The world has been dependant on fossil fuels, especially oil, as a source of energy for many decades now. What is worse, a major part of the world’s oil supply is controlled by a cartel grouping mostly Middle Eastern states, which pursue their own interests regardless of the influence they have on other countries’ economies. The rest of the world has painfully felt that during the 1973 oil crisis. To illustrate the scale of the shock that developed economies suffered, let me use this example: before the crisis West Germany had virtually no unemployment, after the crisis the rate of unemployment jumped rapidly and never returned to the pre-crisis values (See: http://www.destatis.de/indicators/e/lrarb01ae.htm ). This is only one of the many examples has the crisis shocked developed economies.
Since then, not much has changed – the world has experienced a few more oil supply shocks, and in the recent years has struggled with high oil prices, which were the effect of a combination of things. The US is the biggest consumer of oil in the world, using it mainly for gasoline and heating. The dependence on OPEC’s oil has been seen increasingly painful by the American policy makers. President George W. Bush in this year’s State of the Union Address: “Extending hope and opportunity depends on a stable supply of energy that keeps America's economy running and America's environment clean. For too long our Nation has been dependent on foreign oil. And this dependence leaves us more vulnerable to hostile regimes, and to terrorists -- who could cause huge disruptions of oil shipments ... raise the price of oil ... and do great harm to our economy.” (Quoted after: http://online.wsj.com/article/SB116960205937185687-search.html?KEYWORDS=state+of+the+union&COLLECTION=wsjie/6month For comments on the Address see: http://online.wsj.com/article/SB116960576529585829-search.html?KEYWORDS=state+of+the+union&COLLECTION=wsjie/6month ).
The factors named above, as well as environmental concerns, brought up a discussion about alternative sources of energy. Unfortunately, for a long time they have been in efficient and economically unviable. The common view, which is also one that the author of this blog shares, is the following: economic effectiveness cannot be sacrificed simply because of environmental issues. This has made a large scale use of alternative energy sources a rather futuristic scenario.
Well, the future is right now. It actually seems that alternative fuel sources become cheaper and more efficient. High oil prices make it easier to achieve economic viability (For details see: http://online.wsj.com/article/SB117087922327101294.html?mod=mostpop ). This might mean that the day when energy is traded in a really free market and the oil cartel does not have a grip on the rest of the world can come very soon. Furthermore, alternative energy sources seem to be a good investment for the future which satisfies the need of many investors for a environmentally friendly policy. Hopefully in a couple of years we will be able to say “welcome to the future”.
Since then, not much has changed – the world has experienced a few more oil supply shocks, and in the recent years has struggled with high oil prices, which were the effect of a combination of things. The US is the biggest consumer of oil in the world, using it mainly for gasoline and heating. The dependence on OPEC’s oil has been seen increasingly painful by the American policy makers. President George W. Bush in this year’s State of the Union Address: “Extending hope and opportunity depends on a stable supply of energy that keeps America's economy running and America's environment clean. For too long our Nation has been dependent on foreign oil. And this dependence leaves us more vulnerable to hostile regimes, and to terrorists -- who could cause huge disruptions of oil shipments ... raise the price of oil ... and do great harm to our economy.” (Quoted after: http://online.wsj.com/article/SB116960205937185687-search.html?KEYWORDS=state+of+the+union&COLLECTION=wsjie/6month For comments on the Address see: http://online.wsj.com/article/SB116960576529585829-search.html?KEYWORDS=state+of+the+union&COLLECTION=wsjie/6month ).
The factors named above, as well as environmental concerns, brought up a discussion about alternative sources of energy. Unfortunately, for a long time they have been in efficient and economically unviable. The common view, which is also one that the author of this blog shares, is the following: economic effectiveness cannot be sacrificed simply because of environmental issues. This has made a large scale use of alternative energy sources a rather futuristic scenario.
Well, the future is right now. It actually seems that alternative fuel sources become cheaper and more efficient. High oil prices make it easier to achieve economic viability (For details see: http://online.wsj.com/article/SB117087922327101294.html?mod=mostpop ). This might mean that the day when energy is traded in a really free market and the oil cartel does not have a grip on the rest of the world can come very soon. Furthermore, alternative energy sources seem to be a good investment for the future which satisfies the need of many investors for a environmentally friendly policy. Hopefully in a couple of years we will be able to say “welcome to the future”.
