The world faces “a permanent oil shock” and will have to adjust to sustained high prices in the next two decades, the International Monetary Fund said on Thursday in the starkest official warning yet about the long-term outlook for energy supplies.
Predicting surging demand from emerging countries and limited new supplies from outside the Organisation of the Petroleum Exporting Countries after 2010, Raghuram Rajan, IMF chief economist, said: “We should expect to live with high oil prices.”
“Oil prices will continue to present a serious risk to the global economy,” he added.
Here is a classic example of our failure to act, from a combination of largely individual (citizen) inattention and entrenched special interests dominating social decision-making, on available information pointing to a more optimal (or satisficing) path for us in terms of energy policy and investment.
As it is, we are behind the Japanese and Europeans when it comes to relative investment in alternative energy sources and technologies aside from oil, and we further are conditioned (microeconomically at least), in our daily lives, to artificially low oil prices (for use in our cars and heating our homes).
The result could be disastrous for consumer spending and our economy, not to mention ominous for those who already struggle to pay rent and utilities each month. If we fairly suddenly start paying higher prices for oil-based products, like gas and heating, we are going to have less discretionary income for spending. The effects, if not managed effectively, could lead to a downward spiral for spending, investment, jobs, quality of life, and consumer confidence.
With this in mind, ask yourself how we've backed ourselves into this corner. Why have we not followed the eloquent suggestions of people like Paul Hawken or Amory Lovins?
First, we are not doing a good job at raising and educating citizens in our country. Instead, we seem more focused on producing consumers and specialist labor.
Second, special interests and the oil lobby dominate our politics. Oil, military, and other big industries are allowed to influence our political process and social decision-making in pathological ways. It's time we change.
How do we change though? Do enough of us care or are aware of the problem? That's one issue. And, even if we raise a critical mass, how can we make government more responsive to citizens?
We need to come up with some answers, and hopefully they will result in a new energy direction that honors both economics and ecology (not to mention ethics).