us oil demand encourages alternatives

  1. 39 Posts.
    This was in the Australian today...

    THE irony is delicious. George W.
    Bush as the reason the world
    successfully responds to climate
    change. Que? It gets weirder. He
    may also be the reason the US car
    industry declines into irrelevancy and
    there’s a boom in alternative energy.
    Think about it. If, as Goldman Sachs
    and others predict, oil hits $US100 ($129)
    per barrel in the next few years, the
    world will become very focused on the
    efficient use of oil.

    Hybrid vehicles will take off, large
    petrol-guzzling four-wheel drives will be
    bought only by those who need them and
    large amounts of capital will flow into
    alternative energy companies and research.
    Energy independence will become
    a key priority for many countries
    and with that level of priority, combined
    with a focus on climate change, renewable
    energy may well rise from oil’s ashes.

    Thanks, President Bush. Who would
    have thought he could achieve such a
    startling turnaround in favour of the
    global environment? Under US leadership,
    the world has failed for several
    decades to face up to the obvious:
    reliance on oil is dumb security strategy,
    irresponsible economic planning and
    dangerous environmental policy.

    As The New York Times’s columnist
    Tom Friedman argued recently: “By
    doing nothing to lower US oil consumption,
    we are financing both sides in the
    war on terrorism and strengthening the
    worst governments in the world. That is,
    we are financing the US military with our
    tax dollars and we are financing the
    jihadists - and the Saudi, Sudanese and
    Iranian mosques and charities that support
    them - through our [petroll purchases.
    The oil boom is also entrenching
    the autocrats in Russia and Venezuela,
    which is becoming Castro’s Cuba with oil.

    “By doing nothing to reduce US oil
    consumption, we are also setting up a
    global competition with China for
    energy resources, including right on our
    doorstep in Canada and Venezuela.
    Don’t kid yourself; China’s foreign policy
    today is very simple: holding on to
    Taiwan and looking for oil.”

    Friedman then went on to argue for
    taxes to double US petrol prices as a part
    of what he calls a “geo-green” national
    security strategy. Maybe the market will
    do it for him.

    So why do I give Bush the credit for the
    projected super spike in oil prices? Climate
    change is by any reasonable judgment
    a risk that warrants significant
    action. Yet Bush has scuttled the world’s
    efforts to tackle this, with the help of
    Exxon Mobil chief executive Lee Raymond
    and other oil industry friends.
    Under this leadership. the American
    people have been led to believe climate
    change doesn’t matter, oil will keep
    flowing and there’s really no need to
    worry. Cheap energy equals freedom! Go
    buy that petrol guzzler - it’s un-
    American not to. Up goes oil demand.

    Then he invades Iraq. Blood for oil? I
    doubt it. This was more about US power
    in the region and the world, with oil a
    convenient side effect. He really does
    believe he’s spreading democracy and
    freedom, as he defines it. But as a
    consequence, world oil markets are
    spooked. Oil production in Iraq could be
    boosted if the country were stable, but
    that isn’t going to happen anytime soon.
    Markets are also jittery about terrorist
    attacks on other oil suppliers in the
    region. Up go oil prices again.

    Meanwhile, Bush is spending and driving
    up US debt like there is no tomorrow
    - does he know something we don’t? So
    US demand for everything goes up, the
    Chinese economy booms on the back of it
    and China sucks up the world’s oil
    supplies. Oil demand is thereby entrenched
    on a clear upward trajectory.

    Despite decades of effort, the world’s
    scientists and environmentalists have
    failed to get the world to focus on
    reducing oil use. But Bush has managed
    it. Of course, he is not responsible for
    “peak oil”, as it is called - the point
    where oil production peaks and goes into
    decline. That was coming regardless.
    What he has done is make it a 2005 issue
    rather than a 2025 issue. That’s big.

    What it means is that we’re likely to see
    oil prices rise earlier and keep rising until
    the point where peak oil becomes clear and
    prices stay there until we reduce demand
    dramatically. Perhaps over $US100 as
    Goldman Sachs predicts. In response, we’ll
    see dramatic shifts in the economic prospects
    of, and balance between, countries,
    sectors and companies.

    Who’s ready for this new world? Not
    the US car industry, which makes its
    money on gas guzzlers and is laden with
    pension and healthcare costs. Those
    who are ready for it, such as Toyota,
    already have higher petrol prices in their
    home markets. The US car industry has
    been led by Bush and Raymond into the
    deluded belief that the world will stay as
    it is, that cheap energy is a basic
    freedom. Will they recover? Probably
    not. But that will be a sideshow to the
    main game anyway. The shake-out in
    the global economy will be more dramatic
    than that.

    What does this all this mean for
    Australia? It means we need clear policy
    and market action to prepare for this
    new world. Higher oil prices won’t destroy
    the economy unless we’re not ready
    for them. We need to take measures
    now, such as capping carbon emissions
    to reduce our reliance on oil so we can
    have a staged transition rather than an
    economic shock. The sooner we act, the
    smoother it will be. It is good strategy for
    Australia’s national security, economy
    and environment.

    And, by George, we can all go to sleep
    tonight feeling a little better about the
    prospects for the global environment.
    Who would have thought it?

    Paul Gilding, a former executive director
    of Greenpeace International, is a
    founding partner of Ecos Corporation.
 
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