Tuesday, May 13, 2008

Need Energy

http://www.forbes.com/business/2005/11/01/oil-prices-1861-today-real-vs-nominal_flash.html?feed=rss_popstories


Besides education (and urban dance styles), another topic that always intrigues me is energy.

Fossil fuels - oil, coal, and natural gas to name a few - are not renewable, and it is possible that the time may have come where beyond which products based on oil may never drop again. They may go down a dollar here and there, but the overal trend may be that prices will go up, up, up and up, until there is no more.

This phenomenon, based on the current state of the world, is inevitable. Demand for oil grows everywhere as the American lifestyle spreads. Who knew fifteen years ago that kids in the heart of communist China would be collecting Air Jordans?

Along with the ability to be collecting Air Jordans would have to be an underlying economy competitive in the global market. The average Mauritanian, who right now is having trouble just getting enough to eat, has no capacity to be collecting designer shoes. But the economy of urban centers in China frees time leisure time and spending cash for those who have found success - for some, enough cash to have globally competitive purchasing power, enough to afford the same luxuries as Americans, the wealthiest people in the wealthiest nation on Earth.

The basis of these competitive nations is oil. The amount of productivity unleashed by burning oil to run our machines and our factories, our cars and trucks and airplanes... well, I don't have any figures for it, but as far as I've read, the sheer amount of energy we harvest from burning oil is unrivaled by any other source - nuclear, wind, hydroelectric, geothermal, or solar. At this point, there is nothing that can replace the amount of energy we would no longer be able to get once oil is gone.

In other words, our lifestyle HAS to change. The question is not if it will change, but when it will change, and how.

Fortunately for most everyone reading this, we are Americans or are gainfully employed in America. At the top of the food chain, whatever happens will likely affect us the least out of all the world's people, and whatever transitions there are will likely be the smoothest for us.

Countries like Mauritania are already feeling the effects of highly-priced oil in ways that are not little or what I imagine anyone there would consider smooth: the price of grains, which are rising with the price of oil, is reaching a breaking point where as a nation, Mauritania cannot import enough food at low enough prices to feed its own people.

Basic supply and demand explains it. If there are two ways to buy something, people will choose the cheaper option. Something a lot of people buy - fuel - comes in several options, one based on oil, the other based on grain. Until now, biofuels have been far more expensive than the equivalent amount of oil; however, oil prices have risen to the point that more and more people are willing to spend their money on biofuels instead. More money on biofuels means more grain used to produce biofuels; more grain to produce biofuels means less grain to eat. Less grain to eat means grain gets more expensive.

Mauritania produces only 30% of its own food - the rest must be imported. But its people are poor - when you can sell grain to Europe for $5 (not a real price), why would you choose to sell it to Mauritania for $4? Maybe because you have a good heart, and many grain producers do - but what if Maritanians could only buy for $3, or $1, or for only pennies?

What's the solution to all this? I don't know. What I do know is that people much smarter than me are working on it, and I hope they come through. I also have the added security of being American, where what Mauritanians are going through is so far removed from my sphere of consciousness that I don't have to think about it if I don't want to. But it would be good to make people aware; it would make me happy to see people understanding that this is a problem, and that we don't have a ready solution. Change must happen; hopefully we do change before it's too late.

1 comment:

Dan said...

nice piece. poor countries are really in a world of hurt right now. i can't imagine the in Burma, where people were dying of starvation even before the recent spike in oil prices AND the cyclone.

hopefully here at home rising gas prices will make people aware that reliance on oil is a problem. if the US doesn't change its energy infrastructure drastically in the next decade or two i think we'll be due for a paradigm shift in our lifestyles on the scale of the Great Depression. (and I consider myself an optimistic idealist :/ )