Only 12 months ago oil was racing past $100 a barrel, and it seemed like our nation's ability to address our energy future would become the defining issue for our times.
It might be tempting to dismiss talk of our energy challenge as just another fad born out of those crazy sub-prime mortgage days.
After all, gasoline prices have come down, and how can we worry too much about the environment when millions of Americans have just lost their jobs? Nonetheless, there are three key reasons why energy remains an urgent issue and critical to our future.
First, the fundamentals that drove the price of oil and gas to stratospheric highs are not going away. These fossil fuels are finite resources, our ability to extract them cheaply is diminishing, and their costs will again increase as global markets recover and as the developing world surges ahead in population and economic growth. The cost of a barrel of oil is already up 20 percent from its December low.
Second, our demand for foreign oil and the related foreign policy decisions we make to ensure supply from abroad has greatly diminished our leadership position in the global political economy.
According to the U.S. Energy Information Administration, the U.S. imports 58 percent of its petroleum needs.
The top three global oil exporters are Saudi Arabia, Russia and Iran, and 56 percent of global oil reserves are in the Middle East.
If we want to restore both economic and geopolitical strength in the United States, we need to increase our self-reliance. Our greatest obstacle to doing so is our dependence on foreign oil.
Third, the environmental cost of burning fossil fuels is increasingly hard to ignore, and policy changes acknowledging this are gaining momentum. Evidence for climate change is so compelling that even oil company executives have acknowledged it as a critical problem. Consider the words of the U.S. Climate Action Partnership, a group that includes the petroleum giants ConocoPhillips and Shell. In its 2008 Call to Action the group announced, "We need a mandatory, flexible climate program. ... The most efficient and powerful way to stimulate private investment in research, development, and deployment is to adopt policies establishing a market value for GHG (greenhouse gas) emissions over the long-term."
President Barack Obama has promised legislation to reflect the GHG cost of fossil fuels, and $150 billion to speed development of alternatives.
It is thus reasonable to expect that our energy policies will be changing quite soon, bringing an entirely new set of incentives to the energy marketplace. These realities represent a huge opportunity to begin reshaping the world's $6 trillion per year energy industry utilizing technology and innovation.
These opportunities are evident in companies such as EnerNOC, which has grown from a student business plan competition winner to a $250 million business in just six years, and Co2Stats.com, a service started by two students through a program designed for first-time entrepreneurs.
EnerNOC enables utilities to avoid building excess power plants by coordinating decreased electricity demand by large users during peak hours. Co2Stats has registered 5,000 sites in the last 16 months to track the carbon footprint of their Web presence.
Could the next clean energy success story be yours? Awareness is just a mindset. You, too, can contribute to the clean energy movement by getting involved in your university's energy community -- and if none exists, you can create one.
You can also seize the opportunity to build a team and compete for the MIT Clean Energy Prize, sponsored by NSTAR and the U.S. Department of Energy.
This prestigious business plan competition, open to student teams from all U.S. universities, is designed to develop a new generation of energy entrepreneurs.
Enter by Feb. 26 to compete for over $500,000 in prizes (more details at www.mitcep.com). Every community in the U.S. depends on energy and the solutions to our energy challenge will not come from any one policy, university or company. What will be your contribution?
Marcio von Muhlen is a graduate student in the Biological Engineering Department at the Massachusetts Institute of Technology. He is also co-cirector of the MIT Clean Energy Prize.
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Relax once the government stops being socialist the free market will fix the fuel problem. Gas prices spiked in the summer and the free market gave us a bunch of hybrids. Put your worries at ease and rely on the free market it will take care of us all.
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Anonymous is correct. Clean energy is only a viable alternative as long as it makes sense economically. The problem is that most people don't understand economics and assume that the gov't must do everything for them. So, when oil prices rise dramatically on supply fears then alternative energy will receieve more attention b/c there is a opportunity to make money on other means of energy (oh no! not profits, those are terrible and the ruin of modern society).
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Anonymous - the problem with the free market is that it doesn't work for things with 30 year cycles like energy and housing bubbles. If the gov't doesn't get involved, it's only a matter of time until the next crisis. Alum: Oil prices rose on supply fears that were very real. The world doesn't have infinite oil, and the stuff that is cheapest to extract has already been used. Before the recession hit we were coming up against the edge of this constraint. The US, by the way, hit peak oil (a related topic) back in 1973. And profits are great for society.
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Anonymous - the problem with the free market is that it doesn't work for things with 30 year cycles like energy and housing bubbles. If the gov't doesn't get involved, it's only a matter of time until the next crisis. Alum: Oil prices rose on supply fears that were very real. The world doesn't have infinite oil, and the stuff that is cheapest to extract has already been used. Before the recession hit we were coming up against the edge of this constraint. The US, by the way, hit peak oil (a related topic) back in 1973. And profits are great for society.
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You underestimate the free market it will steer us clear of any resource crisis if you let it work. Oil is cheaper than alternatives and we shouldn't force more expensive fuels down the consumer's throat. Once oil spikes again and alternatives become competitive we'll use them. It doesn't make sense to pay more for alternatives when oil is cheaper. The world is years from hitting peak oil and we make new discoveries everyday. However, once oil becomes more expensive alternatives can compete and we will switch then. It's basic economics
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It's worth noting, marciovm, that the supply fear which drove prices upward fueled a subsequent demand fear which has driven prices downward just as rapidly. The free market, in fact, works for everything - your problem seems to be more that it doesn't respond quickly enough for your own liking. It's always just a matter of time until the next crisis - and that's why energy companies employ engineers in order to find the most efficient and cost-effective strategies to develop energy. Clean energy will happen when it is more cost-effective to do so than what we currently have. If you want to pay out-of-pocket to find new sources of energy, be my guest - in the short term, I have better ways to spend and invest my money.
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The problem is that the government tries to prevent crises that serve as the very indicators required by the free market to adapt and correct itself. The funny thing about cycles is that they do just that: cycle. Somewhere along the line the government got the crazy notion that its job is to rectify the downward portions of the cycle, because we have this crazy notion that everything is supposed to hold steady or improve all the time. So we get this hybrid ideology of praising the free market when things are going well and restricting it until it is not free at all when things go badly. This simply does not work. You must either live and die by it, or get rid of it all together. I prefer the former.
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It'd be unwise to just wait until the next "downcycle" to try to fix things. Energy is a strategic resource, as is manufacturing capability. If your outlook is always the next quarter's results - which is what happens in large public corporations, what you consider the "free market" - your response horizon will be limited to a few quarters, max. You will miss longer term strategic opportunities and suffer the consequences. When the whole country's economy does this, we get to this point where Toyota and Honda are worth 30x what the Big Three are, and we have to spend trillions of dollars and thousands of lives fighting a 6 year war in a foreign continent to secure a resource we can't live without. Oh wait, you thought that fossil fuels don't have their own government subsidies?
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