The past, present, and future of our energy economy are on display at the Museum of Modern Art. Don't look for a barrel of crude; admire, instead, what curator Terence Riley describes as "a remarkably beautiful object, half metal, half composite, that goes together in this crazy way that only a computer could understand." A mere 4 feet long, this relatively small but stupendously powerful exemplar of indigenous American craft is a fan blade from a jet engine that powers a Boeing 777. The unnamed artists who created it work for General Electric, the corporate Medici of the modern turbine.
Oil is not the dominant fuel of our modern economy. Oil supplies about 40 percent of the raw energy we use, and we use it mainly in our cars. Coal, uranium, gas, and hydroelectric power supply the other 60 percent or so. And by far the most important use of this not-oil fuel is to produce high-speed streams of hot gas that spin much larger versions of the blade on display at MoMA in New York. The blades spin the shafts that turn the generators that power our homes and offices.
And electricity—not oil—defines the fast-expanding center of our energy economy today. About 60 percent of our GDP now comes from industries and services that run on electricity. All the fastest growth sectors of the economy—information technology and telecom, most notably—depend entirely on electricity. More than 85 percent of the growth in U.S. energy demand since 1980 has been met by electricity.
The electrification of our economy is accelerating. In factories and refineries, electrically powered microwave ovens, lasers, welders, dryers are steadily displacing gas-fired ovens—because these new tools are far more precise and ultimately cheaper. This will move about 15 percent of our energy economy into the electrical sector over the next 20 years.
Even more significantly, the car is now being transformed into a sort of giant electrical appliance. Hybrid cars propelled by onboard, gasoline-fired electrical generators are indeed coming. Not for their fuel efficiency, or because they run cleaner—though they are efficient, and they do run clean. But because the new electrical drive trains that carmakers can now build offer much better performance, lower cost, and less weight. Five to 10 years from now—sooner than you think—you'll be driving around in a sort of two-ton Cuisinart.
It won't run more than about five miles on its onboard batteries—that's why it will still have a gasoline engine. But its batteries will take it about that far—a hefty onboard battery pack is essential to provide bursts of power for acceleration. As our city streets begin to fill up with these monster appliances, people will begin topping off their batteries from the grid. The vast majority of trips are under five miles. Cars spend most of their day parked. And the grid—fired by much more efficient power plants that burn much cheaper fuels—can recharge a hybrid car's battery for between one-third and one-tenth of the cost of power generated by the car's onboard gasoline-fired generator. Within a decade, we could readily be shifting a quarter or more of a typical driver's most fuel-hungry miles from the gas tank to the grid, very little of which is lighted by oil.
Now, back to art. Blades like the one on display at MoMA cost a lot. America currently spends about $400 billion a year on raw fuel—make that $500 billion if oil stays at $50 per barrel, which it won't. But we spend at least $500 billion a year on blades, furnaces, generators, car engines, motors, light bulbs, lasers—all the things that we use to transform, refine, and purify energy as we dig it out of the ground, and turn heat into motion, and motion into electricity, and electricity into laser light, and so forth.
The upshot: We are far less sensitive to the cost of raw fuel than we used to be, when the art-to-fuel ratio was a lot lower. Raw fuel accounts for about one-third of coal-fired power—which is to say, half of all our electricity—and only one-tenth of our nuclear electricity. Fuel costs represent under 20 percent of the typical cost of driving—not because gas is cheap, but because we spend so much more turning the exploding gasoline into a safe, comfortable ride. And you hardly think about raw-fuel costs at all when you check in for laser surgery and use half-cent-per-kilowatt-hour coal in an industrial boiler to create the $200 light of an ytterbium laser.
We are thus witnessing the economic twilight of fuel. America burns enough fuel to release 100 quadrillion BTUs of raw thermal energy every year. That's a gargantuan amount, and it keeps rising geometrically. Yet year by year, the cost of all those quads grows less and less important in our modern economy. The quality and cost of the engineering hardware matters far more.
If the future favored by the greens ever comes to pass, the art will count for everything. The 130 turbines GE is building for America's first offshore wind park five miles off Cape Cod will have 150-foot blades, mounted on towers rising 400 feet above the water. The wind is free and will blow forever; the art will account for the entire cost of the power. But that doesn't mean that wind is the way to go. Modern engineering art isn't cheap, conventional fuels still are, and wind is only one among many alternatives.