In the coming weeks we will witness the shift of power in the White House and on Capital Hill. You can guess that energy will remain in the background while the economy remains out front. Will the momentum to gain efficiencies and streamline dependence upon foreign oil and curtail the climbing costs of domestic energy sizzle?Energy continues to play a vital role in the global engine. Governmental and societal influences on energy will sway businesses, C-level executives and customers to think and even behave differently. Some of what's ahead is more regulation even as global demands for oil energy continue to fall. On the contrary, oil, not "energy" as in electricity, demands are down. The driver's window view of the price per gallon isn't the same meter keeping tabs on your electric consumption, and besides only 2% of oil is used to generate electricity in the U.S.
China, India and developing nations' demands for oil have outpaced ours, including Europe and Japan. The oil cartel (OPEC) revealed what they are willing to accept for oil to keep their economies afloat:
* Qatar needs just $10 per barrel of oil, * Saudi Arabia needs $50 per barrel, and * Iran and Venezuela must have $100 a barrel or they will face economic crisis
OPEC's cartel recently stated they would settle on $85 per barrel and the current less than $50 per barrel won't stick long according to the International Energy Association (IEA).
Here's why: global production has been on a downward trend of over 9% annually (a natural annual rate of output decline of 9.1%, IEA), meaning the world's oil supplies are finite. OPEC wants to force higher prices by less production, thus a refusal to engage in new production and so far, prices remain down. According to the warnings from the IEA, we will again see $100 per barrel and for several years, and then experience doubling of costs - $200 a barrel by 2030. Oil sands or recovery efforts take longer than predicted and the experts all agree we're on the clock.
Concurrently, CO2 levels on the planet are rising to dangerous levels. The World Bank's views seem opposing since they are citing that global demand for oil will plummet and remain down as the world experiences a long and painful recession. The World Bank goes on to say that they think oil prices per barrel will hover around $75 a barrel for three or more years. I don't the see the IEA and World's Bank's view as conflicting because the oil cartel will still get close to the $85 a barrel mark and the issue is really timing. Goldman Sachs predicts oil will bottom out around $35 a barrel. When we get nailed again at the pump is the real time to be worried about, but as far as energy (electricity) for powering our networks, this is a separate issue. While our networks can indirectly influence oil consumption, it's the juice (electricity) consumption that matters most. These are the costs that are continuing to rise, and unlike those falling prices at the pump, no relief is in sight. Who pays the most for electricity? Click here to find out.
Russia is quietly aligning with Iran and Qatar to create a similar cartel for natural gas. Now as sensitive a subject as it is - the U.S.A. started an ethanol campaign to grow corn for use in gasoline. This was a reactionary measure that I believe was intended for the best interests of our country. The result is that the corn and other grain prices (also used for alternative fuel) grew and thus supply and demand kicked in and prices went up until the futures crashed. The world blames the U.S.A. (mostly President Bush) for causing poor people around the world to suffer by not being able to afford food. (Crops for Fuel) Incidentally, Bill Gates invested a lot of dough in Ethanol too, which means he too believed in either the cause, potential for profit or maybe both--and he lost a lot of money, only he didn't get slammed for investing. Obama's guy is also pushing for U.S. ethanol production that is one more cog in the energy wheel.
IT/ITC, as I mentioned in Challenging the System to Heal & Green Itself, can play a key role in delivering green solutions. In your cost models and to whomever you are trying to sell, you must figure out and figure in equations of how to green your customers and users. You will also need to determine how you can either directly or indirectly create energy benefits and whether or not they are reductions in foreign oil or domestic energy (electricity) sources.
The rules have changed, and the voters have spoken and voiced what they demand -change. With these changes come enormous shifts of power (I mean energy) and how we use it to change the landscape of IT/ITC solutions on any scale. The energy problem is an inter-generational problem. The experts have forecast how long and what proactive methods we must employ (conservation and efficiency) and what kinds of energy we must implement and when, to enable us to keep up with demand.
New energy sources will be tapped and they will likely include nuclear and clean coal, as I previously reported in The Balance of Power {see MacKenzie Energy Policy 31 (2003) 1183; page 4 U.S. Mid-range Abatement Curve - 2030}.
So in the days ahead, remember that gasoline prices do not reflect prices of electricity. Energy production from new alternative sources including nuclear energy adoption is slow, and figuring out how to pay for alternative energy production systems on larger scales remains politically charged. Many energy experts agree that we must act now, else suffer dire environmental consequences and more economic woes. Concurrently, the same environmentalists haven't made mention of the positive effects of the slowing global economic machine -less production means less fuel expended. Then it will be interesting to see if the new administration has the finesse to tackle energy and make policy amendments to move the U.S.A. in IT time, off of foreign oil dependency. IT/ITC's role will expand to assisting the company to get green and in helping direct customers and users in getting green too. This year's (2009) funds for energy causes may not gain the visibility needed since mindsets about energy remain fixed on prices at the pump.
