The Primacy of Price: Past & Future Energy Transitions in America

1. The Primacy of Price:Past & Future Energy Transitions in America Joe Pratt University of Houston

2. PRIMACY OF PRICE • Past energy transitions largely directed by BUSINESSES and largely determined by traditional economic concept of PRICE • Environmental costs as “externalities” • Competition among companies in each energy industry AND among different fuel sources • NOTE: There is not a unified market for “energy” and no single “energy industry”

3. THE RISE OF COAL, 1850-1900 • Coal helped transform agrarian American into industrial America • Much more than PRICE at work here—fuel quality • U.S. energy consumption quadrupled from 1850-1900, as coal-led industrialization created new markets • As of 1900, coal seemed poised to remain the dominant source of energy in the U.S. for a long time

4. The Rise of Oil, 1900-1973 • Oil as illumination versus oil as energy (1901-Spindletop) • Oil as superior to coal in numerous ways • Regional component to oil’s ascent • Government regulatory role: Antitrust • Government’s promotional roles: National Security rationale • End of “easy oil” in 1970s • Impact of oil price swings on alternatives to oil

5. The Rise of Natural Gas, 1980s Forward • Government regulation yields national grid plus shortages • Recent surge in natural gas markets and supplies -LNG (global market for once stranded gas) -Shale gas (“game-changer” versus threat to groundwater) GAS AS BRIDGE TO A RENEWABLE ENERGY FUTURE?

6. Observations of an Old Texas Historian • Oil and natural gas as the “default option” • DO NOT underestimate the resilience of petroleum • “Industrial” renewables: problems of scale • Political process as a major barrier to change • Trend toward “adaptation” instead of reduction of greenhouse gases • Rays of hope at regional level • The “LongTransition from Natural Gas and Oil to Something Else”