Rising Energy Costs - impact on economy

Rising Energy Costs - impact on economy

Energy is the backbone of our civilization and the clear enabler of globalization of business and our great agricultural and manufacturing productivity. Cheap energy has allowed us to be comfortable and prolific, increasing the world population rapidly during the past century, and making my enjoyment of the apple on my desk, which came from several thousand miles away, possible. This is just one of the myriad benefits of globalization that would never have occurred without cheap energy, and I admit to enjoying it. Unfortunately, the era of cheap energy must come to an end, but how might that come about?
Many indications of the future are visible and reported on today. While globalization has shifted huge numbers of jobs to “low cost countries” and enabled mass movement of products and raw materials over long distances, at costs low enough to make the moves profitable, fossil fuels will inevitably become increasingly scarce and prices will be driven higher, taking the profit back out of the global movements of goods. This will redistribute jobs to both new markets and the older and more developed areas where globalization previously took them away. Thus, the rust belt of the United States, for example, will likely see some (but not all) of its lost manufacturing jobs returning over time. Steel for sale in U.S. markets is reported to already have become more profitable to make in the U.S. than China).
Sustainability combined with increasing scarcity of fossil fuels will localize the products we use. Unfortunately, the steady (and sometimes rapid) run-up of energy prices will result in the eventual moth-balling of many ocean freighters, but their steel will help feed the once again less-centralized mills of the world, and the oil they consume will find ready customers. I expect before long I will no longer be eating New Zealand apples one week and South African oranges the next, but will instead be eating high quality U.S. fruit, and my local orchard may see a profitability it hasn’t known for decades.
The developed countries will be driven to serious efforts to develop alternative energy sources. As fossil fuels run out, the developed countries (including China and probably India) will marshal their resources to make a big push for fusion power, among other sources, and might actually achieve it within the next 20-50 years. This will maintain most of the economic differences between the developed and undeveloped countries, which will scramble for fossil fuel and less costly alternatives for decades more. Energy shortages will plague the developed countries in the interim, and cause significant economic fluctuations, but politicians will scramble to fund alternative energy research when it becomes especially evident that falling standards of living in North America will endanger their jobs, and that may accelerate the realization of alternative energy sources.
In the near term, globalization will slow and adjust downward, and the move towards a “level playing field”, economically speaking, will be slowed with it. In the long term, globalization will slow until much larger and sustainable alternative energy sources are in place, and may not return to its current level again for decades, and possibly more than a century.
ENERGY Escalating costs
It is an issue for citizens of the world. We are facing an energy crisis, which is being felt by every single business, household, school, church and organization in our society, because they all consume energy.
As well as that, we are in the grip of a credit crunch, so households are being hit in every direction. The cost of gas has risen by 35% and the average bill is now close to $1500, which means an extra $400 or $600 being squeezed out of people’s already tight budgets. The cost of electricity has risen by 24% and we are told that, before the winter, it will increase again by a further 20%. Diesel and petrol are at record high prices at the pumps, and the price of home heating oil is scary — it is now 75% to 90% more expensive than it was a year ago. On top of all that, people are facing a credit crisis, rising rate BILLS, and the potential for additional water charges.
It is against that backdrop that I warmly welcome the motion. The governments at all levels, businesses and citizens of the world must take every possible action to address the energy crisis, because all people are dealing with the same problems. I meet people in my business every day — in my office and on the streets — who can no longer afford to fill their oil tanks. Some people, particularly the elderly, are concerned, because usually they have a cushion — for example, a half a tank of oil left over — but that will not happen next year. Instead, many people let their tanks go empty in May and will try to leave them empty for as long as possible so that they do not have to fork out $1500 or $2000 to fill them. If we have a bad winter, the consequences will be horrific: people will die because they will not be able to afford to heat their homes. Fuel poverty, which is a nice cliché, will rise, and we will be faced with misery on all fronts.
Although the current problems are happening when oil is $140 and $150 a barrel, we must be prepared for the price of oil to hit $250 a barrel. It is unacceptable that major oil companies are making massive profits at a time when people are being forced into misery and have to make a choice between buying food and heating their homes. The oil market must be regulated.