Energy crisis deja vu: the U.S. energy needs--and the world's--are changing fast. Are we prepared?

• Author: Brown, Matthew H.

Is the United States at the beginning of another energy crisis?

Oil prices surged past $50 a barrel in late 2004, bumping heating oil and gasoline to the highest prices in years. Natural gas jumped to around $6 per million Btu after having spent most of the late 1990s at one-third that price. The power transmission system failed in eight eastern and Midwestern states in the summer of 2003--and some of the fundamental flaws that caused the failure have yet to be fixed. And the nation continues not only to import more than half of all the oil it uses, but is now beginning to import more natural gas to make up for its falling gas production. Whether or not these diverse factors add up to a crisis might not matter. The fact is that the energy system is changing fast, and not all of those changes have been easy. Federal energy legislation is stuck in partisan wrangling, so most of the action to address energy is at the state level.

UNDERSTANDING THE CHANGES

Representative Carl Holmes, a Republican, who chairs the Kansas House Energy Committee, suggests that legislators need to understand the fundamental changes at work in the energy system. "Kansas is ninth in oil production in the country," he says. "Oil used to be a big part of the economy in the state, but now our oil and gas production is declining. We're using our energy resources up fast."

Democratic Representative Terry Backer, who chairs the Connecticut House Energy Committee, agrees. "Not only are we using more and more energy, but we are starting to import more and more of it from outside the country. We're starting to expose ourselves to new risks," he says.

Both Holmes and Backer suggest that legislators need to be aware of some big shifts in the way we get our energy, and that we need to think hard about more efficiently using what we have while exploring all the alternatives that will give us new supplies, like renewable energy, along with the fossil fuels we know so well.

The United States is likely to import more and more oil and gas, at the same time other countries are beginning to need a lot more. China's appetite for oil and gas will double every five years at its current 14 percent growth rate. Tom Hewson of Energy Ventures Analysis says the United States is now exporting coal to China. China is on track to add 562 coal-fired power plants over the next eight years. For the first time, China's billion-plus population is starting to affect what we pay for energy, and that's not likely to change any time soon.

Tom Markin, a vice president with BP, observes that at the same time other countries like...