Monday, July 7, 2008

Planning a Future Without Oil

With the price of crude hovering above $140 a barrel there is significant pressure to reduce and manage our energy consumption. Goldman Sachs has predicted that we will soon hit $200 per barrel.

Politicians and commentators are quick to offer solutions or attribute blame. However many of them deny the fact that in the not too distant future, supply will not be able to keep up with demand. Drilling cannot fix this and speculators are not to blame. Speculators are simply reading the markets. Making pariahs out of speculators is yet another way to avoid the reality of the energy problems we face. And drilling for oil in Alaska or off America's shores will further degrade the environment and do nothing to reduce the price of oil.

Even the much maligned government of China has put energy efficiency on the top of their agenda. Within the realm of today's technology it is entirely possible to achieve a 10% reduction in energy consumption. Although inflation is a real problem, there are some upsides to increased oil prices. The high price of oil exerts pressure to reduce consumption and research alternatives.

Although oil is still part of the energy equation, in the future we will have a more diversified energy economy that is much less dependent on oil. If we are to be weaned off of oil we will need to focus on energy in a methodical way. From a policy point of view we need incentives and disincentives in support of efficiency and alternatives. We need national and global energy strategies.

1 comment:

Anonymous said...
This comment has been removed by a blog administrator.