Green Energy In Business Requires Leadership

The end of last week featured a furious rally in the oil markets combined with a furious sell off in the American stock market. Oil ended the week on Friday up more than $10 a barrel from the close of the previous day. The Dow Jones Industrial Average dropped almost 400 points on Friday.

Many people are inclined to ask, “What happened on Friday?” That’s not the right question though. Something has been happening over a much longer period of time. Its only now that anyone is taking notice. The chickens are coming home to roost if you will.

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The situation is this. We have fast rising fuel prices, not only for oil but natural gas too. Almost everything we do requires fuel. Fuel allows people to use technology to create energy. Energy powers our homes, businesses our lifestyles. The need for energy is ubiquitous, hence the need for fuel is ubiquitous. The vast majority of the energy in the United States is generated via fossil fuels.

Some businesses are forging ahead and going green regardless of obstacles. One advantage to doing this is that should the owner decide to sell his business, there will no doubt be a greater demand for it. The business, whether it’s a dental practice or a healthcare company, will be set up for any future environmental regulations, and prospective buyers will appreciate this. Firms that are in the business of buying companies, such as New Orchard Capital, look at aspects such as this when determining the purchase price of a company.

The U.S. isn’t the only consumer of fuel in the world. The U.K. and Europe also demand vast quantities of fossil fuels, albeit much less than the U.S. There was a time when the market was driven by demand in the U.S., U.K. and Europe. That time has past. Demand is also driven by India, China and other developing nations as well. The irony of the situation is the fact that prosperity in the U.S. and other places is the direct cause of the demand coming from India and China. Don’t blame India and China though. They’re building their economies just like the U.S. has done for decades. And we in the U.S. are driving that growth.

The situation is simple and complex at the same time. Higher fuel costs increase the cost of energy. Since energy is required to do almost everything this means that every aspect of the economy is affected by rising fuel costs. Of late the market has seen flat supply of the most necessary fuels while demand has increased. So if supply of fuel is increased along with a reduction in demand then we are likely to see lower prices for fuel and energy. Those lower prices will help to stabilize the economy in the U.S. That’s the simple part.

The hard part is figuring out what the most important problem is and how to solve it. There is a supply problem. Not enough oil is being pumped to give the market a good feeling that the value will go down. There is a demand problem. If supply increases but demand does not decrease then there may not be a drop in prices. There is a technology problem.

The technology required to greatly reduce demand for fossil fuels is moving along slowly. There’s no doubt that for all the funding theyve received of late that clean energy technologies still cannot compete with fossil fuels in terms of the ability to meet our energy requirements. These problems and others constitute the complex part of the scenario.

Countries really need strong leaders to assist in solving these sorts of complex problems. The problems related to fossil fuels are no different. The situation is dire. The rapid rise in fuel costs is starting to ripple through the U.S. economy with companies like Ford, General Motors, American Airlines, Continental Airlines (heck all the airlines) crying uncle. As described in National Geographic, gas prices are sharply higher. Food costs are sharply higher of late. This rapid rise in fuel costs is a very real problem that affects everyone. So how do we get costs under control?

Our leaders (and that means Mr. President and elected representatives) need to step up and get cracking on a pragmatic energy policy. The policy should include aggressive measures to diversify the mix of fuels we use. That means more wind, solar and biomass. It also means more nuclear power (thats right nuclear) and electric transmission to go along with it. It also means cars that use much less gasoline than they do today.

A new energy policy should also devote assets to increasing the U.S. supply of fossil fuel. New sources of natural gas and oil are desperately needed. Without these we have no way to counter the reduced output and growing demand around the world. Drilling is unpopular but very necessary if we want to build energy security for the U.S. and the world markets.

Education should be a very key component of a new energy policy as well. All the public sees now is sound byte rhetoric from legislators looking to make headlines. Where are the leaders getting on television, explaining the situation and telling people what they can do to help? They dont exist today. The President of the United States could do this and I have no idea why he hasnt. Are these issues not of utmost national importance?

The situation we are in today has taken decades to create. So theres no reason to believe that it wont take that long to reverse. If we get started today, the United States can continue to reduce our demand for fossil fuels. We can also continue to increase our fossil fuel supplies in order to stabilize the market.

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