How do international businesses need to adapt to the energy shortage?
All businesses around the world rely in some way on a supply of energy derived from fossil fuels. Oil and gas are the lifeblood of all economies as without them mass manufacture and global logistics simply would not be possible given the technology we currently employ in a myriad of uses.
The problem is that we are running out of hydrocarbons. Oil and gas are derived from non-renewable sources accessed by drilling into the Earth’s crust. These deposits were formed over the course of millions of years. With the current rate of consumption being as high as 40,000 gallons per second for oil, these reserves are being depleted far more quickly than new ones can be developed. Some scientists predict that given the current rate of usage, all oil will be used up by 2050 and gas supplies will run dry by 2070. Currently, 33 of the 48 oil-producing nations have passed peak production and are in decline.
Global businesses will have to make significant changes in order to adapt to the shortage of these fuels. Global manufacture and industry cannot continue to run as they presently do. One reason behind this is a responsibility to the environment. Saving energy and switching to renewable sources has a positive effect in terms of climate change and in the reduction of environmental destruction, making this a better world for us all. Even without this responsibility though, companies have a more immediate need in terms of future-proofing their business against the fallout effects of supplies running dry.
Many companies overlook just how important continued uninterrupted energy supply is to their future as it is simply taken for granted while it is still produced in abundance. Even office-based companies that may feel they do not contribute much to the crisis probably have a greater reliance on fossil fuels than might at first be apparent. Fuel is not just used to power computers, lights, and heating or refrigeration systems, but also vehicles used for logistical purposes. Add to this the fuel reliance of any suppliers and you can begin to appreciate the extent of the issue affecting every international company in the world.
As the crisis progresses and resources begin to dwindle, there is likely to be increasing political tensions and economic concerns affecting both the availability and price of oil and gas. For maximum security against these risks, companies ought to prioritize adjusting their business practices to take advantage of new, renewable and decentralized energy sources currently being developed. Daniel Yergin, acclaimed energy scholar, has written and spoken a great deal on the challenges the world will face as gas and oil shortages begin to occur, as well as possible solutions. One of the most promising solutions identified by Yergin is unconventional oil, essential petroleum produced or extracted by means other than traditional oil wells.
Other solutions that businesses should consider are aiming to produce a substantial amount of power through means such as solar panels, or to support the development of localized renewable sources such as wind farms or hydroelectric dams. Essentially, every business should perform an energy analysis to discover precisely where oil and gas are used and how processes could be altered to reduce this reliance. This should be a priority concern for every business.