Hill+Knowlton Strategies

It was the most famous cardigan in world energy policy. On a bright winter’s day in February 1977, less than two weeks after his inauguration as US President, Jimmy Carter settled into an armchair (casually dressed) for his first ‘fireside chat’ with the nation. In the address, Carter revealed that his ‘strategic priority’ as president would be to implement the US’s first long-term energy strategy. The address was well received. Only a few years before, in 1973, the Arab oil embargo had sent oil prices soaring. Americans and Europeans remembered long queues at petrol stations and soaring gas prices fuelling high inflation and economic malaise all round. Back in 1973 Richard Nixon had become the first American president to call for the US to become energy independent – the first in a unbroken chain of presidents and presidential candidates who have called for the same since, Mitt Romney becoming the latest last week.

 Several months after his first report in 1977, Carter returned to the airwaves for an “unpleasant talk” with the American people on the “the energy crisis”. His national energy strategy would require “considerable sacrifices” from them he said. It would be the “moral equivalent of war” (or MEOW, as its critics labelled it). It was a disaster. 

 Carter’s plan was underscored by a genuine belief that the world was rapidly running out of oil and gas. In 1977 oil and gas prices had dropped significantly from their 1973 peak – but Carter was convinced by evidence of “peak oil” that suggested that oil supply would be unlikely to peak much beyond its then current level of around 60mbd (it’s now at around 90mbd) and gradually drop off in the early 1980s. Carter’s plan was threefold: re-energise the American coal industry, launch a massive push on energy conservation, and plough investment into renewables, with a headline target for the US to be 20% solar-powered by 2000.

 To a large extent the Carter presidency launched the renewables industry in the US and the world. Huge sums of money were invested in solar, ‘synfuels’ and other technologies, the Department for Energy was created and Carter even had a solar water heater installed on the White House roof to much media fanfare. But the American people didn’t buy it. For many Americans the message on energy conservation and scarcity was just too gloomy and the complex subsidy regime set up to support renewables ended up being inefficient and costly.

 In 1980 – after the Iranian revolution had wreaked further havoc on world energy markets – Ronald Reagan defeated Carter on a ticket to deregulate the market and end federal support for renewables. The infant renewables industry practically collapsed in the US while a huge market based drive for domestic fossil fuel production began.

 35 years later and energy policy is back as a strategic, government directed, priority for presidents, prime ministers and chancellors.

 As the US Presidential election itself approaches, the candidates’ energy narratives closely mirror those of Decision 1980 with a Republican challenger accusing a sitting Democrat of reigning in domestic production through (among other things) burdensome environmental regulation and costly renewables subsidies. How it will all play out is, of course, difficult to say.

 However, it would appear that the current (unnamed) White House adviser quoted by Daniel Yergin in his magisterial new book The Quest might be right: “these walls are still haunted by Jimmy Carter’s sweater”.  

 Now watch the sweater in action

http://www.youtube.com/watch?v=MmlcLNA8Zhc