present day economists would add an important fillip. Lower costs, without other intervening factors, such as behavioral changes, regulations and taxes, competition, will generally increase demand for oil. We will want to drive more and companies will want to produce more. At least in the short term, overall GNP growth will lead to increased demand for oil and higher prices. The “rebound” effect, while not as significant as many suggest, will reduce the benefits of technologically caused efficiency and sustain demand for oil at a high enough level to maintain dependency.
What should a nation concerned with energy independence do? CAFE standards and other related conservation efforts, while important, likely, will not make a major dent regarding dependency. The nation is not ready politically to accept increased oil/gas taxes or new regulations to mute demand and use. An attractive electric car that competes with an internal combustion engine for mileage and price is regrettably still years away.
Because monopoly conditions exist, natural gas and natural gas related fuels, like methanol, cannot easily compete with gasoline as a fuel for automobiles and trucks.
The risks associated with oil dependency should lead to opening the market place to flex fuel cars and to flex fuels. Technological advances combined with large supplies of natural gas will generate lower prices for fuel and produce a cleaner environment. Collaboration between government, advocacy groups, research institutions, and industry could lead to a successful early technological response to environmental issues associated with fracking. Why are we waiting? Bring back a reformulated Jevons!