THE HUNGER FOR ENERGY
In 2004, the world production of oil was estimated at just over 29.7 Bbl. The corresponding world consumption for oil during the same period was estimated at 29.6 Bbl of oil, leaving a surplus of just under 0.1 Bbl at the end of the year. In the United States, one of largest consumer markets for oil and oil products, from the first week in September 2004 to the first week in September 2005, gasoline prices increased by a staggering 1.22 per gallon to 3.12 before dropping to 2.25 on November 21, 2005. These figures are quite staggering considering that contracts for crude changed hands at 10 USDbarrel in 1999 (Bilgen and Kaygusuz 2004). With the emergence of China in the global market and its increasing demand for oil, it is projected that unless oil companies are able to increase the world production by investing investment in oil and natural-gas production oil prices could increase exponentially over the next ten (10) years.
Since oil remains the main energy source in most countries, the demand for oil will remain constant despite the changes in the price of oil (Case, 1999). While theoretically it is expected that there will be a greater demand for oil if the price decreases, it is important to factor in the fact that more governments around the world are implementing energy saving policies as well as trying to reduce to dependence on oil as an energy source by developing alternative sources of energy. With the insatiable appetite the world has for energy, the problem that the world faces now is whether or not the existing energy source, oil, is developed or should the national environmental policy favor more the development of alternative energy sources (Tester and DiPippo, 2007). As such, this brief discourse shall highlight the problems surrounding oil by juxtaposing it against the advantages that alternative energy sources bring with the end goal of arguing that national environmental policy should favor more the development of alternative energy sources.
Given the volatility of the oil market and the economic crisis that the world is currently in, the issue on trading and the future of the oil market is in question. Barring any increases or massive decreases in oil supply, it seems that the world has adjusted and reduced its reliance on oil especially in the light of record highs in oil prices a few months ago. Yet, these developments do not change the fact that one of the problems with oil as an energy source lies in the volatility of its price.
The obvious factor in determining the supply of oil in the world is the amount of oil that can actually be extracted and processed. Oil is essentially a non-renewable energy source and cannot be replenished once it has been extracted from the ground. The role of oil companies and countries is not in the actual production of oil but in it rationing (Leggett, 2005). The first factor in the supply of oil is basically dependent on the actual amount of oil that can be produced and processed and also considers the capacity of oil companies to refine oil more efficiently and to tap other sources of oil (Deffeyes, 2005). This factor however also heavily depends on the capital investments that oil companies make in the oil industry.
The capital investment that the oil companies make in the oil industry is another factor which greatly affects the supply of oil in the world. The relationship between supply of oil and investments in the oil industry is simply that more investments in the oil industry, such as setting up new refining plants and searching for other sources of oil, translate into greater supply. Technological advances are slashing the costs of finding, producing, and refining oil, creating a new economic calculus for the oil industry. Reports however from the International Energy Agency show that while investments in the oil-and-gas industry totaled 340 billion in 2005, because of inflation, the capital investment in the oil industry was only 5 (Leggett, 2005).
Another factor which greatly affects the supply of oil is the political climate of the oil producing countries. Any conflict in oil producing countries affects the supply of oil in the world market. Political turmoil, particularly in the Middle East, has disastrous consequences on the supply of oil because of the fact that the Middle East is the largest producer of oil in the world today. This can be seen from the increase in prices of oil in relation to the events that have transpired there such as the Gulf War, the War in Iraq and Iraq-Iran conflict.
One of the main factors which affect the demand for oil is the price of oil. But given the fact that oil is a necessary resource and that it is a non-renewable energy sources, the supply can basically only remain at a certain Peak level depending on the amount which can actually be processed and the demand also remains at a certain level even if oil prices continue to rise (Case, 1999).
Ordinarily, if the resources were renewable, there would be perfect elasticity between the supply and the demand in proportion to the increase or change in the price. Therefore, if the price of oil were to increase, it would theoretically result in the demand for oil to decrease (Case, 1999). This assumption however cannot be applied to the case of oil because, as mentioned earlier, oil is a non-renewable resources and remains as the primary source of energy in the world today.
This shows the inelastic demand for oil. The reason for this is that since oil remains the main energy source in most countries, the demand for oil will remain constant despite the changes in the price of oil (Case, 1999). While theoretically it is expected that there will be a greater demand for oil if the price decreases, it is important to factor in the fact that more governments around the world are implementing energy saving policies as well as trying to reduce to dependence on oil as an energy source by developing alternative sources of energy (hybrid cars, solar power, hydroelectric power). The fact that oil is a non-renewable resource must also be considered.
The current technology that is available or that will be available in the near future also does not provide any respite. Any technology that runs on fossil fuels will invariably let of carbon emissions that have detrimental effects on the environment. As such, the only means of developing oil technology lies in developing a method that does not have any emission which is an inherent impossibility since it will run counter to the law of conservation of energy (Pimintel, 1998). This means that if there is to be any breakthrough in environmental policy there has to be a real shift towards real alternative energy sources that can be used to replace the current fossil fuel dependent technologies that are currently available.
Given the volatility of oil supply and prices coupled with the harmful effects that fossil fuels have on the environment, it is important to discuss the pros and cons of alternative sources of energy. The most popular and arguably most powerful source of energy today is the sun. Solar energy has been touted as the solution to the worlds energy problems. Being free and efficient, solar energy is a viable replacement for the energy that fossil fuels provide and as a primary source of energy it is renewable (Serra 2006). One drawback, however, is the fact that current technology to harness the suns rays is expensive and cannot be availed of by many, especially those in developing countries. On top of this, in order for enough solar energy to be a viable source of alternative energy there has to be an ample supply of it (Serra 2006). This means that a large area which is constantly sunny is the ideal place for the proper utilization of solar energy. There is a lot of promise in this field, however, and soon, as the technology for this improves, solar energy may indeed shed light on the energy problems of the world.
Another form of alternative energy that is free and renewable is wind energy. In places that are particularly breezy and have no constant sunlight, harnessing wind energy is a very effective source of clean and renewable energy (Bilgen and Kaygusuz 2004). It has been shown in studies that when the wind is strong it can provide up to 20 of a countrys energy needs (Serra 2006). Aside from the energy that it can provide, it also promises clean and efficient energy as there are no harmful effluents that are produced and it does not require as much space as solar energy. One problem, however, is the fact that wind may not always be constant (Serra 2006). When the wind slows down to a certain speed it also can no longer be harnessed. This being said, life would certainly be a breeze if the world was able to improve the harnessing of wind energy.
To water-down the need for fossil fuels, the world can also resort to hydroelectric energy. Using the natural flow of water and gravity, hydroelectric energy is one of the most widely used alternative energy sources in the world (Bilgen and Kaygusuz 2004). With the amount of energy that can be produced, hydroelectric energy produces no waste material and no pollution (Serra 2006). The downside to this form of energy, however, is the fact that the construction and maintenance for hydroelectric power dams is expensive. While there are developments in micro hydro technology, hydroelectric dams can also displace several communities, destroy forest resources and kill other fishes and aquatic life in the area (Serra 2006). This means that while hydroelectric power is certainly a very viable solution to the energy problems of the world there must be several things that should be sorted out and improved for it to be useful as the worlds main energy source.
Another alternative energy source that is making waves is the energy that can be harnessed from tidal energy. Similar in function to hydroelectric energy, this type of energy uses turbines that harness the rise and fall of the tides. The natural flow of the oceans currents is harnessed in order to produce energy (Serra 2006). However, due to the peculiarity of the energy source, it cannot be located just anywhere. There are very few sites that are feasible for the location of tidal energy plants and it also poses a threat to local fishing and fisheries (Bilgen and Kaygusuz 2004). Also because tides only occur at certain times of the day it is not as efficient as the other energy types.
One of the largest growing sources of alternative energy is biomass. Since this form of alternative energy has a two-fold advantage, reduction of waste and generation of energy, it seems to be the best solution to the worlds energy problems (Bilgen and Kaygusuz 2004). Taking animal waste, agricultural crops, grains, wood, mill residues, forest, and aquatics, biomass plants ferment these wastes to generate gases that are then burned to create energy Bilgen and Kaygusuz 2004). The obvious downside to this, however, is that there are harmful effluents that are released. While it indeed captures the gases that are produced, it also releases energy from the burning.
The Life in the lap of luxury is indeed a very convenient life but as it is it will be a lifestyle that will be nearly impossible to sustain. It is wonderful to take advantage of all of the technological advancements that are available today but one must always ask whether or not the tradeoff is worth, a moment of pleasure that could be disastrous for this generation and the next.
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