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.
- Forums
- General
- us oil demand encourages alternatives
This was in the Australian today...THE irony is delicious....
Featured News
Featured News
The Watchlist
FHE
FRONTIER ENERGY LIMITED
Adam Kiley, CEO
Adam Kiley
CEO
SPONSORED BY The Market Online