Tulsa — Our cover notes the 100th anniversary of PennWell Corp., which publishes this magazine plus dozens of other business-to-business magazines across a range of industries.
One hundred years ago PennWell published just one title: the Oil and Gas Journal, which retains its reputation in 2010 as the dean of publications for that industry. The idea of renewable energy was hardly contemplated 100 years ago, although wind, hydro, solar and biomass were in use. Wind power was almost exclusively limited to farms and ranches as a tool to pump water for crops and livestock.
Hydro was well established as the fuel that made the Industrial Revolution possible. Water-driven mills were first set up along the rivers and fall lines of New England streams where they enabled mechanization and accompanying economies of scale and scope to drive industrial expansion.
Solar had only limited application and certainly nothing like today’s photovoltaics and concentrating solar thermal systems. Interestingly, a number of public housing projects built in the South during the 1930s used solar thermal to heat water used for washing laundry.
Biomass–which our cover references–had a role in the U.S. identical to the problematic deforestation that today afflicts many developing parts of the world. Don’t forget that 100 years ago the United States was little more a Second World nation itself, in today’s parlance. Deforestation–clear-cutting forests and plowing prairies to make room for agriculture and animal husbandry–was widely practiced. Its worst excesses manifested themselves in the Dust Bowl of the 1930s. The push to cultivate as much land as possible led to unsustainable farming practices, which depleted the soil and led to disaster. Only after the soil began to blow away were conservation practices taught to protect the land and promote sustainable practices.
The oil spill in the Gulf of Mexico may be our own Dust Bowl: the consequence of exploiting a resource without adequate controls and safeguards in place. Instead of clouds of dust blowing across the landscape, clouds of oil billow from the seabed. The unchecked exploitation of resources–whether land, energy or capital as the recent banking crisis demonstrates–ultimately can prove unsustainable and detrimental.
Call it addiction if you want, but our economy and way of life are intimately bound up with hydrocarbons. Our cities sprawl courtesy of low-cost petroleum. The global economy depends on the same low-cost energy. Fruit from South America in the dead of winter and electronics and Nike shoes from Asia any time of the year are available only because low transportation costs are possible thanks to low-cost, readily available petroleum. It’s ironic that petroleum is the source of our industrial strength and our Achilles heel. Low-cost factors of production are vital to industrial strength. But capitalism’s singular focus on cheapest leads to unintended consequences such as Dust Bowls and oil plumes.
Our vulnerability is evident. Recall what happens when the flow of cheap petroleum is disrupted. The first shock was the 1973 oil embargo, which led to long gas lines and economic malaise, but later sparked efforts to promote energy efficiency. More recently, the unexpected spike in oil prices two years ago may have helped tip a weak global economy into recession. On the electricity side, California’s deregulation debacle led to price spikes in 2000 that resulted in significant cuts in consumption.
One lesson is that price signals work as a means to change consumption. Higher gasoline prices led to a collapse in SUV sales and a spike in sales of smaller, energy efficient vehicles. Higher electricity prices can lead to greater conservation and energy efficiency measures.
But here we must exercise caution: many people have low incomes that leave them vulnerable to price shocks. And with an economic recovery still fragile, public policy makers need to remain mindful of upsetting the status quo. Global competition for jobs and manufacturing place a focus on controlling factors of production such as energy inputs.
The choices are far from easy. But the oil spill in the Gulf of Mexico should cause us to question how many of our energy practices ultimately are not sustainable. Our Dust Bowl moment is at hand.