The Mother of All Commodities

New York Times writer Christopher Furlong hits the nail on the head in describing the close nexus between economics and politics when it comes to oil and its role in the health and security of the world economy: “In 2011, events unfolding in the Arab world, the epicenter of global oil production, have been a sobering reminder that trading in oil, the mother of all commodities, is at heart a political game.”

Middle East Tumult Continues

And as Furlong points out, with financial analysts projecting that prices for two important oil benchmarks will average from $100 a barrel to $120 a barrel in 2012, “There is little room for more disruption in supplies.” Iranian threats last month to block the Straight of Hormuz could significantly influence 2012 oil prices, just as the unrest in Libya did in 2011, according to Furlong. We all know that the tumultuous events of theMiddle Eastin the last year are not going to settle into long-term stability anytime soon. Given that fact, we can rationally expect a continuing volatility with its attendant inflationary impact on global oil prices.

Management by Forethought or Crisis?

With that scene clearly on the horizon, the pressing question becomes, “Do we manage now by thoughtful foresight and planning, including a strong move toward more renewable energies such as Ocean Thermal Energy Conversion (OTEC)…or do we wait for the inevitable and predictable, in which case we will manage by crisis?”  Short-termism can be deadly. Every responsible citizen lives by the sound principle that some measure of advanced long-term planning is wise in their financial and personal affairs. Surely, we should expect no less of our business and political leaders.

WATER WARS

An Unpleasant Fact

Some facts we all would rather not think about. One of those unpleasant truths is that there are places in the world where the need for people to share limited fresh water supplies poses a real threat of conflict. The south Indian states of Kerala and Tamil Nadu are two of those places. As described by T.P. Sreenivasan of The New York Times, “ If Kerala and Tamil Nadu were independent countries with their own armies, they might have been at war by now over the water held behind a dam in Kerala that supplies Tamil Nadu.” According to Sreenivasan, “Protests and demonstrations have lasted for more than five years and tensions have been so elevated recently that some citizens have resorted to violence as India’s federal government, for the most part, has watched helplessly.”

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Life Is Change
President John F. Kennedy said that “Change is the law of life. And those who look only to the past or present are certain to miss the future.” One need only consider the fall of the Soviet Union, rise of the internet, or social turmoil now sweeping the Middle East to see concrete evidence of the accuracy of the President’s words. How then does this admonition apply to our planning for the world’s future energy needs?

Running Out
A respected credible figure speaking to this question has been James Schlesinger. Having served Presidents from both parties, including as the first Secretary of Energy, Schlesinger has no political axe to grind. He has also served the country’s national security interests as CIA Director, and has oil industry insider information through his role on Board’s of Directors for several oil companies. Bottom line: what he says, you can take to the bank, including the fact that

“Large conventional oil production is increasingly no longer part of the future, unless there is a technological breakthrough raising the ultimate recovery rate from existing fields, which at this moment, we cannot expect.”

Putting the future of oil more bluntly, Schlesinger said, “If something cannot be sustained, it eventually will not be sustained.”

One Solution
There is no doubt that the oil industry has served as the global foundation for growth and sustenance in the past. To a large degree, it continues to do so in the present. But it cannot for our long-term future. Only renewable energies can fit that bill. Change is the law of life. We trust that the following articles will provide a glimpse into a brighter energy future in which Ocean Thermal Energy Conversion (OTEC) brings substantial benefits in four major areas: economic, international security, humanitarian and environmental.

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