Role of conservation in the changing economics of energy

The impact of energy conservation measures on the U.S. energy supply/demand situation is examined. Considering the economics of possible energy conservation efforts, these actions are judged to be desirable if: 1) the value of the energy saved equals or exceeds the additional operating costs or investment required to achieve it; or 2) in comparison to the alternate measure to increase energy supply, the conservation action is cheaper in terms of total cost. R and D needs in energy conservation are outlined. Strategies to implement energy conservation are discussed, including 1) information programs to educate consumers on total costs of products and on opportunities to save; 2) incentives and/or disincentives, particularly for medium- or long-term conservation options; and 3) regulations and standards. A policy of total cost energy pricing would do much to encourage energy conservation. In 1974 U.S. energy use dropped 2.2%, a considerable shift from the recent historic growth rate of over 4%. This fact indicates that short-term energy conservation options are being recognized and used. Progress on longer-term conservation measures cannot be evaluated at this time, but the trend seems promising. It is pointed out that government policies to lower energy prices would discourage consumers from taking neededmore » medium- and long-term energy conservation actions, which require investment. A sensible but aggressive energy conservation program could reduce the unavoidable import gap significantly and provide a substantial slack in the energy supply required without conservation. (BYB)« less