Energy Policy and the Global Economy
Without question, climate change is having a profound impact on the global economy. Evidence is mounting within increasing intensity to suggest that the patterns of climate and weather are shifting and that these shifts are likely the consequence of manmade hazards. In no small part, the negative impact of global industrialization is reaping considerable environmental consequences and, by no small irony, these same consequences will have a direct impact on global industries. Most specifically, the rate of human energy consumption — with all its attendant financial costs — has increased exponentially in recent years. And in light of the heating of our atmosphere, this consumption threatens only to increase with time. According to Chinn (2013), “occurrences of summer temperatures more than 3 standard deviations above the mean, which were extremely rare before 1980, occurred an order of magnitude more frequently in the 2000s and covered between 4% and 13% of the world between 2006 and 2011.” (p. 1)
This is an alarming resolution with respect to the heavy economic toll of rising energy prices. Though the pace of inflation in recent years has slowed modestly, the peak oil crisis threatens to magnify the impact of climate change. As the article by Whipple (2013) warns, we are approaching a tipping point where the slowing of oil production due to diminishing availability will come into conflict with continually rising demand and consumption. As the lifeblood of the global economy, oil is a resource upon which we have become wholly dependent. But As Whipple reports, “Production from existing oil fields is declining by 4-5% annually and demand is increasing by about a million b/d each year. To keep the lid on costs, the world will have to come up with 5 million b/d of new oil production each year for the foreseeable future.” (p. 1)
This means that we are facing a danger of catastrophic economic collapse on a global scale as oil becomes increasingly scarce. The best way, therefore, for nations to improve the energy security, and for the global community to do the same, is to find ways of moving toward innovative and sustainable energy production methods. For generations, wealthy industrial nations such as the United States have resisted the need for such innovation because oil production has represented such a critical part of the nation’s economic structure. This resistance, however, is substantially to blame for the current crisis of both environment and economy.
To date, U.S. energy security policy has been highly flawed, specifically given its dependency on unstable regimes in regions like the Persian Gulf. According to Hayward (2013), however, the U.S. has recently revised its approach to improving energy security and has begun to remove itself from reliance on unstable sources. According to Hayward, “most of the drop in total U.S. risk in 2012 was related in one way or another to greater unconventional oil and natural gas output and moderating energy prices.” (p. 1)
This strategy still suggests that U.S. is hesitant to invest thoroughly in alternative, green or renewable energy. By countries, there are some developing nations who may actually come out as winners in a new global energy economy. According to Leahy (2013), “emerging economies such as Mexico and India are shifting energy investments into renewable resources while industrialised countries hesitate, noted two new United Nations reports.” (p. 1)
Because developing nations are less resistant and far less entrenched in corporate interests than are developed nations, they may actually be in a better position to lead the way to a sustainable energy economy.
Chinn, M. (2013). Some Economic Implications of Global Climate Change. Econbrowser.
Hayward, S. (2013). U.S. Energy Security: Getting Better. Power Line.
Leahy, S. (2013). Developing Countries Lead Global Shift to Green Energy. Inter-Press Service News Agency.
Whipple, T. (2013). The Peak Oil Crisis: A Review of Richard Heinberg’s ‘Snake Oil.’ Falls Church New Press.
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