Because of the high cost of energy, more and more companies are finding creative ways to save money and operate their businesses while using less fossil fuels. And company managers are apparently looking very hard for those energy savings.
Last fall, some 30 percent of those surveyed by the Alliance to Save Energy said they had made energy management a critical part of their business plan. A third said that were undertaking major capital projects to cut energy costs. And a quarter said they were at least working on low-cost, one-time fixes to try to cut energy bills.
The potential savings could be huge. Industrial use accounts for about a third of energy consumed in the U.S., according to Energy Department estimates. By cutting back on just 20 percent of that consumption, American businesses could save close to $19 billion a year at 2004 energy prices, according to a recent report by the National Association of Manufacturers. About 30 percent of those savings can be achieved with no capital investment, the report said.
As the United States moves away from manufacturing into a service economy, more and more goods consumed in the U.S. are created with energy from other nations. Therefore we should be seeing a steady decline in U.S. oil consumption, but consumption continues to rise.
One of the major reasons for this is that the average fuel efficiency in 2004 was 6% less than 20 years ago for personal American-made autos and trucks. transportation accounts for 9,125,000 barrels per day or 383.3 million gallons of gasoline. So Transportation alone uses more oil than is produced collectively domestically. Transportation is actually the biggest user of energy worldwide at around 33% of the total. It’s also the fastest growing source of greenhouse gas emissions, the primary cause of climate change.
The marginal improvements in fuel economy and reductions in emissions has been heavily outweighed by the increase in the number of cars on the road and the average distances traveled. There are 600 million cars in the world today, a figure which is environmentally unsustainable. Yet this number is forecast to double within the next 15 to 20 years.
Going green is as much about economics as it is about saving the planet since America consumes 20.6 million barrels of oil per day and the rate of consumption is increasing by 2% yearly. We import 10,056,000 million barrels per day with an average cost per barrel of approximately $70.00, which means the daily cost to the U.S. government is a staggering $703,920,000. Annually that’s over two hundred billion tax payer dollars that’s being spent on oil imports.
Fifty years ago, America produced half the world’s oil and was a net exporter of oil, yet today the U.S. can’t produce even half its needs. U.S. crude oil production, although significant, only produces approximately 5.0 million barrels per day. Ironically, the U.S. actually exports a quarter of that or about 1.2 million barrels per day.
Reducing our consumption incrementally over the year by as little a 2% per year would save us billions of dollars annually and trillions of dollars over the next decade. That amount of reduction in fossil fuel usage would take a huge bite out of our budget deficits and create new green related industries that would flourish in this country.
High energy prices have already started to create new markets for companies that make and sell equipment and services that offer alternatives to fossil fuel. Investment in alternate energy is also getting a lift from a fresh round of government incentives and subsidies for both consumers and producers of alternative energy. Flexible fuel vehicles and gas-electric hybrids are among the highest profile targets for the government’s policy of encouraging conservation and alternative fuels.
“Conventional energy supplies are getting more expensive,” explains Ron Pernick, co-founder of the research firm Clean Edge. “Whether you look at natural gas, nuclear, or oil, they’ve been going up over time, not going down which is the inverse of renewable energies. We’re getting to a point where we’re able to compete in price so clean energy makes sense economically.”
Climate change is indisputably the single biggest environmental threat to mankind with significant global economic implications. And reliance on fossil fuels is simply an unsustainable economic model destined to change. Even if Al Gore is only partially correct in his assumptions, global economies can no longer reley on fossil fuels if they are to sustain economic growth.
The federal reserve may try to tinker with interest rates in an effort to stem domestic inflation, but in the long term it’s an insufficient and unproductive way to create a stable and sensible economy. Reducing our dependence on fossil fuels will eventually become the path of least resistance. In time green economics will become the economics of the real world ,and America could be at the forefront of that trend.
As green economist Paul Hawken writes, “Our social and environmental crises are not problems of management, but of design. We need a system overhaul.”