ENERGY: LOOKING PAST THE PANIC AT THE PROBLEM

KEY ASPECTS OF THE CURRENT ENERGY SHORTAGE ARE SURVEYED. STATISTICS HAVE OBSCURED THE DIMENSIONS OF THE ENERGY SHORTFALL AND THE PRACTICAL PROPOSALS FOR DEALING WITH IT. UNRESTRICTED USE OF ENERGY WAS ENCOURAGED BY PRICE CONTROLS AND NEW CONTROLS SUCH AS RATIONING WILL NOT HELP THE PRESENT SITUATION. THE POLICY DILEMMA CONFRONTING CENTRAL BANKS IS REPORTED. THE SHORTALL'S PERVASIVE EFFECT THROUGH THE INDUSTRIAL WORLD IS REVIEWED. IT IS DIFFICULT TO DISTINGUISH THE IMPACT OF THE OIL EMBARGO FROM THAT OF THE RESTRICTIVE MONETARY POLICY. THE TIGHTENING EFFECT OF THE EMBARGO WILL DEPEND ON WHETHER GOVERNMENT ACTIONS SUPPORT RATHER THAN FRUSTRATE THE ADAPTIVE MECHANISMS OF THE PRIVATE ECONOMY. A GRAPH ILLUSTRATES THE POINT THAT UNTIL RECENTLY, ENERGY PRICES WERE FALLING IN RELATION TO ALL OTHER PRICES. THIS LED TO THE PROFLIGATE CONSUMPTION OF ENERGY AND ALSO TO A SHAFT AWAY FROM COAL. A SOLUTION TO THE PRESENT PREDICAMENT WOULD BE TO LET THE PRICE OF ENERGY RISE. THE OPTION OF RATIONING IS DISCUSSED AND THE DEFECTS AND FLAWS IN NON-PRICE RATIONING ARE DETAILED. RATIONING OF CONSUMPTION BY PRICE WILL WEAKEN THE INCENTIVE TO DISCOVER AND DEVELOPS FRESH ENERGY SOURCES. TO DEVELOP THE WILL TO ACHIEVE A LARGER SUPPLY OF ENERGY IN THE SHORTEST POSSIBLE TIME, FEDERAL AND STATE ENERGY-PRICE POLICIES MUST BE RADICALLY REFORMED. THE RATE OF MONEY-SUPPLY GROWTH, THE RATE OF PRICE INFLATION, THE DEMAND FOR MANY AND THE PRICE LUBRICANT ARE SOME ASPECTS CONSIDERED IN A DISCUSSION OF CENTRAL BANKS.

  • Corporate Authors:

    Monthly Economic Letter

    ,    
  • Publication Date: 1973-12

Media Info

  • Features: Figures;
  • Pagination: p. 1-8

Subject/Index Terms

Filing Info

  • Accession Number: 00202432
  • Record Type: Publication
  • Files: TRIS
  • Created Date: Jun 5 1974 12:00AM