It is a well understood fact that less than 40% of the oil we need in the United States comes from our own domestic sources. And, with the rest of the world developing an increasing appetite for the remaining supplies, there is a growing global rush for oil, which in its polite form leads to global instability. Our objective as a nation must be to find a state of steady equilibrium where our future prosperity does not depend on how adept we are at winning the global "oil rush."
For years, predominant thinking held that the world contained plenty of oil and that we need not worry. And besides, as the price rose, alternatives would become more competitive.
What is wrong with this picture? For starters, the supply of oil is not unlimited. U.S. consumption per capita leads the world by roughly double the rate of other industrialized nations, and 10 times that of developing countries. The real news here is not our consumption level, but rather the rate of growth occurring in the developing countries, such as China and India. They have a lot of catching up to do -- and they are.
We in the manufacturing sector account for approximately one-third of the energy consumed in this country, and even more when product transportation and the energy equivalents in our feedstocks are factored in. This gives us, on the one hand, a tremendous stake in the price and availability of energy, but we also have a tremendous opportunity to participate in developing "synthetic" energy. I use the terms, "synthetic" and "opportunity" because we don't have to use scarce resources to produce energy if we don't want to. There is abundant energy in a variety of forms all around us: tapping sunlight, the wind in the air, or even plants from our fields, to name the most logical sources.
Unfortunately, these alternative energies have long been the province of anti-industrialists who angrily wag their finger at us for not using them. The fact is there has not been a good economic reason to do so. Capitalist principles drive our economy, and we capitalists have needed a better reason to switch. But lately, we have at least two very good reasons to do just that: global instability and global pricing.
Business requires a steady, cost-efficient supply of energy, but today we can no longer count on a cheap, uninterrupted flow of oil and natural gas to sustain us for the long term.
So what is the solution? Force our way to the top of the list with the highest bid for the remaining inventory in the ground? Or worse yet, take it at gunpoint? The fact is, we have the ability to create energy sources for ourselves. By making the rapid development of our alternative energy capabilities a national priority, we can turn our deficit into a positive -- without sacrificing our lifestyle. It really is that simple: we can literally "manufacture energy!"
What does it take? In an environment of skyrocketing oil prices, alternatives may well become more competitive, but an initial policy boost is essential to affirm our intentions.
The Administration recently presented a vision of the many ways we can bolster our energy supply. In his "Advanced Energy Initiative," the President rightly points the way for broad development of all resources -- including for the short term: additional responsible drilling, nuclear and clean coal -- but also provides the future vision for alternatives, including wind, solar and biomass.
For those who may bristle at the prospect of government intervention, let's remember that there are already plenty of government "investments" in the infrastructure of conventional oil and gas; even nuclear and coal have attracted government investments.
Energy alternatives are beginning to attract legislators' attention, but so far the list has been relatively small, and the time horizons too short, to support sustained industry growth. What is needed is a national consensus on the need for a new approach and a commitment to making these alternatives more cost-effective than they already are. If turned loose with the help of sound government policy, the manufacturing sector itself could develop the necessary infrastructure and increase its research and development to "manufacture energy." That certainly seems a fitting task for our sector.
The resulting growth would reduce the demand on our remaining fossil fuels, and result in lower prices and increased global stability. That has the potential to generate a new "energy rush" -- one in which everyone can be a winner.
Fred Keller is CEO of Cascade Engineering. Cascade Engineering, based in Grand Rapids, Mich. provides engineered plastic systems and components for the automotive, solid waste and industrial markets, with capabilities ranging from compounding and testing, integrated design analysis and prototyping to large tonnage molding and plastics processing. For more information visit, www.cascadeng.com.
