Is continued economic growth in the US and the world obstructed by the price and availability of oil? Is the lifeline of modern society clotting, or is it simply thinning out and offering no substantial pressure to continue its legacy of economic growth? Are the days of plundering ending or just beginning?
Oil has given society many rewards: the ability to transport people, goods and services; the ability to heat and electrify; the ability to produce quality products and services; the ability to shelter, feed and cloth billions of people; the ability to advance civilization through education, healthcare, telecommunications and scientific advancement.
The World Factbook published by the CIA lists the top economies of the world. In the list of 193 nations, firms like Wal-Mart and Exxon Mobil would rank in the top 30 largest economies of the world. If you totaled the sales of the following eight oil giants, they would equate to one of the top ten economies of the world.
Exxon Mobil
Royal Dutch Shell
BP
Total
Chevron
ConocoPhillips
Pemex (Mexico)
Petrobras (Brazil)
The sales of eight giants listed above exceed $1.8 trillion and their revenues exceed $160 billion. Together these firms employ more than 680,000 people worldwide.
Oil is one of the most widely used commodities on earth. Some 85 million barrels of oil are produced and used per day globally according to the Energy Information Administration, the data and analysis arm of the USDOE. Oil prices have reached record high’s topping more than $120/barrel in recent days. Over the past decade the price of oil has increased more than 1000%. On December 28, 1998 the price of oil was approximately $10 barrel. And during the week of April 22nd 2008 the price of oil flirted with $118, $119, and $120 per barrel.
The world has a love hate relationship with oil. When the economy is strong and the pocketbooks fat, we forget about the price of oil. When the economy struggles and our pocketbooks empty, we focus intently on the price of oil and point to it as the root of all economic evil. Every Greek tragedy needs a lead antagonist, and in the story of the rise and fall of global industrialization the antagonist is oil.
tOILing toward a balanced energy diet
Oil has been the consummate enabler for industrialized nations to feed the veins of commerce with a “performance enhancement” and “mood adjusting” supplement. It’s almost too bad that there were not product disclosures and warnings 100 years ago before we became fully addicted. You know those commercials where they say “side effects may include…nausea, vomiting, fatigue, etc.”. Perhaps the disclosure for oil would have read, “side effects may include…sluggish economy, natural resource damages, global warming, geo political and economic warfare, social inequity, and detachment from living due to chronic idle time spent driving”.
But truth of the matter is that 100 years ago we had no idea about the scale and magnitude by which oil would play in everyday life, our economy, our standard of
living, and our ability to sustain critical infrastructure and networks. As oil has pumped through the veins of commerce, we’ve grown. But like the overuse of performance enhancement drugs in top athletes, too much can result in serious injury, suspension of play, or even death. In the case of oil, perhaps we’ve grown so quickly and have become so strong; we simply cannot score enough performance enhancement oil to help us keep pace. Or perhaps we’re now overweight, bloated and ready to suffer a massive heart attack due to one or more blockages in our system (e.g., global demand, climate change, availability of refineries, aging infrastructure, cost pressures, etc.).Oil is not bad. It’s just a performance enhancer that has been over sold and over used. Sure it has its side effects, but no technology or energy source is without their fair share. And, with 6.5 billion addicts around the world a premium can be placed on the availability, price and quality of oil. Oil is an earth based commodity with a man-made purpose. Sometimes that point is lost. We’ve created a flat world whose pace of growth has quickened, all in part to our friendly performance enhancer, oil. We have the ability to transform our flat world into a new dimension, neither round nor flat, but shapeless bound by only our imagination and innovation to bring to it new life not bound by technology, resource or ideological constraints. Oil will have a place in this new shapeless world, but so to will other forms or energy that will displace and yet balance our traditional thirst for petro-based nourishment.
bOILing this down
When it comes to high energy prices and environmental challenges related to oil, we need to move beyond blame and get serious about creating real change. It's so easy to blame the Bush Administration or point the finger toward OPEC or hedge fund managers that are perceived to be in cahoots with big oil executives padding their wallets and patting each other on the back for influencing oil markets and reaping huge profits. Are their inefficiencies, potential back door deals, unneeded confusion in how the price of oil is set? Sure, but blaming one administration or one company over another will solve nothing and will only fuel more wasted time, money, and oil.
The 21st Century challenge before each of us, as consumers, industrialists, policy makers, shareholders, innovators, scientists, students and conservationists is to collaborate on a way to reduce our appetite for oil while simultaneously working toward performance enhancement supplements that we can develop and use to round out our energy diet.
So often I hear references to the “silver bullet” technology that will transform our energy diet. According to the Schlumberger
Excellence in Educational Development project, oil was first drilled in 347 AD. Since that time oil has been somewhat of a “silver bullet” for the energy needs of human kind. Oil has provided us with heat, electricity, transport, cooling, and that performance enhancing high that has fostered economic growth. But we now know that oil cannot be the “silver bullet” for our future prosperity or sustainability.
There is no “silver bullet” anymore. A well balanced diet has a mix of energy sources rich in nutrients. A well balanced energy diet may include exercise (energy demand reduction), it may include a balanced approach (combined heat and power, distributed generation), it may include options low in proverbial cholesterol – that is carbon (wind power, solar, geothermal, etc.) it may include fortified vitamins and minerals (engineered petrochemicals and biofuels) and it may include new age supplements yet to be fully qualified (fuel cells, hydrogen, carbon sequestration techniques). The point is that we need an energy diet that is balanced, nutritious and positions us for longevity, not just performance enhancement. The performance enhancement will come from a renewed focus on energy research and development and new innovations. Besides are we foolish enough to believe the best we can do as a society is rely primarily on an oil based economy? Is that the extent of our ingenuity and imagination? Oil has given us so much, but its time to transition to more secure, reliable and economic sources of energy that promote independence and sustainability.
social response to energy - avoiding energy market turmOIL through social response product development, deployment and capitalism
So often I hear references to the “silver bullet” technology that will transform our energy diet. According to the Schlumberger
Excellence in Educational Development project, oil was first drilled in 347 AD. Since that time oil has been somewhat of a “silver bullet” for the energy needs of human kind. Oil has provided us with heat, electricity, transport, cooling, and that performance enhancing high that has fostered economic growth. But we now know that oil cannot be the “silver bullet” for our future prosperity or sustainability.There is no “silver bullet” anymore. A well balanced diet has a mix of energy sources rich in nutrients. A well balanced energy diet may include exercise (energy demand reduction), it may include a balanced approach (combined heat and power, distributed generation), it may include options low in proverbial cholesterol – that is carbon (wind power, solar, geothermal, etc.) it may include fortified vitamins and minerals (engineered petrochemicals and biofuels) and it may include new age supplements yet to be fully qualified (fuel cells, hydrogen, carbon sequestration techniques). The point is that we need an energy diet that is balanced, nutritious and positions us for longevity, not just performance enhancement. The performance enhancement will come from a renewed focus on energy research and development and new innovations. Besides are we foolish enough to believe the best we can do as a society is rely primarily on an oil based economy? Is that the extent of our ingenuity and imagination? Oil has given us so much, but its time to transition to more secure, reliable and economic sources of energy that promote independence and sustainability.
social response to energy - avoiding energy market turmOIL through social response product development, deployment and capitalism
It’s time for the oil economy to be shaken up, agitated, and churned. It’s certainly causing enough turmoil at its current state of being today. High energy prices, environmental degradation, water and soil contamination, air pollution, climate change, inequitable distribution of wealth, socio-political conflict. These are the spoils of oil? I don’t believe that’s what we had intended.
If the state of civilization were equated to the life-cycle of a human, we’re still in our infancy. We’ve been formula fed with oil for a few weeks/months and now its time to introduce new nutrients into our everyday diet so that we can grow, mature and lead a balanced life. The largest economies of the world, from industrialized nations to the wealthiest of corporations are taking strategic, proactive and leadership actions to prepare them for an exciting childhood, adolescence, adulthood and old age.
Companies that are rounding out their energy diet are becoming better investments. As they transition from the one-dimensional oil based economy to a multi-dimensional energy services economy they ultimately hedge on the price of energy in the future. In addition they are more apt to compete over a longer term as well as offer better products at a better price as they are less reliant on price fluctuations associated with oil. We call companies with well balanced energy diets social response leaders because they are positioning themselves for future growth and with growth that is in alignment with societal needs and values. Companies, large and small, public and private, that we classify under the heading of social response leaders (due to their responsible and innovative approaches toward a balanced energy diet and new age product and service innovation) include:
Boeing – is developing lighter and more fuel efficient airliners. This is a social response product innovation that is adaptive – meaning it seeks to optimize efficiency and reduce demand for aviation fuel. In the absence of other forms of energy, Boeings fuel efficient 787 Dreamliner is a dream. Boeing is contributing to a new era of efficiency in air travel that will reduce side effects of a petroleum rich diet like carbon emissions. With greater fuel efficient aircraft, Boeing stands to fly 30,000 feet above its competition toward a balanced energy diet.
Canadian National – is a Canadian rail company that operates the largest rail network in Canada and the only transcontinental network in North America. The company operates in eight Canadian provinces and 16 U.S. states. As part of its equipment upgrade policy the company is upgrading its fleet of locomotives with models that are at least 17% more fuel efficient than their predecessors which reduces air emissions and enables more efficient delivery of goods. The company also remanufactures its older locomotive engines which reduces waste, recaptures energy used in manufacturing processes and minimizes the need to produce new materials for locomotive engines. Canadian National optimizes the flow of goods through the use of rail, a demand side response to energy use in our transportation sector.
Energy Answers International – offers communities a resource recovery solution to solid waste. Since 1981 the company has been developing resource recovery facilities around the world with a goal of zero disposal of waste. The company works within communities to find equitable and economical production of energy. The company often works on Brownfield sites giving once blighted industrial facilities new productive uses and upgraded with state-of-the-art clean technologies that enable the more sustainable production of energy. Energy Answers excels at discovering how energy use can be optimized through the use of waste resources, another important input into a balanced energy diet.
Evergreen Energy Inc. – out of Denver, CO this small but growing company is attempting to transform the US’s largest energy resource (coal) into a highly efficient, low emission and economically viable fuel for the future. Evergreen Energy’s technology is offering many US industries and electric utilities a new option to balance their energy portfolio into the future. Reducing carbon dioxide emissions, enhancing the efficiency of operations and offering a cleaner fuel option for the future are each elements of the Evergreen Energy technology platform. Evergreen Energy is innovating new solutions for minimizing the impact of abundant fossil fuel resources, an important element of a well balanced national energy diet.
Fuhrlaender AG – one of the last (if not the last) privately owned and operated wind manufacturing companies in the world is also one with a strong product portfolio. Based out of Waigandshain, Germany this company has been a quiet innovation leader for years. They are
developing more reliable wind turbines and with designs that are conducive to quick maintenance enabling them to be in operation longer thereby generating every last kWh that is possible. They’ve expanded into China and seeking to foster more sustainable growth of emerging economies through their portfolio of wind products that range from 30 kW to 2.5MW. The firm was one of the first in the industry to launch a production model for a 2.5MW wind turbine. Small, agile and committed to quality, Fuhrlaender AG is truly a “friendly energy” company that is worth watching in years to come even if not the size of a GE, Suzlon or Vestas. Fuhrlaender offers new economies an energy diet supplement, one that is less harmful and ultimately longer-lasting thereby contributing to a healthier energy diet.
Green Mountain Coffee Roasters continuously brews better coffee and a better world through social response innovations in their facilities, supply chain, products and operations. In the energy realm the company installed an electricity cogeneration system at its Waterbury, VT facility to reduce demand and reliance on the electric grid. The company also purchases 100% of its electricity from renewable energy credits making them greenhouse gas neutral. The company sets an annual goal to reduce energy use by 5% per a certain unit of sales. In 2006 the company reduced its natural gas usage by 15% from the previous year. The company has been active in conducting energy audits of its facilities and offices and retrofitting equipment where possible to foster energy efficiency improvements. The company is also greening its fleet of vehicles and encourages conservation of energy among its employees.
Social response corporate leaders are balancing their energy diet within their operations, their product portfolio, among their employees and within the communities in which they operate. Ultimately their more balanced energy diet is translating into a stronger business and a stronger bottom line due to operational efficiencies, cost recovery, product innovation, margin improvements and enhanced reputation.
Everyday we see more and more companies making conscious decisions to evaluate their firms’ energy diet and ways to enrich their diet. Share with us some of the corporate leaders you are aware of that are creating a more balanced energy diet for their operations, employees, customers, shareholders and communities in which they operate.
Mark C. Coleman
Senior Associate & World Inc. Case Leader, AHC Group, Inc.
Mark@ahcgroup.com
Author note: The Basel Agency for Sustainable Energy (BASE) provides a summary of big oil’s investment in alternative and renewable energy. While not summarized in this blog, the BASE summary is a useful comparison of the capital expenditures of big oil versus their investments in other forms of energy production.
If the state of civilization were equated to the life-cycle of a human, we’re still in our infancy. We’ve been formula fed with oil for a few weeks/months and now its time to introduce new nutrients into our everyday diet so that we can grow, mature and lead a balanced life. The largest economies of the world, from industrialized nations to the wealthiest of corporations are taking strategic, proactive and leadership actions to prepare them for an exciting childhood, adolescence, adulthood and old age.
Companies that are rounding out their energy diet are becoming better investments. As they transition from the one-dimensional oil based economy to a multi-dimensional energy services economy they ultimately hedge on the price of energy in the future. In addition they are more apt to compete over a longer term as well as offer better products at a better price as they are less reliant on price fluctuations associated with oil. We call companies with well balanced energy diets social response leaders because they are positioning themselves for future growth and with growth that is in alignment with societal needs and values. Companies, large and small, public and private, that we classify under the heading of social response leaders (due to their responsible and innovative approaches toward a balanced energy diet and new age product and service innovation) include:
Boeing – is developing lighter and more fuel efficient airliners. This is a social response product innovation that is adaptive – meaning it seeks to optimize efficiency and reduce demand for aviation fuel. In the absence of other forms of energy, Boeings fuel efficient 787 Dreamliner is a dream. Boeing is contributing to a new era of efficiency in air travel that will reduce side effects of a petroleum rich diet like carbon emissions. With greater fuel efficient aircraft, Boeing stands to fly 30,000 feet above its competition toward a balanced energy diet.
Canadian National – is a Canadian rail company that operates the largest rail network in Canada and the only transcontinental network in North America. The company operates in eight Canadian provinces and 16 U.S. states. As part of its equipment upgrade policy the company is upgrading its fleet of locomotives with models that are at least 17% more fuel efficient than their predecessors which reduces air emissions and enables more efficient delivery of goods. The company also remanufactures its older locomotive engines which reduces waste, recaptures energy used in manufacturing processes and minimizes the need to produce new materials for locomotive engines. Canadian National optimizes the flow of goods through the use of rail, a demand side response to energy use in our transportation sector.
Energy Answers International – offers communities a resource recovery solution to solid waste. Since 1981 the company has been developing resource recovery facilities around the world with a goal of zero disposal of waste. The company works within communities to find equitable and economical production of energy. The company often works on Brownfield sites giving once blighted industrial facilities new productive uses and upgraded with state-of-the-art clean technologies that enable the more sustainable production of energy. Energy Answers excels at discovering how energy use can be optimized through the use of waste resources, another important input into a balanced energy diet.
Evergreen Energy Inc. – out of Denver, CO this small but growing company is attempting to transform the US’s largest energy resource (coal) into a highly efficient, low emission and economically viable fuel for the future. Evergreen Energy’s technology is offering many US industries and electric utilities a new option to balance their energy portfolio into the future. Reducing carbon dioxide emissions, enhancing the efficiency of operations and offering a cleaner fuel option for the future are each elements of the Evergreen Energy technology platform. Evergreen Energy is innovating new solutions for minimizing the impact of abundant fossil fuel resources, an important element of a well balanced national energy diet.
Fuhrlaender AG – one of the last (if not the last) privately owned and operated wind manufacturing companies in the world is also one with a strong product portfolio. Based out of Waigandshain, Germany this company has been a quiet innovation leader for years. They are
developing more reliable wind turbines and with designs that are conducive to quick maintenance enabling them to be in operation longer thereby generating every last kWh that is possible. They’ve expanded into China and seeking to foster more sustainable growth of emerging economies through their portfolio of wind products that range from 30 kW to 2.5MW. The firm was one of the first in the industry to launch a production model for a 2.5MW wind turbine. Small, agile and committed to quality, Fuhrlaender AG is truly a “friendly energy” company that is worth watching in years to come even if not the size of a GE, Suzlon or Vestas. Fuhrlaender offers new economies an energy diet supplement, one that is less harmful and ultimately longer-lasting thereby contributing to a healthier energy diet.Green Mountain Coffee Roasters continuously brews better coffee and a better world through social response innovations in their facilities, supply chain, products and operations. In the energy realm the company installed an electricity cogeneration system at its Waterbury, VT facility to reduce demand and reliance on the electric grid. The company also purchases 100% of its electricity from renewable energy credits making them greenhouse gas neutral. The company sets an annual goal to reduce energy use by 5% per a certain unit of sales. In 2006 the company reduced its natural gas usage by 15% from the previous year. The company has been active in conducting energy audits of its facilities and offices and retrofitting equipment where possible to foster energy efficiency improvements. The company is also greening its fleet of vehicles and encourages conservation of energy among its employees.
Social response corporate leaders are balancing their energy diet within their operations, their product portfolio, among their employees and within the communities in which they operate. Ultimately their more balanced energy diet is translating into a stronger business and a stronger bottom line due to operational efficiencies, cost recovery, product innovation, margin improvements and enhanced reputation.
Everyday we see more and more companies making conscious decisions to evaluate their firms’ energy diet and ways to enrich their diet. Share with us some of the corporate leaders you are aware of that are creating a more balanced energy diet for their operations, employees, customers, shareholders and communities in which they operate.
Mark C. Coleman
Senior Associate & World Inc. Case Leader, AHC Group, Inc.
Mark@ahcgroup.com
Author note: The Basel Agency for Sustainable Energy (BASE) provides a summary of big oil’s investment in alternative and renewable energy. While not summarized in this blog, the BASE summary is a useful comparison of the capital expenditures of big oil versus their investments in other forms of energy production.
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