This time of year, our lawn is host to goodly numbers of birds - robins, English sparrows, finches of various flavors and some whose names I don't know. We lure them with a feeder in our backyard and I'm sure Patti and I spend several minutes a day watching them through a picture window that overlooks their coming and going. And, while the picture window supplies us with a constantly changing view, it does not treat our winged friends nearly so kindly. You see, at certain times of the day, reflections on our window feed back to our birds a mirror image of the backyard. Lifting off from the bird feeder, they see before them what is behind them. And, not infrequently they fly straight into the window. They stop abruptly, of course. It has to be quite a shock to discover that what is behind you is not the same as what is in front. At this point, I might be tempted to say something about bird brains - except for the fact that we humans also are prone to deceptive images thrown up by the past. Today, I think we hear a great many voices painting past images as they look to the future. We hear that the price of oil soon will rise to its former elevated position; the price of copper will bounce back; a hungry world soon will escalate the demand for food and our agricultural industry will be back in the black. In fact, we can hear hope from many voices telling us that our major resource-rich, basic industries are poised to fly up. I can hope that the voices are right, but I keep thinking that those expressions come from people seeing false images. Most certainly, it is more comfortable to see the past, rather than acknowledge that the world economy is being restructured and that the restructuring is affecting the Rocky Mountain states profoundly and negatively. The worst mistake we could make may be to place too much credence in the images from our past. We can be lulled into a dangerous complacency. What we need is a tighter belt and the will to do some serious bootstrapping. Before proceeding, I would make two points: First, it is not my intent to be a prophet of doom. But I do think we need some healthy doses of realism, if we are to avoid the shock of flying into a false future. Second, by now you have detected that I have choosen to diversify the assignment you handed me on utility diversification. As I proceed, you soon will see that the roots of diversification for many utilities lie in the subject that we ponder now. We could begin in many places, but let's start with energy. It is pervasive in our businesses and industries. We all use it. And, despite conventional economic wisdom, we are using less of it. The price is down, but we have not reverted to our profligate ways. That is true whether you look at the industrial customer or the residential consumer. As a nation and as a people, we have learned to do more work with less energy. A few statistics illustrated the point. If we use 1973 as the base year, energy use in the United States has declined almost I percent. If we examine the year of peak energy use, 1979, the decline approaches 7 percent. Let's look at it another way. In 1973, for every dollar of gross national product, the United States consumed 27,100 Btu of energy. Last year, 1985, the comparable figure was 20,700 Btu - a decline of 24 percent. So, not only are we using less energy, but we are using it more efficiently. Even though the price of energy has declined, we are unlikely to use substand with natural gas and petroleum consumption. Use of natural gas has dropped almost 21 percent since 1973. Petroleum consumption has declined 1 I percent since 1973 and almost 19 percent since 1978, when the U.S. used a record quantity of petroleum. We also know there's been no appreciable change in amounts of oil and gas used since 1981. We weathered both a sharp recession and a healthy recovery without altering the amount of those fuels used. That the use of oil and gas dropped sharply, while the total use of energy merely slumped a bit is easy to explain. The use of coal, nuclear power and hydroelectricity from 1973 through 1985 increased almost 48 percent. Some people will tell you that the large decrease in the price of oil and gas will result in increased demand that will displace coal, nuclear and hydropower. In turn, demand will force the price of oil and gas upward. I doubt it. From the poking around I've done on the subject, I suspect there may be some short-term displacements, but they will be, for the most part, cancelled out by declining use among existing customers. For instance, we all know what has happened in the automotive sector. In 1973, the average U.S. automobile made 13.1 miles to the U.S. gallon of gasoline. In 1984, the most recent available statistic, the average auto made 16.94 miles to the gallon. That's a 19 percent improvement. Because annual miles driven per automobile are essentially unchanged over the period and the number of cars on the road is not increasing, we are witnessing a drop in this segment of the petroleum market. That trend will continue. Now, let's look at energy consumption patterns still another way. Between 1973 and 1985, consumption in the residential and commercial sectors of our economy increased total energy use by 11.2
Utility Diversifications