Authors' Note

As this manuscript goes to press, the uncertainties surrounding the energy outlook appear much greater than they were a year ago when we put the first draft on paper. Although the Arab oil embargo has just been lifted after almost a half year of restricted flow, it is nevertheless difficult to forecast the price and quantity of Middle East oil that will be made available to the world. The price of oil in the U.S. is even more uncertain, with the feasibility and ramifications of "Project Independence" yet to be explored.

We had to ask ourselves what the "energy crisis" and its aftermath imply for the conclusions reached in this manuscript. While there is no easy answer to such a question, this is how we view the shape of things. First, there has emerged a clear desire to lessen our nation's dependence on foreign fuel sources. While this desire is constrained by the political, economic, and environmental costs of such a change, the trend is clearly toward higher capital expenditures by the energy industry on exploration, development, and production facilities than would have prevailed in the absence of such a goal.

Second, the rationing of gasoline and fuel oil, the raising of fuel prices, and the employment of moral suasion by our government officials, energy companies, and concerned citizens have all had a pronounced effect on the growth rate of energy demand. Conservation measures in the form of better building insulation, smaller automobiles, reduced street and commercial lighting, lower (higher) average temperature maintenance in space-heated (cooled) areas, and a host of other things have begun to lead us on an energy consumption path that deviates from the historic trend.

Our conclusions are based upon an assumed 4.2 percent growth rate in energy consumption, which is essentially an extrapolation of the growth rate in energy consumption during the 1960s. That growth rate was experienced, at least in part, because of the falling price of energy relative to other goods and services. In the past year world oil prices have risen dramatically. Even if they were to fall back to their previous levels, independence would require