What My Book The Power Surge Got Wrong
It’s been two years since I turned in the manuscript for The Power Surge, my book about the changes sweeping American energy and their consequences for the world that was published last May. The book is out in paperback today, which strikes me as a great opportunity to take stock of what’s changed, both in the world and in my thinking about it. Here are five things I’d tackle differently if I could write the book again.
I’d put the tight oil boom more squarely at the book’s center. I devoted a chapter of the book to potential gains in U.S. oil production. It included sections on tight oil, offshore drilling, Alaska, enhanced oil recovery, and much else. A core part of my case for the bright prospects of U.S. oil production centered on that diversity of opportunities: even if several didn’t pan out, I argued, at least some would. Indeed the United States set record for annual increases in oil production in both 2012 and 2013 – both data points that weren’t yet on the record books when I turned in my draft. But this has been driven centrally by tight oil while the rest has lagged. This fact doesn’t change my basic conclusions, but if I had another go at it, I’d spend more time drilling down into this core driver of U.S. oil.
I’d say a lot more about distributed electricity generation. I spent a chapter of the book on the boom in renewable energy, but it was focused largely on large-scale wind and solar generation. In the last two years, though, the biggest news in renewables has been around distributed generation, particularly solar. There have been claims that renewable energy will spark a “death spiral” for traditional utilities and quickly slash U.S. greenhouse gas emissions. All this would have been well worth digging into (I do that a bit in a new epilogue for the paperback), even if it wouldn’t have changed my bottom lines.
I’d be less confident of my assessment of the impact of U.S. oil production on oil prices and carbon emissions. I argued in the book that U.S. production would likely have a minimal impact on world oil prices because other big producers would cut back their own output to stabilize prices. A corollary of this was that U.S. oil production wouldn’t lead to much more oil use or emissions. I covered the possibility that things would play out differently, leading emissions to rise and prices to be restrained or even fall, but I put that in a decidedly less likely category. I haven’t flipped, but the more I look at how big oil producers make investment and production decisions, the less confident I am in our ability to predict their future actions. One upshot is that, while I still think that U.S. oil production won’t push prices way down over the long run, and I don’t think that it will push emissions way up either, I do think there’s a decent case to be made that more U.S. production might restrain future price rises considerably. This doesn’t change the cost-benefit balance when it comes to climate change, but it does make both costs and benefits potentially larger.
I’d be a bit more generous toward electric cars. It’s tough to believe, but in the two years since I turned in my draft, Tesla has gone from a marginal player to an industry darling. Its share price has gone from under thirty dollars (not too much above its 2010 IPO price) to nearly three hundred dollars last month. In the meantime, it’s booked its first quarterly profit, racked up awards, and sold tens of thousands of its cars. It’s even navigated safety problems – with one person I quoted in the book flagged as an Achilles heel for automotive start-ups – with aplomb. I still stand by my view that the biggest changes this decade in U.S. oil consumption will come from better conventional vehicles, not electric cars, but there’s little question that Tesla has surpassed my expectations when I wrote the book.
I’d be more open to larger and longer-term impacts from both fossil fuel and alternative energy production on U.S. employment and growth. The book took pains to distinguish between cyclical and long-term impacts of energy developments on the U.S. economy. I made the mainstream argument that, in the long run, the U.S. economy ought to return to full employment regardless of what happened in domestic energy, which would temper the long-run consequences of any energy boom for growth and particularly for job creation. In my penultimate chapter, though, I delved into five “wild cards” that I thought could force a rethinking of some of the book’s conclusions. One of those was sustained economic weakness. Today, even though indicators like unemployment suggest that the economy is returning to full steam, talk of “secular stagnation” – is far more common. To flesh out exactly what secular stagnation would mean for the value of increased activity in U.S. energy – whether driven by markets or regulation – you’d need to play around with working model of the phenomenon. Regardless of the details, though, I’d move this out of the “wild card” section and into the mainstream.
I’d still stick, though, to my bottom lines. We’ll fail to understand how U.S. energy fits into the bigger economic, foreign policy, and environmental pictures unless we ditch a 1970s vintage view of the world that still dominates our thinking; people are overstating the substantive (though not the political) conflicts between exploiting booms in “old” and “new” energy at the same time; and the biggest gains won’t be realized by just sitting by and watching – we’ll need to transform policies to take full advantage of new opportunities that changes in U.S. energy have created across the board.
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