The economies of the world are powered by oil. That is not a hyperbole without reason.

The turbines that continually feed electricity into our homes, cities, factories and
institutions mostly run, for now, on some form of hydrocarbon or other. Modern-day
transportation, which allows to trade vast quantities of raw materials and consumer
products across territories and with that international trade would have been
impossible without the engines the fuels that they burn. Not only do we rely on crude oil
for our energy needs, we also rely on it to extract many important key chemicals that
are used in various chemical manufacturing processes. Chemicals such as ethane,
propene, benzene, toluene amongst other simple unsaturated hydrocarbons are derived
from the cracking process necessary to fractionate crude oil into its various components.
The greatest example would be plastics, the phenomenally successful material spawned
by the 20th century. Demand for synthetic polymers in the past has increased
significantly, increasing with it the demand for ethane, propene and benzene. Besides
plastics, chemicals derived from the fractional distillation of crude oil go on to be
converted into various chemicals that are used in the agrichemical, dye, and drug
industries.
However, it is already pretty much common knowledge that the supply of crude oil will
not last forever. Modern-day society has been made aware of that in the peak-oil crisis.
And even though new reserves have been found since then, ultimately, the inevitable
depletion of oil reserves shall come upon us. With all our dependence on it, how do we
wean society from this seemingly uncurbed addiction to crude oil?
No time for innovation is as ripe as now. Already, greater awareness of the impact of
human activities on the environment, increased demand for greenness and environment
friendliness has set the stage for action. This of course will require investment, a
definition of priorities and a judicious use of social and economic incentives.
The greatest problem with our dependence in oil is that a multibillion dollar corporate
infrastructure and highly-developed technologies are already in place to ensure that our
oil demands are continually met. What’s more, the oil market has been here for a really
long time. Investment into new technologies requires gambling with the odds that one’s
investment may not achieve a result that will create a high enough demand in the
market. Investment into research is development is a gamble, and not every promising
find ends up in the market. Thus, there is a general inertia in the energy industry
against seeking and discovering new areas for expansion. For example, one of the most
telltale signs of this reluctance is the seeming keenness of the petrochemical industry in
advocating the possibilities of ethanol derived from agricultural crops like corn. Ethanol,
being an organic compound, may be distilled in a similar manner as crude oil, though of
course, certain engineering details will have to be adjusted considerably. And like oil, it
can combust in pretty much the same machinery as diesel or petrol engines. In a
nutshell, the technologies are already there, and as such the oil industry won’t have to
invest more money into it compared to something more untried and untested like
hydrogen fuel.
If the economic sector can not be relied upon to bring about the next great technological
shift that will relieve society of its tethering to crude oil, the government may have to
step in to ensure that there is investment into new technologies. Although as a
capitalist system, private individuals ought to have free reign of their capital and
investment opportunities, the laissez-faire philosophy of the capitalist market can not
always be depended on to ensure that basic necessities are always met adequately and
affordably. But as we are not communists, government intervention would have to be in
the form of incentives and regulations.
Another problem in which the government may be of use is in making sure that the
natural resources and environment of its nation is taken care of. Unlike crude oil or any
other economic good, the goods we obtain from the environment for free do NOT have a
market price. Things that we take for granted everyday like breathable air, sunlight,
stable water supply, and healthy ecosystems that take part in the great geochemical
cycles that continually recycle and replenish chemicals on the Earth’s crust do not have
a market for themselves—there is no demand for them and supply is assumed to be
limitless. That is why there is hardly investment from the economic sector until recently
in protecting these valuable resources. And yet, the contribution these have on our
economies and human welfare is priceless. In fact, a study estimated that their total
economic value may be in the order of trillions of dollars—larger than all the
economies in the world combined. Evidently, if we don’t start rethinking how we value
these things, we may end up paying up for things that mother Nature provides us for
free.
Another thing that will have to be addressed is the way money circulates in the society.
Up until around the 1950’s, capitalist investment went mainly into manufacturing and
new technologies, resulting in the improvement of our material well-being and our lives.
Upward social mobility has improved, and so socioeconomic inequality in developed
countries has been substantially reduced. It was an era where new things were always
being tried and everybody profited from that. However, large, and at times, extreme
reduction of the interest rates in the 1970’s and beyond contributed into a “gold rush” of
financing. That is, a significant portion of the capitalist investments were diverted from
R&D, manufacturing and entrepreneurship and were instead used to buy more assets,
financial derivatives like collateral-debt obligations(CDO’s) and leveraging up monetary
wealth. That is, more money was created from money than from real, tangible stuff.
Although one can not say that no new material goods were created in that period, a
better use for all that money could have been contrived. At the back of all these are the
banks deemed too big to fail and all the financial engineers in pursuit of their very own
Midas touch. But alas! Much of the money that these banks earn from investing in such
financial derivatives will not be used to finance the manufacturing sector but will
instead be re-injected into the business of making wealth out of thin air instead of
lending it to entrepreneurs and businesses to pursue new technologies or improve and
expand existing manufacturing operations. Money is created, but no new wealth is
gained by the nation as a whole.
So with these three important issues, it is evident that we will have to re-evaluate the
way we do things and appraise the system for what it’s worth. And though government
incentives into key areas such as investment into key technologies and industries may
do some good, a call for a more profound social change is at hand. A social change that
will change the way we develop technologies and do business—a social change that has
human welfare and the environment in mind. Of course, the government will have a
decidedly important role to bring on this change. It should do first by reviewing the way
it spends its taxes. Instead of bailing the big banks out and condoning their mistakes,
the government should let them sink. This should create new opportunities for smaller
banks and at the same time teach those who are in the financial sector to be more
responsible for their actions. The government should also create institutions that will
provide research grants to institutions or people who have promising ideas, especially
those that will most likely have a big impact on the society and the environment.
Altering the way we measure a nation’s wealth should also be considered. Indicators
like the GNP, the GDP and the national budget do not tell anything about how the
money is spent, the returns on investment, environmental impact and the standard of
living. Thus, a nation’s wealth must be measured by how its citizens fair and how its
natural resources are maintained.