Systems Thinking Basics

1. Those in favor of deregulation of the electric utilities have a theory about how competition can lower electricity prices. What is their theory?

2. To uncover the structure that underlies this theory, begin by listing the key variables in the theory. (Hint: Try to list four.)

3. Graph the behavior of these variables over time.

4. Now draw a causal loop diagram that shows how the variables influence each other. As with Activity 1, make sure each link in your diagram has an s or an o. Label your loop with an R or a B. Add any necessary delays. Finally, check the diagram's accuracy when you're finished.

1. To build a causal loop diagram of this story, start by identifying the key variable that leads to everything else. That is, what prompts Americans to buy foreign oil and to look for alternate sources of energy?

2. Without worrying about loops yet, think about the nature of this dynamic. As energy shortages increase, Americans buy more foreign oil and develop other energy resources, and then the energy shortage gets eased. What kind of process do you sense at work here: reinforcing or balancing?

3. Draw a simple multiloop diagram that shows how energy shortages, oil imports, and development of alternate energy sources influence each other.

4. Now think about the role that oil addiction-the craving for a short-term "fix"-plays in this sce-nario. Each time the U.S. buys foreign oil, It becomes more and more dependent on that energy source. As this addiction grows stronger, it diverts attention away from efforts to develop alter¬nate energy sources. Neglecting alternate sources in turn only forces Americans to become even more reliant on imports. What kind of process does this part of the scenario sound like to you: reinforcing or balancing?

5. Try adding an arrow that links "Addiction to Oil Imports" to the diagram you drew in Step 3. Add any important delays.
What does the new version of your diagram suggest about the impact that an intense, short-term need can have on long-range, more effective solutions to the original problem of energy shortages?