Thursday, May 22, 2008

Future & Energy:

I'm fairly optimistic on the energy scenario. I think oil is another bubble waiting to burst. Given high energy demands of China and India, I don't think we'll ever see the days of oil in the $10 or $20 dollars a barrel. But $60-70 seems a more realistic number after the bubble (hopefully) bursts.

But what if the bubble doesn't burst? What if oil goes to $200 a barrel? Some expert recently predicted $12-15 dollar gallon gas. Even if such occurs, I'm still optimistic that life will go on as we adapt to those changes.

I often have my international business students read the following article from James Howard Kunstler -- again, one whose premise I don't believe in -- just to let them know there are doom-and-gloom theories from both the right and the left about future problems. Kunstler does not say that life will just go on. Rather he says the adaptations will require radical life changes -- that Walmart will collapse (because of all of the energy it uses in its long supply change) a whole slew of formerly middle class professionals (probably those people who have to commute more than 5 miles to work, which Kunstler argues middle class folks no longer will be able to afford) are going to be working as farmers, and life is going to become a lot more like Little House on the Prairie for them. As he says in his article, the world is about to become a much less flat, much larger place again.

Forces on the left (like Paul Ehrlich) and the right (Pat Robertson, Hal Lindsey, the Y2K, Jesus is coming soon crowd) have been feeding us this Chicken Little The Sky Is Fallen line for so long that it's becoming like the boy who cried wolf.

If it really gets that bad with oil; we'll consume less and use alternate sources of energy. We’ll drive less and drive far more fuel efficient cars. Expect to see much smaller cars, and many more of those smart cars that look like they are made of fiberglass. Also expect to see more motorcycle and scooter drivers. When I visited Rome in 2001 I was astonished by how many ordinary professional types drove motor scooters in the city.

You can’t really take a family on a motorcycle. But, if you are one person driving to work in a car that holds 5…maybe one day we will see that as a waste of energy and insist that person driving to work should drive something that holds only one person.

I know in the winter, I'd hate to have to drive a motorcycle to work; but the market would demand the creation of a car with three or four wheels, that holds one maybe two people and their bags, not much larger than a motorcycle with an inside that can be heated an air-conditioned.

I’m hoping this is NOT the future. But as an optimist, if we did have to live with oil rationing and $10 a gallon gas, I think life could go on with most single drivers switching from large cars to more motorcycle-like cars to get to work.

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