Energy, who needs it?
Supply and demand, the first law of economics, prices go up when there is short supply and prices come down when there is plenty of it. On energy and its current low price, we find ourselves in a period of extraordinary confluence; United States domestic production has nearly doubled in the last several years, pushing out oil imports that need to find another home. Saudi, Nigerian and Algerian oil that once was sold in the United States is suddenly competing for Asian markets, and the producers are forced to drop prices. Canadian and Iraqi oil production and exports are rising year after year. Even the Russians, with all their economic woes, manage to keep pumping at record levels.
OPECs muted efforts to control the market, means production has reached an all-time high with most wells in the US currently unprofitable. Equally, low profit for the petro-states such as Brazil, Venezuela, Nigeria, Ecuador and Russia cause them to keep on pumping, as the consequence of dropping production could mean further economic hardship not to mention political hardship.
On the demand side, the economies of Europe and developing countries are weak and vehicles are becoming more energy-efficient. So demand for fuel is lagging, although there are signs that demand is growing in the United States and production is falling because of the drop in exploration investments.
Either way, we find ourselves in extraordinary times. Our ‘so called’ weak economies continue to be over financialized. Low oil prices and quantitative easing demonstrate a ‘politicisation’ marked by a need to grow markets leading to increased consumption.
Ultimately, this comes at a cost. In early September, over 600 academics, campaigners, activists and policy makers came together in Budapest at the Fifth International Degrowth Conference. At it, we heard that Europe is more dependent on importing resources than any other region in the world and that increasingly, our resource intensive lifestyles are leading towards greater social inequalities and environmental damage.
This increased consumption and short term gain has implications for future generations. The concept of Peak resources is not new to many. The Association for the study of Peak Oil (ASPO) for many years operated out of Ballydehob in West Cork. Their plotting of national based oil reserves showed up many anomalies based around over statements of reserves, a point later taken up by the International Energy Agency who have indicated us likely passing Peak Oil before 2020. Once we do so, supply will continue to drop and prices continue to increase. Our current rush to consume merely heralds this date forward.
Today, we find ourselves (as a nation) to be more affluent than at any point in history. We have ready access to information, food, healthcare, money and energy. Increasing energy prices or worse still, an interruption in the availability of energy such as that in the 1970’s would have significant implications for all of us. Continued and increased investment in alternative energy sources needs to happen now, because, in answer to the question, we all need it.
About Paul Butler
Dr. Paul Butler is a Snr. Commercialisation Specialist, Manufacturing, Engineering and Energy Commercialisation, in Enterprise Ireland