Wednesday, September 14, 2005

Energy knowledge

Energy is crucial to almost every aspect of our economy. Our current use of energy is predicated on the idea of an abundance of cheap sources. Now, the prices are rising. We should prepare to behave differently and knowledge is going to help.

We have not yet reached peak oil production, the significant point at which supply will no longer be able to grow to reach an increasing demand. Nevertheless, fossil fuel prices at present are high, due in part to low investment in the last ten years. Demand is rising, especially in China, which has only just begun to motorize in significant volume. Chinese motorization is significant not just because of the size of the growth, but also because of the lack of an alternative fuel for cars.

Economists assure us that GDP in the US and Europe is less dependent on oil than it once was and that therefore we are better prepared than we once were for increased energy costs. Sadly, the laws of physics haven't changed. Our imports, once manufactured domestically, still require energy. We will pay additional import costs one way or another.

This is no bad thing. Higher fossil fuel costs will do more to mitigate climate change than any amount of imploring from well-intentioned commentators. Innovation in energy might provide greater political stability, too.

Information will be critical to energy innovation, to support decisions to reduce demand, improve efficiency, make new investments in breakthrough technologies and undertake fundamental research and science.

There is a socially important and profitable future in energy and knowledge.

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