Buddy, my furnace repairman, tells me it’s time to buy a new furnace. And I’d better act quickly if I still want to order the old mid-efficiency model. In the New Year, I have to buy a high-efficiency one, which, of course, costs twice as much.

Welcome to the brave new world of energy scarcity—it’s not only smaller, but also more costly. As energy prices continue to climb, you can expect to pay more, not less, for all the new energy-efficient cars and devices for your home.

But don’t count on actually saving any energy.

Efficiency may be the holy grail of the economist, but it’s a total head fake for the conservationist. And while one is being used to promote the other, the two concepts are as different as day and night.

The fact that the high-efficiency furnace generates more heat for a given amount of fuel burnt doesn’t necessarily mean I will end up with any fuel savings. As the cost of my heating falls, might it just allow me to set my thermostat higher? If so, my energy savings go right up the chimney.

That’s just where all the energy savings in the auto industry have gone over the last four decades—up the tailpipe, actually. Despite all the efficiency gains mandated by rising CAFE (corporate average fuel economy) standards, your average North American car consumes just as much fuel today as it did back in the early 1970s. Sure, the engine is 30 per cent more efficient, but now it’s hauling around an SUV that’s driven about a third more per year than a vehicle was back then.

And it’s no different in your home. Don’t be fooled by the fact that even today’s kettle has to meet some government-mandated energy-efficiency standard. Your house consumes a lot more energy than your parents’ did.

Even the most energy-efficient central air conditioning system sucks a lot more power than a bedside fan. Those two or three flat-screen TVs you have? Each one consumes about four times as much power as the old black-and-white in your parents’ living room. And while today’s furnace is certainly more energy-efficient than your parents’ was, the size of the average house it’s heating has doubled from the meager 1,500 square feet it was back then.

From our homes to our vehicles, what do we do when greater energy efficiency lowers the cost of consuming energy? We consume more of it, not less. And the rebound created in demand as the cost falls nullifies all the conservation gains that greater efficiency made possible. Paradoxically, efficiency gains encourage us to consume more of the very resource we are trying to conserve.

With that in mind, I told Buddy I was ordering the old mid-efficiency model. Not only does it cost half as much as the high-efficiency furnace, but I’ll probably end up burning less gas as well.

  • gregor.us

    Nice looking blog, Jeff. It will also be easier for everyone to find you here, should they miss anything you are publishing in broader online media. As to the topic of this post, I took a long series of notes on Sankey's big Peak Oil report, which came out last October. Although I think that's an ambitious report he did seem to miss Jevons/Khazoom-Brookes factors. Also, he seems not to understand that the marginal utility of a small amount of oil to the new user in the developing world is high. I have written that the developing world is indeed the structural mechanism that gets us to unthinkably high prices.



  • k'cheng

    Jeff – you raised some good points. I've heard of these points before from other insightful people. Summarily, you're arguing higher efficiency does not equate to higher energy conservation, if we don't change our demand. What would you say people can do to change demand for energy? From an external perspective, I see energy prices need to be as expensive as now, and more in the future. I also see governments need to levy fees and taxes. From an internal perspective, I see people need to embrace the idea of energy conservation by making a greater effort to consume less, and educate the next generation. Finally, from a macro perspective, I see (energy or world) crises to remind all parties the importance of these natural commodities. Your thoughts?

  • acchikocchi

    This is the kind of hackneyed argument you get from the good folks promoting the oil industry. It is more a case of 2 steps forward, one step back. I got the high-efficieincy HVAC system and yes it cost twice as much. But the BPU paid $10,000. I am getting $1200 rebate from Trane. And I get $1500 Fed tax credit. Which brings it back down to the same cost I would pay for an outdate “low efficiency” HVAC system. Am I mad that Trane raised prices? Yes! They are abusive in their price hikes. But…let's look at the big picture shall we! As part of the deal to get the $10,000 I was told I had to add more insulation to the attic. I went from R38 to R60. It saved me 30% and it cost very little. And I was shocked to see the difference in my first month's bill. For December I paid $80.00 for Nat Gas compared to $240 last December! “And get this, last year was not as cold in December!” I cut my Nat Gas bill by 2/3rds! Do I keep the home at a higher temperature? Yes. Your argument is correct about human nature. If it costs less, people use more of it. But I'm not using that much more. My house is toasty at 69 degrees. We used to keep it at 60 degrees and suffer. Big difference. And we are paying 2/3rds less! Is my house bigger than my parents? Yes. Like you said–twice. Their home was about 1500 sq feet. Mine is 3000 sq ft. But my heating bill is way less. Your argument is circular. Man can never improve, so why try. Out with the new and in with the old. You are not the first fossil fuel promoter to come up with this hackneyed argument.

  • David

    Great service to civilization, Jeff. The number one problem on the living earth today is too many human beings. Every man should seriously consider getting a vasectomy. We can't avoid the coming pain of our lifetimes, but 100 years from now the world could be much better off if men stand up and take responsibility for the deteriorating quality of life of their offspring.

  • SuperMMX

    You have elastic and non elastic consumption:
    Efficiency gain can only reduce non-elatic consumption.
    Car's are highly elastic – cost less to run – used more…
    (impose a rod tax based on the vehicle miles driven and and square or cubic pover of loaded vehicle axel load (proportional to the road wear done by vehicle) to reduce elasticity. So it will charge drivers proportionally to the wear to the road surface, and disencourage them to drive huge empty cars/vans.)
    Heating is less elastic (especially in the hard frost) – you need at least +18 celsius in the house (Old medical norm) and around 20 in the bathroom, but you unlikely to use more then +25 in any part of the house. So if the outside temp is -15 degrees – than you have to heat difference of the 33 (18 inside) or 40 (25 inside) degrees. So there is much more gain from efficiency/insulation increase than with the cars.

  • andres

    Huh? Are you trying to make a point? Talk about pretzel logic. Perhaps this kind of misinformation or misleading “expert analysis” is better suited for Fox News. I was hoping to get some real (non partisan or non ideological) insights into how efficient applicances and vehicles somehow actually use more energy. But all you are saying is the DECISIONS of the consumers of the energy (bigger homes etc) lead to more consumption. If people are dumb enough to negate the savings and want to continue ruining the planet for future generations (and they are – they elected GW Bush twice), don't blame the efficient products. Weak.

  • claudeshogun

    Comments and graphics on oil, consulting this blog in another language is possible using the tool “Google Translate ” button in the upper left column, simply select the language your choice.


  • the heat engine model

    A timely post. It brought to mind this recent study: http://unews.utah.edu/p/?r=112009-1

  • http://www.thenucleareconomy.com/ Zachary

    Ah yes, the Jevons Paradox. This was put forth by English economist William Stanley Jevons in 1865, and it has yet to be proven wrong. Of course, if we are forced to use less oil geologically, even with a rebound effect we will still use less oil. Efficiency, therefore, can soften the blow, and prevent the economy from shrinking as rapidly.

  • http://www.thenucleareconomy.com/ Zachary

    Ah yes, the Jevons Paradox. This was put forth by English economist William Stanley Jevons in 1865, and it has yet to be proven wrong. Of course, if we are forced to use less oil geologically, even with a rebound effect we will still use less oil. Efficiency, therefore, can soften the blow, and prevent the economy from shrinking as rapidly.

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