Friday, August 29, 2008

Energy Costs, Transportation, Georgia, and Globalization


Of the slew of articles appearing in all sorts of media outlets around the country related to energy, some recent articles in the NY Times caught my attention. The first, entitled Shipping Costs Start to Crimp Globalization, started me thinking about the role of transportation in the global economy, especially about the need to recreate local and regional economies to reduce the economic and environmental impact of said transportation (image from www.indmedica.com). The very first paragraph of the article highlights the taken-for-granted complexity of global supply chains that deliver goods to global consumers at their whim. Tesla Motors (receiving their share of press as they build and sell a $100,000 electric sports car), planning to ship subassemblies around the world (chasing low costs with acceptable quality) found out that, with the rise in fuel prices, it was more economical to complete the subassembly work near their HQ in California. Good news for people in manufacturing in the locale and for CO2 emissions. According to the article, nearly 5000 miles were removed from this assembly's shipping. Now, if there were a price on carbon, how much more would they have saved, and what other innovative production methods would they come up with?

I am not suggesting that high fuel prices are the best thing ever, though I like the fact that the higher prices start to internalize many of the externalities that come with burning fossil fuels. I am suggesting that, as we learn in Econ 101, prices provide a strong market signal to players in the market to take action. High fuel prices mean that many individuals, companies, governments, etc. are looking at their energy bills and thinking about what they can do to reduce them.

Paul Krugman (full disclosure, I read the Conscience of a Liberal recently) chimes in a few weeks later with an op-ed piece titled The Great Illusion, looking at the Russia/Georgia conflict. The connection to energy; Georgia is a major corridor for oil shipments (please pardon the fact that I do not have exact numbers) and provides established access to additional oil and natural gas fields. The article hearkens back to the last great "pause" in the march of globalization; WWI and WWII. Mr. Krugman takes a look at the state of the economy, global instability, energy concerns, food price spikes, etc., and posits that perhaps globalization will be slowing. What does that mean? Who benefits and who loses? Taking the examples from the first article one could argue that American manufacturers with plants located domestically could benefit. Do the large multinationals that have been chasing the least costs locations stand to lose? If so, how much and where/how will they apply their considerable power to reduce their risks?

Warning, personal musings to follow!

Both these articles are a bit dated; I decided to stay away from the computer for some time to reflect upon the past few weeks and the upcoming second year of my graduate studies at BGI. It's funny, in the time that I have been away from school, as welcome as the time off has been, I have found that my cynicism about the ability of business and society to change the profligate ways we live (I am a perfect example of this) growing deeper. I believe it has something to do with a lack of contact with people that share some of my visions around regenerative business. This is something I can remedy rather quickly. It also relates to my own lack of commitment to a simpler, less energy intensive lifestyle.

What's keeping me from buying the composter I have been talking about for months and engaging my neighbors in its use? What "invisible barrier" keeps me from visiting more farm stands to support local agriculture (there will be more commentary on the "Omnivore's Dilemma" & "In Defense of Food" coming)? Is it the fear of non-conformity? Am I that caught up in what other people think of me that it gives me pause? Perhaps it's just the opposite, perhaps I am caught up in the cynicism I mentioned before, convinced that my actions will be useless and inconsequential.

I suppose that's not the best way to view one's actions, especially if one believes in the threat of (insert threat here; liberals, conservatives, climate change, gangs, economic collapse, obesity, elder care, education, war, government & consumer debt, etc.) _______.

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