Substitution and Resilience

Posted: December 22, 2011 in CRM, Current Affairs, Economics, Technology
Tags: , , , ,

I culled two stories from today’s (Thursday) New York Times that illustrate some important points about energy, substitution and resilience.  I think the word resilience will be prominent next year as the economy tries to recover further.  Tired of waiting for full recovery we may very well see more people taking matters into their own hands—legally and non-violently—to make the difference.  This will amount to substituting one form of activity for another in an effort to reduce costs and keep the wheels turning.  That is essentially what resilience is all about.

Example one, “Signs Point to Economy’s Rise, but Experts See a False Dawn” .  Ok, this may not be the most upbeat headline but it makes some good points.  Economic activity in the fourth quarter may be trending up to four times what savvy analysts had predicted at an annual pace of 3.7 percent.  That’s good.  What’s not so good is that the boost may be temporary and a result of rebuilding inventories that have run down over several quarters.  But that’s what recoveries are all about so I’m playing the optimist on this one.

The article falls short of making the connection between energy prices and economic growth but it is plain to see.  The first half of 2011 had reasonably good economic numbers, which caused increase demand for energy.  In May while on a trip to Chicago I saw gas prices pushing five bucks and the same was true in San Francisco.

High energy prices cooled the economy.  As a result demand for energy fell back.  Prices in a photo accompanying this article show regular gas at $3.16 per gallon.  A few years ago that would have been nose bleed territory but today three bucks seems like a tropical vacation.  We’ll take it!

Example two, “Video Chat Reshapes Domestic Rituals” describes how families are using video chat to stay close, even when they are across the country and can’t travel.  Video chat is not just like being there, yet, but it fills a void.  The article briefly mentions one person’s inability to hop on a plane for face time; clearly video chat is substituting.

Not only is video chat substituting for being there but also it is helping to create new ways of connecting and reasons for connecting which is all wonderful.  It is also a great example of resilience.  It shows that conservation through substitution need not be onerous; it need not feel like a sacrifice to use Skype rather than travel, especially when you can’t afford to travel anyhow.

I’d say that adoption of video chat is right where social media was about five years ago.  It’s in the grass roots stage; it is personal for the most part though advanced corporations are discovering its value.  And it is dependent on hardware technology rollout meaning PC’s with microphones and cameras.  Generation Two of all this will mean a PC directly connected to your giant plasma TV with a built in mic and camera.  I have a Mac Mini connected to my TV and it is fantastic.  In addition to Skyping, I can watch silly cat videos any time I want on the big screen.

So here is my point.  Energy supplies are tight and will remain so indefinitely.  If you like the ups and downs of the economy that match the rise and fall of energy prices, stay tuned, as supply continues to tighten there will be more and the ups and downs will be more violent.

On the other hand, if you like the idea of less turbulence in the economy, you know what you can do.  You can find substitutes for energy in your lives both personal and working.  This kind of substitution on a macro scale makes a difference.  It makes each of us a little more resilient to energy price fluxes and it makes the society as a whole a lot more so.

So, what did you think?

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