America is not facing its first energy crisis. Those of us with some grey hair and wrinkles have lived through times like these before. Let’s see—first there was the great Oil Embargo of 1973. Service stations were closed on Sundays, gasoline supplies were rationed, and Congress mandated a national speed limit of 55 MPH.

In 1979, there was a revolution in Iran that overthrew the Shah of Iran and installed an anti-American Islamic State. This caused oil shortages and price increases that lasted well into the 1980s.

In 1991, Saddam Hussein took over the nation of Kuwait. An allied coalition led by the United States stopped the aggression of Saddam Hussein, but not before they set every possible oil well on fire and generally caused as much mayhem in world oil supplies as possible.

Photo courtesy U.S. DOE Kuwait ’s oil field in flames as Iraq retreated during the Gulf War, 1991.

So for those of us who are older, paying too much at the pump is even more familiar and tiresome than it is for the young.

Something else that we lived through in the past that we may be avoiding during this current crisis, however, are well-intentioned yet harmful government regulations intended to either conserve energy or encourage alternatives, but that did neither. There were things like the windfall profits tax which, before it was repealed, caused a collapse in oil production and an even greater reliance on imported oil than before its passage. Even the CAFÉ (corporate average fuel economy) standard brought undesirable side effects. Were it not for the fact that Congress originally exempted light trucks from CAFÉ standards, today we would have millions of station wagons on the road, probably getting around 25 MPG instead of the fleet of millions of 17 MPG sport utility vehicles that the CAFÉ regulations produced.

It is just possible that history will NOT repeat itself. So far, during this current energy crisis, the government has largely stayed away from developing regulations and is allowing the market to do its work. The market is producing results!

Graphic courtesy of the U.S. DOE The recent history of gasoline prices.

One of the great success stories of 2005 is the move toward Green Power. Green Power includes everything from sun, wind, and hydro power to renewables such as biodiesel and ethanol. On a global basis, investment in renewables exceeded $30 billion this year, compared to $7 billion invested just ten years ago. Broken down by national sectors, the United States leads the world in the development of biomass and geothermal energy (U.S. biomass development includes biodiesel and ethanol)! Germany leads the world in development of wind power, Japan in solar development, and France in the construction of ocean driven power generation.

Let’s look at some examples of the steps being taken by corporate America to move toward Green Power: Johnson & Johnson is the largest corporate purchaser of Green Power. As a matter of corporate policy it is committed to a 7% reduction in greenhouse gas emissions from its 1990 levels. It is committed to achieve this reduction by 2010! British Petroleum just announced formation of a new business unit, to be known as BP Alternative Energy, to develop low carbon and renewable energy sources. It has capitalized the unit with an initial investment of $1.8 billion dollars. It anticipates the new division will generate more than $1 billion in revenue by 2008! Safeway Stores, Inc., and General Electric Co., are also adopting Green Power on a company-wide scale.

Tracking the “Kyoto Effect”: A special green stock index has been created. The “Global Energy Innovation Index” (GEIX) tracks the performance of fifty selected renewable or low-carbon energy companies worldwide. The index has analyzed the performance of Green Power companies in countries who have adopted the Kyoto Accords and those countries (including the United States and Australia) that have not. Not surprisingly, companies doing business in countries pledged to the Kyoto Accords for greenhouse gas reduction are doing far better overall than companies in the United States and Australia. A closer look, however, shows that even in the United States the GEIX companies outperformed the NASDAQ average, and the biofuels sector of the GEIX was up 35 percent in the first quarter of 2005. The poorest performing companies in the GEIX were the fuel cell/hydrogen firms whose stock dropped an average of 13.6 percent in the same period.

All of this is taking place without Federal mandates or intervention. These advances in renewable energy sources are being driven by the market. They are being driven by investors who see the future potential for profit in Green Power. This is as it should be.

Even some government initiatives being enacted are on a voluntary basis. An excellent example is a new program just adopted by the State of New Jersey called the “New Jersey Clean Power Choice Program.” It is the first of its kind in the nation.

Through this program, New Jersey electrical consumers can select to buy their electricity from one of four Green Power companies who are producing energy from a combination of wind, solar, hydro, and landfill methane. By checking off their choices on their monthly utility bills, each consumer agrees to pay the slightly higher costs of this energy. The added costs range from about one to three cents per kilowatt hour.

Photo courtesy of MarinCounty.org New Jersey ’s choice program offers consumers a choice of energy alternatives on a purely voluntary basis. Photo courtesy of Galen Frysinger Perhaps this young boy is contemplating his future. Will he grow up in a world overheated by greenhouse gases and depleted of energy? As the present day stewards of the planet it is our decisions that may decide his fate.

Fossil fuels (petroleum and coal) are not about to disappear as our primary sources of energy. But as Green Power grows, the need for fossil fuels can diminish. And as Green Power grows, the costs will decline. This is already evident in some sectors. The U.S. Department of Energy claims that overall, Green Power has declined in cost by 8 percent in the last five years.

To succeed in a free market, renewable energy must be cost competitive. Otherwise only mandatory rules can guarantee its use. History has shown that these rules don’t work. Let’s do all we can to make sure we do NOT repeat this part of our energy past!