Peak Oil, Global Warming and Business

Posted: November 6, 2012 in CRM, Current Affairs

So hurricane Sandy was a wakeup call for many people and their attitudes toward global warming.  But I have been trying to make the point for many years that global warming or climate change or whatever euphemism you decide on, is really just one side of the coin.  The other side is the availability of fossil fuels to begin with.

In simple terms, the earth is a finite hunk of water, rock and living matter and the term finite is well chosen.  Resources like fossil fuels maybe quite large but they are not infinite and that has to mean that at some point the resource can be depleted.  Peak oil is all about depletion.  It’s the point beyond which production will not increase and all that is left is limited supply and increasing demand.  When that happens prices rise.

Now, you might say that we aren’t there yet and that there is plenty more oil to be found under the oceans.  To that I say, great!  The cost of drilling a well in the Gulf of Mexico is about $100 million.  Even if there’s no oil in the hole you drill, you still pay to play.  Someone has to pay for that dry hole at the bottom of the ocean and that’s the consumer in the form of higher pump prices.  So peak oil or sub-ocean oil, it amounts to the same thing — higher prices.  And of course nothing changes regarding pollution — the stuff you find in unconventional places still pollutes and causes global warming.

Now let’s add a third component.  The chart supplied here shows that a whopping 94% of the world’s oil is owned and controlled by national oil companies (NOCs).  NOCs like NIDC in Iran play by a different set of rules.  Some NOCs are not about profits and would prefer to keep their oil for domestic consumption.  They don’t care much about the world market or the oil companies and by controlling their output they can control their prices and profits.

So a lot of data is coming together that says oil prices aren’t coming down and a prudent strategy for controlling our destiny and trying to save the planet for our kids is to find another way to propel our cars.  It’s not easy but it’s not impossible either.  We need to quit blowing off the need for change because it’s not convenient or too hard to contemplate.

I believe there’s a lot we can do to avoid travel and carbon use in business and I saw some great examples last week at Microsoft with applications embedded with Skype.  Imagine Skyping from your CRM system to a customer rather than getting in a car.  That wouldn’t radically change your life but it might do much good for other reasons.

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