At times when an ever increasing demand for energy calls for corresponding expansions of supply, it may be worthwhile to contemplate the possibility of bringing the supply and demand to equality by reducing the demand or at least by reducing the growth of demand. In other words, the attention could be focused on the demand rather than on the supply side and one could investigate the desirable effects of energy conservation.

Recent international comparison of energy utilization have revealed that Canada's consumption of energy is higher than that of other industrial countries. This fact is well demonstrated by Figure 1, where data showing energy consumption (millions of tons of oil equivalent, MTOE) per constant (U.S.) dollar value of gross domestic product (GDP) are plotted for Canada, the U.S. and the average of seven industrialized countries (Japan, France, West Germany, Italy, the Netherlands, Sweden, and the U.K.) during a recent time period. Such international comparisons of energy use brought about insinuations that in Canada (and in the U.S. as well) energy is being used wastefully. More precisely, suggestions have been made that in Canada (and in the U.S.) we needlessly consume more energy per unit of utput than do other industrial countries. If this is so, then a potential for energy conservation in this country should exist and if realized, the present rate of use of energy could be slowed down. This would have the desirable effect of delaying the exhaustion of relatively cheap conventional energy sources and of providing more time for the development of Canada's more expensive energy resources such as the heavy oils, the tar sands, tidal power or solar energy.

The focus of attention in this paper will be all the question whether or not Canada is a high and wasteful user of energy and whether a conservation potential exists and can be exposed. We must therefore begin by making it clear what is meant by energy conservation and follow with an international comparison of energy use which may offer insight into the question at hand.

What is Energy Conservation?

To different people energy conservation may mean different things. The general meaning of the word ‘conservation’ is simply a careful protection, management of preservation of something with an overriding objective to prevent undue exploitation or plain destruction. This is a very general definition. To be useful for the purpose of the present inquiry, the definition must allow monitoring of conservation through time and also permit a meaningful comparison of different states of conservation between two countries.

The economic theory of capital can provide an environment within which some insight into the question of conservation of energy or other resource assets can be gained2. Imagine for example an owner of a physical asset such as a pool of crude oil. Assuming that this producer will attempt to maximize his profit over the productive life of the pool, he will have to decide how much of the oil he should produce now and how much in the future.

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