Business | Opinion
US looks for greener pastures in energy sector
The price of oil has, for the most part, finally shed some of its over-inflated weight over the past few weeks
- By Leah Bower, Special to Gulf News
- Published: 23:21 August 18, 2008
The price of oil has, for the most part, finally shed some of its over-inflated weight over the past few weeks.
And while Russia's rather frightening incursion into Georgian territory and the western hemisphere's upcoming hurricane season blowing in will probably provide the occasional upswing, there is one upcoming event that could pack a serious price punch.
Once again the United States is heading into a presidential election, and probably the most important hot-button issue in voters' eyes is energy.
Road-trip-loving, SUV-buying, oil-furnace-owning Americans have suffered a phenomenal sticker shock over the last year, as the price of crude shot through the roof.
Now, two US presidential candidates are facing off with wildly different energy plans. But differences aside, what both candidates are pushing is a sharp reduction in dependence on foreign oil.
So what does that mean for energy companies?
Well, it could mean a serious long-term drop in demand for oil as Americans slowly shift to alternative energy sources. But it could also be a windfall for companies focused on renewable energy sources.
For now, US Senator Barak Obama's plan is far more detailed in how to go about reducing that dependence. He is pushing a $150 billion development fund for alternative energy programmes, another $1 billion yearly to convert manufacturing centres to "clean technology centres" and a requirement that all utilities produce 10 per cent of their electricity from renewable sources such as wind or biomass.
That is a healthy chunk of investment for alternative energy companies. Obama also wants to boost energy efficiency standards, including those for appliances, in an attempt to reduce building energy use by 25 to 50 per cent. He's also planning to push fuel economy requirements to more than 35 miles per gallon, and invest an undetermined amount in new vehicle technology.
Meanwhile, Republican candidate Senator John McCain wants to lay out $2 billion to develop clean coal research, and use tax credits to promote renewable energy research. He also says the current fuel economy standards are fine where they are.
Frankly, that is probably going to translate into business as usual in the US, which means the country will remain dependent on foreign oil, which in turn will be good news for the Organisation of Petroleum Exporting Countries (Opec) a decade or two down the road. He does want, however, a $300 million prize for improved batteries for hybrid vehicles, which he backs.
If I were running a company developing alternative energy sources, I'd be a heck of a lot more interested in Obama's $150 billion. Heck, if I were one of the oil majors, I'd start reinvesting even more of my earnings into making sure I was out in front of what is only going to be an expanding field.
After all, our energy requirements are going to keep growing along with the world's population no matter how many low-energy washing machines and electric cars we have.
I was surprised to find that both candidates oppose opening the Arctic National Wildlife Reserve (Anwar) on Alaska's North Slope. Both are willing to entertain lifting bans on offshore drilling as well. But even if wells were set up everywhere, it would just continue to feed into the US's oil appetite. Once those started to run dry, the country would once again be dependent on foreign black gold.
Of course, campaign promises don't necessarily translate into the real world once the US Congress gets involved. But what we can sense here is the direction that the American public is heading - away from gas and towards greener pastures.
- The writer is a freelance journalist based in Alaska, USA.
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