History Section 1: Historical Arc of
Energy Policy and Development

Primary energy: energy extracted from natural sources, not converted into usable energy yet
Ex: wind, coal, oil
Secondary energy: energy from transformation of primary energy
Ex: electricity
Both used to measure energy consumption
Quad of energy: 1015 btu, used for reference

Question
Name one example of a primary source and one example of a secondary source

Edison’s light bulb
• Created incandescent light bulb
• Alternative to common kerosene lighting
• Affordable, long-lasting, does not catch on fire
• Provided need for electricity on a wide scale

Direct vs Alternating current
• By late 1880’s, most power plants used direct current
• Direct current inefficient, only transmit about a mile until power lost as heat
• Alternating current introduced by George Westinghouse( inspired by Nicolas Tesla)
• Began a “war of the currents”
• Edison began publicity campaign against alternating current
• Alternating current just too good, so today, alternate current used
• However, researchers still looking at diff uses of direct current today

Question

Access to electricity today
• International Energy Agency(IEA) defines energy poverty as lack of access to modern energy services
• 1.5 billion people lack any access to any electricity
• 95 percent of these people live in Asia or sub-
Saharan Africa( refer to fig 2 page 8)

Oil!
• Cooked, pressurized remains of organic matter over millions of years
• Used so much by everyone
• Major role in geopolitical power: 1990 Kuwait invasion, Gulf War, many Middle Eastern conflicts
• Everyone (especially US) dependent on oil for everything
• Hard to find alternatives for it, but not impossible

History of Oil
First oil well drilled in 1859 in Pennsylvania by George Bissell
Started an oil boom overnight
John Rockefeller, founder of Standard Oil, becomes one of richest men in history
Demand for oil grew with Ford cars
However, oil resources finite
Amount of oil drilled peaks in 1970, the declines irreversably
( see fig 3, p10)

OPEC and 1973 Oil Crisis
• OPEC: Organization of the Petroleum Exporting Countries
• Rivaled the Seven sisters: private oil companies
• October 6, 1973, Egypt and Syria start 1973 Arab-Israeli War
• US backs Israel against Egypt and Syria
• In response, OPEC declares Embargo on oil against US
• Results of Embargo:
– Creation of IEA 1974
– US began building Strategic Petroleum Reserve to protect from future supply disruption
– Begins awareness of our increasing dependency on foreign oil

Question
What was the cause of the 1973 Oil
Embargo and Crisis?

Question
Name one consequence of the 1973 Oil Crisis

1979 Oil Crisis
• Iran was 2 nd biggest producer of oil in world in
1979
• Disrupted by Iranian revolution
• Less supply, higher prices
Consequences:
- President Carter only 1 term
- Resignation of 5 members of cabinet
- More gas lines

Energy Policy
• Policy: principles that guide decisions and provide a pathway toward achieving desired outcomes
• Many policy efforts in energy since Industrial
Revolution, but approach changed with 1970’s oil crises

Energy Policies prior to 1970’s
• 4 energy developments between WWII and 70’s:
– Coal repurposed for electricity
– Natural gas industry destabilized
– Oil industry shifted from nearly unlimited to shortage
– Nuclear energy came online nationwide
Natural Gas Act 1938
- Empowered Federal Power commission to regulate rates for pipelines
- Had to keep gas prices at the wellhead
- Has to set price controls and set prices

Energy policy under Nixon
• 1969-74
• When first entered office, implemented price controls against inflation
• Had to adjust with 1973 oil crisis
• Announced Project Independence
– Supposed to wean US off of foreign energy sources by end of 70’s
– Couldn’t see it through b/c of Watergate scandal and resignation

Question
What was the intent of Project
Independence?

Energy Policy under Ford
• Continued Project Independence, but stepped down from totally efficiency to “reasonable self-sufficiency”
• First president to emphasize relationship between energy, economy, and national security
• Energy Policy and Conservation Act 1975
– Codified Ford’s Strategic Petroleum reserve
– Increase energy production and supply and reduce demand
– Extend price controls on oil
– First time that US energy policy encourage conservation and renewable energy

Question
Name one thing the EPCA act did

Energy Policy under Carter
• Created department of energy
• Gave a Speech about energy crisis vs War
– Led to passing of National Energy Act 1978
National Energy Act
- Addressed larger role for coal
- Return to conservation principles
- Create electricity market
- Decontrol of oil prices

Energy Policy under Carter Part 2
• 5 major legislative efforts under NEA
– National Energy Conservation Policy Act(NECPA)
– Powerplant and Industrial Fuel Use Act
– Natural Gas Policy Act
– Public Utility Regulatory Policies Act (PURPA)
– Energy Tax act of 1978
NECP: direct departm. of energy to set “minimum energy performance standards” for buildings, vehicles, equipment
PURPA: created markets for power produced by small power plants and exempt them from most regulation, gave power to non-utility power producers, and created conditions for competitive markets in the electric industry

Question
Name one thing Carter did during his legislation in regard to energy

Energy Policy under Reagan
• Totally different approach from Carter
• Decontrol fuel prices, increase access to domestic oil supplies
• Promote alternative energies, esp. nuclear
• Policies unsuccessful in attempt to deregulate energy industry

EPAct of 1992
• Similar to earlier acts: lessen dependence on imported oil, encourage renewable energy
• But deregulated electric power
– Before, companies that owned or controlled 10%+ of a public utility had to listen to PUHCA and simplify their ooperations to a single state
– Crated new category of power generators who could generate and sell electricity at wholesale w/o being regulated by PUHCA
Results:
- non-regulated energy producers could enter wholesale market and sell power at market prices
- End of monopolies for electricity generation

Energy Policy Act of 2005
• Under George W. Bush
• Calls for increase in amount of biofuels mixed with gas
• Subsidies for wind and alternative energy producers
• Authorizes 50 mil for biomass research and development
• Repealed PUHCA entirely
• Amended PURPA by repealing that utilities in competitive markets buy Qualifying Facility power

Question
What previous policy did the Energy Policy
Act of 2005 repeal?

Energy Independence and Security Act of 2007
• Increased CAFE( Corporate Average Fuel
Economy) standards for passenger vehicles
• 35 mpg minimum( varied)
• Forced taxpayers to fund +production of biofuels and incl. new standards to promote energy efficiency in residential and commercial appliance equipment

Question
Describe CAFE in your own terms

Energy Policy Today
• No consistent or well-defined goals
• Some say not big problem, has already lasted decades w/o real policy
• But energy resources finite
• Need to watch out for global warming and geopolitical security