New renewable energies are making a dent in the market worldwide. Nowadays, energy securities along with the public’s concern for the environment are factors that drive the prices of oil up or down. However, while we do consider positive for the economy when the prices of oil are high as they as evidence of financial stability, it also raises some questions as to the future of energy with the rise of alternative sources.
The truth is that there has been little research to the way oil prices directly affect the progress we are making in finding, developing and offering alternative energy sources to the public, but it is obvious that a commodity as sensitive as oil, will be somehow stimulated by outside factors that can eventually become serious competition to its position in the world.
The way users respond to higher oil prices is cutting down on usage or utilizing methods and buying products that allow them to use the resource in a more efficient manner so as to spend less fuel. At the same time, companies who work in the business of alternative energy sources are encouraged to spend more money on research and development of their products when the prices of oil are higher since it makes sense at that point to find lower cost alternatives to energy as a basic need.
It is believed that sometime between 2016 and 2040, we will reach oil peak. Oil peak is the hypothetical point in time when the maximum rate of oil extraction is reached, which means that from that point forwards, all oil production will be expected to enter terminal decline. This is a real concern to people and a strong motivator to end our dependency in a resource that no matter how ample it seems, it is nonetheless limited.
New economies like China and India grow exponentially every day, and their demand puts strong pressure in oil production worldwide, something that will inevitably raise prices in a near future, even if the numbers seem to be stable right now. We cannot ignore the fact that only 5 countries hold 60% of total reserves in the whole world and that the largest consumer is the United States, only holds about 5% of those reserves.
Geopolitical uncertainty is most common in most countries that hold large oil reserves, so you can only imagine how irresponsible it is for other countries to depend so much on a product that can pretty much only be found in places where there is so much conflict and where things are so volatile. That situation in itself is enough to create major security issues and pressure to find alternatives.
The environment is another great reason why there is a tendency to move away from the exclusive relationship nations have with oil as the main source of energy and find cleaner and renewable sources. In the last 140 years, we have drastically change the concentration of CO2 levels in the atmosphere from a balance that lasted thousands of years, interrupted only by our modern industrialized economy. Now, by all means, we are aware of the many benefits this has brought with, but at the same time we must be realistic and understand that our current model cannot be described with words other than unsustainable. It is naïve to believe that those drastic changes do not have consequences, especially when those consequences can be easily observed today.
These factors joined to create a type of perfect storm that further cements the belief that the future of energy will be found in alternative renewable energy sources. The truth of the matter is, fluctuating oil prices can both strengthen and at the same time weaken the advancement of research in renewable energies, but perhaps not as directly as we think. Oil will continue to be essential in its own way as we use it for activities that differ from the ways that we currently employ the energy derived from newer alternative sources like wind and solar energy. One of the funniest facts of this conundrum is the wrong belief that the volatility of oil prices has a direct correlation with the onset of renewable energies as a tangible alternative when in reality it is the oil industry’s own unstable prices what is becoming another major factor that makes a government look for alternatives. It is worth remembering that alternative fuels are a product of new technologies and as a new technology, it is supposed to get cheaper as time passes, while oil continues to be an industry of production, something that with time increases in cost.
The current states of affairs look promising for new technologies that are coming to the market and filling the void left for the inability that oil has of being a source of energy that meets all of our needs in a stable manner. That means that perhaps in the near future we can find a way that both alternatives can coexist and help each other find that balance between cost and benefit we all expect.
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