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http://finance.yahoo.com/news/Oil-climbs-to-highest-since-apf-1947152419.html?x=0&sec=topStories&pos=main&asset=&ccode=
Rising oil prices is at the top of my list of catalysts for economic recovery. Today oil closed at its highest level in 2.5 years (closing at $106.76). Obviously the most direct implication of these high prices is seen at the pumps when we fill our cars up, but high oil prices effect far more than just the price of gas.
Personally I do not see oil prices decreasing substantially even when issues in Libya are cleared up for a number of reasons (read up on peak oil). As such, I am a huge proponent of green energy research and investing. Unfortunately, it is not yet a truly viable alternative and its development is still in its infancy.
What do you see as being the biggest catalysts in our economic recovery, and what role to you think oil will pay?
I will have to agree with you, Chris. I would say high oil prices is a major factor in dealing with economic recovery. Think about it, our plastics and logistics industries heavily rely on oil. If the United States experienced an "oil crisis," where oil production decreased significantly, the implications would be disastrous.
ReplyDeleteAlso, more of what you were getting at, higher oil prices equals higher gas prices, which means fewer dollars going towards consumer spending. Individuals have less money to spend goods and services, decreasing GDP.
Hopefully, this will spark more R&D in alternative fuel industries. I'll be looking for possible investments.
Good post.
I think that one of the reasons that will spur our economy is research into alternative energies and products and packaging, ways of producing that will use less oil and more manpower. I think that a lot of the research into green energy has spurred the economy slightly, even if that activity is not sustained due to the prolonged slump we are in.
ReplyDeleteI think the rise in oil prices will hamper economic recovery. i am also a proponent of alternative fuel sources, and think that one of the fastest ways that we can get there is to stop demanding big ass cars etc. I know the Prius isnt sexy, and doesnt growl when you touch the gas pedal, but if we are serious about reducing our reliance on foreign oil, then this seems like a logical choice. Drilling here should not be an option. you cant tell me that green technology wouldnt be farther along if we didnt keep buying gas guzzlers. If we can put a man on the moon over 40 years ago, we should be able to make a battery powered car.
ReplyDeleteBatteries are more destructive than oil in the environment in my opinion. We don't have proper disposal laws and fines in place. I think reliable public transportation is a key issue to making the future economy blossom.
ReplyDeleteBatteries take super amounts of energy just to make them and they use a lot of precious scarce materials.
Bloomberg provided an article on Tuesday describing falling consumer confidence. According to the article, consumer confidence continues to fall as gas prices rise and home values fall; home prices have fallen for seven consecutive months nationwide. I believe the ultimate player effecting the state of the economy is the consumer. If consumers have confidence in the market, the market is likely doing well. If they consumers are fearful of the future of the market, they will behave differently today in preparation, effectively altering the state of the market. So things like oil prices and home prices play a huge role in the future of our market because they play a huge role in how consumers feel about the market.
ReplyDeleteHere's a link to the Bloomberg article.
http://www.bloomberg.com/news/2011-03-29/u-s-consumer-confidence-declines-to-three-month-low-on-surging-fuel-costs.html
I believe an important part of economic growth is ingenuity through research and the development. However, many corporations were hit pretty hard as a result of the recession, and have not been investing as much in developing market-leading technologies/products. To compound this problem, the availability of capital from banks and private equity has also been limited. I guess this is a long-winded way of saying that the economy needs to revert back to developing new technology in order to get many factories up and running again and consumers spending money.
ReplyDeleteI agree with above comments that we need to put more money into research and development for new technologies that will make our economy more efficient. That being said, an emphasis on green technology should be at the top of that list because Americans use nearly 24%* of the world's oil and depend on oil for just about everything in our lives. Developing green technology will make Americans less dependent on oil, which gives them more money to spend on other goods; thus stimulating our economy. The more money people spend, the more jobs there will be created.
ReplyDelete...so basically I think oil is a major factor in our economic recovery since we are so dependent on it.
*http://www.nationmaster.com/graph/ene_oil_con-energy-oil-consumption
I also agree with Jared's and Andrews points. Research and development of alternative or green energy is essential for our economic recovery. By developing these alternative energies we will be taking a step towards being less reliant on foreign countries, which, in my opinion is one of the big reasons why we have such a huge national debt in the first place.
ReplyDeleteWhat do you guys think about the developments being made with bio-diesel alternatives?
ReplyDeleteHarvesting algae to produce bio-diesel seems promising. The costs of processing algae bio-diesel should improve in the coming years, making it more competitive with oil production. Rising oil prices will make alternative fuels more competitive across the board.
http://en.wikipedia.org/wiki/Biodiesel
http://www.technologyreview.com/Biztech/20319/?a=f
I agree with Andrew, Jared, and Mark's comments that increased efforts towards research and development of green energy and technology is absolutely necessary. The extraction of oil from waste product's can play a huge role in spurring economic growth. In January’s State of the Union address, President Obama offered support for biofuels while also calling for a major reduction in federal subsidies for oil companies. Economists and researchers have agreed that this would have mixed potential effect on heating oil. The ramifications would be higher costs for oil companies that would likely lead to higher heating oil prices but greater support for biofuels. Additionally, it would probably make for greater quantities and lower prices of biodiesel fuel. I found an extremely interesting article in the Journal of Agricultural and Food Chemistry that looked at using Spent Coffee Grounds as a Versatile Source of Green Energy. The paper looks at an approach to extract oil from spent coffee grounds in order to convert the processed oil into biodiesel fuel. The most interesting issue tackled by this article was that biodiesel derived from coffee grounds proceeded by 100% conversion of oil to biodiesel and was found to be stable for more than 1 month under ambient conditions. There are profound implications to this study because it provides an inexpensive and eco-friendly approach for the US to decrease our dependency on petroleum fuels. There are even more profound implications for this study worldwide, as there is a potential of a projected 340 million gallons of biodiesel that could be produced from waste coffee grounds. Using waste material to produce renewable energy from these sources would ultimately drive the price of oil down. In my opinion, this method holds tremendous promise in increasing jobs in the green energy sector and would increase consumer confidence.
ReplyDeleteThe article was written by Kondamudi, Mano, and Mohapatra in the 2008 Journal of Agricultural and Food Chemistry and available through the library if you guys are interested, although it is very science heavy.
I also agree with all of the previous statements. Green energy is the future, and unless the US can come up with some viable alternatives we will be stuck paying extremely high prices for oil in the near future. Green and battery powered cars, along with the current fuel alternatives, are a good start, but more US consumers need to be aware of how changing to green energy will affect their futures.
ReplyDeleteGreen energy, like Becky noted, is the future. I don't see biofuel developments getting to sustainable point. Its too costly. WMU is currently doing research into algae based bio fuel.
ReplyDeleteSince everyone nearly agrees that green energy is the future, what does this mean for the oil companies?! Will the industry just dissolve? Will new, drastic, methods of drilling change the industry and possibly hurt our Earth as the companies turn to desperate measures? I'm worried that this industry will not want to take the necessary actions to develop and be sustainable, but that they just want to make cash. In the necessary progression of the market, industries come and go with the changing times. I hope the oil and natural gas companies will know when the time comes that enough, is enough.
ReplyDeleteMichelle, I think the major players in the oil industry are too large and influential to become obsolete. Just look at the Fortune 500, 3 of the top 5 are oil companies. With the revenues and profits they have, their lobbying power is ENORMOUS. Also, I think that any potentially viable alternative fuel source that is discovered/created will instantly be bought by Big Oil; their coffers are too great and their role in our economy and the global economy is too substantial.
ReplyDelete