In February 1974 Western foreign ministers met in Washington to take forward Kissinger’s proposal for an oil buyers’ group. France was strongly opposed. ‘I won’t be able to accept, no matter what conditions are established, a situation which requires us to forego Arab oil, for even a year,’ President Pompidou told Kissinger.[21] Major oil importing countries such as West Germany and Japan decided to let their economies adjust to higher oil prices. German motorists were not going to wait in long lines to fill up their cars. ‘We’re going to recognise that if we want oil, we’re going to pay the world price,’ West Germany’s economics minister said.[22] The US went down the route of much greater regulation. The 1973 Emergency Petroleum Allocation Act authorised a raft of petroleum price, production, allocation and marketing controls, turning the oil price shock into an energy supply crisis.
The rift between Europeans and American policy became a defining feature of the Carter presidency. Carter was a true believer; he’d read The Limits to Growth. It had, he said, melded together scientific data ‘to show a dismal prospect, even for the survival of mankind, if we fail to change some of those trends quickly’. Its language became a major theme of his inaugural address and his presidency.[23]
Politically Carter’s problem was that he saw limits where his fellow countrymen did not. Convincing Americans about the energy crisis was like pulling teeth, Carter complained.[24] By 1979, according to a briefing by his pollster Pat Caddell, Americans did not believe his warnings about future energy shortages. They were convinced that both the government and oil companies were either incompetent, dishonest or both.[25]
‘Tonight I want to have an unpleasant talk with you,’ Carter told Americans three months into his presidency.[26] The energy crisis was the ‘moral equivalent of war.’ The alternative might be ‘national catastrophe’, Carter claimed. The lines at gas pumps had gone, but the energy problem was now worse; ‘more waste has occurred, and more time has passed by without our planning for the future’. The immorality of waste was Carter’s overarching theme. ‘Our energy problems have the same cause as our environmental problems – wasteful use of resources.’[27]
The next day, Carter presented his energy plan to Congress. He wasn’t expecting any applause and didn’t get any. It was ‘torn to pieces in Congress in much the same way puppies might rip the stuffing out of a rag doll’, critics noted.[28] A month after declaring war on oil and natural gas usage, Carter sent Congress a message on the environment: ‘The transition to renewable energy sources, particularly solar energy, must be made.’[29] He had solar panels installed on the roof of the White House (they got taken down for maintenance in 1986 and were never put back), backed gasohol (a mixture of ten per cent ethanol and ninety per cent petroleum), called for the creation of an energy security corporation financed by $5 billion of energy bonds, and a solar bank. Twenty per cent of America’s energy should come from solar power by 2000, a target Carter said was crucial.[30] The target might as well never have existed. By 2007, renewable energy contributed less than seven per cent of America’s needs while the contribution from solar energy was little more than a drop in the ocean – less than one tenth of one percent.[31]
The Nixon-era price controls inherited by Carter had a two-tier system so that the price of oil from developed reserves was capped at a lower price than oil from new fields. Selling gasoline at two different prices created local shortages and long lines at filling stations. During the 1976 primary campaign, Carter had pledged to remove price controls on natural gas prices, helping him win the crucial Texas primary. But he reversed himself once he got to the White House in what his domestic policy adviser Stu Eizenstat thought possibly the most fateful domestic decision of his presidency.[32]
Deregulating energy prices wouldn’t work, Carter claimed, because OPEC dominated the global energy market. Instead Carter got former defense secretary James Schlesinger, who had been a Rand Corporation systems analyst in the 1960s, to design a national energy plan. Its aim was to put the market to work to conserve oil and gas. ‘Why not then, use the real market?’ asked the plan’s conservative critics. ‘Even a systems analyst, however brilliant, would find it impossible to simulate the complexities of a fairly simple market system, let alone one as huge as the energy market,’ they argued.[33]
Carter’s energy policy was based on the (false) premise that energy supplies were soon going to be exhausted. 1973 world oil production was 58.5 million barrels of oil a day and rose to sixty-six million barrels a day in 1979.[34] Neither was it the case that America’s reserves of energy were running low. In April 1977, shortly before Carter launched his energy plan, the Energy Research and Development Agency concluded that America’s natural gas reserves could be expected to exceed its total energy needs well into the twenty-first century. The director of the US Geological Survey, Dr Vincent McKelvey, said that following a slew of recent discoveries America’s natural gas reserves were about ten times the energy value of all previously discovered oil and gas reserves in the US combined. He left his post shortly after.[35]
The more Carter talked about energy, the lower his poll rating sank. In 1977, he made three television addresses on the subject as well as one to Congress and countless appearances at public forums talking about the energy crisis. It left everyone confused, including Carter himself. In June 1979, Carter told an interviewer: ‘I don’t claim that the government has done a good job with the energy problem; it hasn’t.’[36] When asked by Dan Rather in August 1980 to grade his performance, Carter gave himself a straight ‘A’ on energy. ‘Very good, I think we’ve done better than we had anticipated, and that’s one of the great achievements of our administration.’[37]
1979 was a particularly tough year for Carter’s energy policy. In April he announced another energy package, including a windfall tax (preventing energy suppliers ‘profiteering’ from changes in energy prices was a constant theme). The public was cool and the attitude of Congress ‘disgusting’, Carter wrote in his diary.[38] At the end of June came his mauling by Helmut Schmidt in Tokyo. To save face, the Europeans agreed to a formula that would meet Carter’s objective of cutting oil imports by counting oil from the British North Sea as pooled with the other European members of the G7.
On his return home, Carter planned another televised address on energy for Independence Day. After reading the draft, he cancelled it and went to Camp David to reflect. ‘Some of the most thought-provoking and satisfying [days] of my presidency,’ Carter wrote in his memoirs.[39] He emerged to give what he thought was one of his best speeches, one that history knows as Carter’s malaise speech.
By this stage of his presidency, the energy crisis had mutated into a moral and spiritual crisis. Inflation, unemployment and all the economic ills that ailed America were blamed on imported oil. ‘This intolerable dependence on foreign oil threatens our economic independence and the very security of our nation,’ Carter told America. ‘It is a clear and present danger.’[40] He asked Congress to give him authority to impose standby gasoline rationing and announced that he was setting import quotas on foreign oil. ‘Beginning this moment, this nation will never use more foreign oil than we did in 1977 – never,’ Carter emphasised.[41]
For a time, it looked like the tide had turned. Oil imports had peaked in 1977 and continued to decline until 1985. Since the trough that year, apart from during the early 1990s recession, oil imports grew each year. Every year since 1994, oil imports exceeded 1977 and in 2009 were over one third higher.[42]
Carter’s energy policies provide a test run for similar policies Western governments adopted in response to global warming. Energy policies based on the assumption of energy shortages end up creating shortages. As one historian of the Carter years has written, the energy crisis was a politically constructed artefact.[43] German car drivers did not queue for petrol because the German government decided to let the market work.
Invoking national security
is a useful indicator of poor quality policy. Compelling countries to use higher cost, less efficient sources of energy than those available from the world market inflicts a continuing penalty on economic performance. The Paley Commission’s lowest cost principle is better economics: obtain the lowest cost energy in whatever form, from whatever source, and let the economy adapt to changes in energy prices is likely to be more efficient than pre-emptively imposing high-cost energy on energy consumers. The Shah of Iran’s suggestion to the Nixon administration of building a strategic energy reserve is a better answer to the threat of temporary supply disruptions than permanently hobbling the economy with mandates for high cost domestic energy.
Carter left another bequest to posterity. In his May 1977 environmental message, Carter announced a study on the implications of world population growth for natural resources and the environment. Work on The Global 2000 Report to the President took almost the rest of his term. In his farewell address, Carter said that population growth and resource depletion were one of the top three issues confronting America. ‘The report is credible,’ Madeleine Albright told colleagues on the National Security Council when it appeared in 1980.[44] Measured by the one and a half million copies sold, it was also a success.[45]
‘The world must expect a troubled entry into the twenty-first century,’ the report predicted.[46] For sure, the report wasn’t anticipating the possible effect of the millennium bug on computer programs. Neither did it anticipate what actually happened. Writing shortly after the century’s end, Maddison found that
the world economy performed better in the last half century than at any time in the past. World GDP increased six-fold from 1950 to 1998 with an average growth rate of 3.9 per cent a year compared to 1.6 per cent from 1820 to 1950, and 0.3 per cent from 1500 to 1820.[47]
As was the custom with such efforts, the study, led by Gerald Barney, a physicist, did not analyse why previous studies predicting a reversal of the benevolent economic trends since the Industrial Revolution had failed. Instead, the report’s authors believed their methodology imparted an optimistic bias to their gloomy conclusions.[48] In 2000 people would be poorer than in 1980 and life for most would be more precarious.[49] Erosion of the Earth’s ‘carrying capacity’ and the degradation of natural resources would give rise to global problems of ‘alarming proportions’.[50]
The most serious environmental impact would be on food production, caused by ‘an accelerating deterioration and loss of resources essential for agriculture’.[51] The report predicted that by 2000, more people, especially babies and children, would be dying from hunger and disease. Many of those (un)lucky enough to survive would be ‘mentally and physically handicapped’ by childhood malnutrition.[52] In fact, life expectancy continued to lengthen. According to the UN, over the last two decades of the century global life expectancy at birth rose by four years to sixty-five and, for the least developed, countries it rose by three years, from forty-eight to fifty-one.[53]
Food production of developing countries, the report conceded, would increase, but not by enough to keep ahead of population growth.[54] Wrong again. Compared to 1970, the supply of calories per head in developing countries rose by twenty-five per cent and the supply of nutrient per head grew by twenty percent.[55] Inevitably the report predicted that oil would be running out. During the 1990s, oil production would approach its geological estimate of maximum production capacity.[56] In 1980, world oil output, temporarily depressed by the Iranian Revolution, was 62.9 million barrels of oil a day. Ten years later, this had risen by four percent to 65.4 million barrels a day and increased by fourteen per cent during the 1990s to reach 74.8 million barrels a day in 2000.[57]
In one respect, Global 2000 was prophetic of a new era. ‘Rising carbon dioxide concentrations are of concern because of their potential for causing a warming of the earth,’ it said.[58] A doubling of atmospheric carbon dioxide by the middle of the twenty-first century would lead to a 2-3oC rise in temperatures in the Earth’s middle latitudes and greater warming of polar temperatures which could lead to the melting of the Greenland and Antarctic ice caps, a gradual rise in sea levels and the abandonment of many coastal cities.[59]
Had Carter been re-elected in 1980, might it have brought forward the age of global warming to the beginning of the 1980s? More likely, it would have meant a much more problematic launch than the one global warming was to have in 1988, when the stars were in perfect alignment. Environmentalism needs prosperity to thrive. Poor economic performance during the second half of the 1970s, especially in Britain and the US, meant that the economy came first.
Global warming also needs a benign global order. As Global 2000 recognised: ‘An era of unprecedented global cooperation and commitment is essential.’[60] On Christmas Eve 1979, the Soviet Union invaded Afghanistan. In response, Carter stopped further grain exports to the Soviet Union and banned the US from competing in the Moscow Olympics. The Cold War needed to be won first.
There was another factor. The planet wasn’t warming, or at least not many people thought it was. The opposite seemed to be happening. According to James Rodger Fleming, one of the leading historians of the science of global warming,
by the mid 1970s global cooling was an observable trend. The US National Science Board pointed out that during the last twenty to thirty years, world temperatures had fallen, ‘irregularly at first but more sharply over the last decade’.[61]
Global warming needed a warming world – economically, geostrategically and climatically. The world was not ready.
‘How much do you miss dinosaurs? Would your life be richer if those giant pre-historic flying lizards occasionally settled on your front lawn?’ Ronald Reagan asked a radio audience in 1977.[62] Reagan often discussed the energy crisis and environmental issues in radio talks during the Carter years. The question about dinosaurs was his way of suggesting that species had become extinct before man’s appearance, but that feeling guilty about species loss had led to legislative over-reaction.
Reagan described himself as an environmentalist at heart who, like the majority of people, was somewhere in the middle between those who’d pave over everything in the name of progress and those who wouldn’t let us build a house ‘unless it looked like a bird nest’.[63] He didn’t buy a CIA report cited by Carter that claimed the oil would be gone in thirty years. Past government reports had consistently under-estimated oil reserves. If they’d been right, the oil would have run out by now. Even if true, what was the point of Carter’s conservation measures to reduce consumption by ten per cent if all it meant was that the oil ran out three years later?[64] Gas-guzzling Californians were not to blame for the state’s gasoline shortage, Reagan argued. The fault lay with government regulations that capped the price of oil and prevented Californian refineries from importing the low sulphur crude they were designed for.[65] Having reduced oil production, the government was now proposing to reduce consumption. ‘Why don’t we try the free market again?’ Reagan asked.[66]
As president, that’s what he did. One of Reagan’s first acts was to lift all remaining domestic petroleum price and allocation controls. The price of oil peaked at $39 a barrel the month after Reagan took office. It fell to $18 a barrel five years later and ended the decade nearly fifty per cent lower than the peak after taking account of inflation.[67] The 1980s turned out to be a decade of oil glut. The 1970s energy crisis had been solved.
After 1973, it had been an article of faith among environmentalists such as Schumacher that economic growth had gone for good, as a result of its collision with environmental limits. The pursuit of high standards of consumption in an advertising-crazed society would condemn societies to perpetual inflation, Barbara Ward argued in 1973. If pursued across the world, it would precipitate such an exhaustion of resources and such a toll of pollution that the technological system would simply crack under the strain.[68]
And so, paradoxically, the renew
ed prosperity of the 1980s that environmentalism said could not happen became the prerequisite for environmentalism’s own revival.
[1] Henry Kissinger, Years of Upheaval (2000), p. 857.
[2] Jimmy Carter, Inaugural Address, 20th January 1977 http://www.presidency.ucsb.edu/ws/index.php?pid=6575
[3] Uri Bar-Joseph, The Watchman Fell Asleep: The Surprise of Yom Kippur and Its Sources (2005), p. 226.
[4] Francis Sandbach, Environment, Ideology & Policy (1980), p. 7.
[5] ibid.
[6] Kissinger, Years of Upheaval (2000), p. 854.
[7] E.F. Schumacher, This I Believe (2004), p. 22.
[8] ibid., p. 21.
[9] ibid., p. 22.
[10] John Dumbrell, The Carter Presidency: A re-evaluation (1993), p. 172.
[11] Jimmy Carter, Keeping Faith: Memoirs of a President (1995), pp. 117–18.
The Age of Global Warming: A History Page 14