Tuesday, 28 October 2008

Thoughts on the Consequences of a Clean Tech Boom

A common catch-phrase in US politics is the need to "free ourselves from a dependence on foreign oil." So for arguments sake, lets assume there is a boom in Clean Tech and a variety of alternatives become economically viable. Not only improvements in efficiency and cost, but also improvements in functionality making their uptake more attractive. I'm NOT suggesting government policy mandate, but legitimate free market uptake of alternatives.

If this is the case, is it possible that the price of oil will drop given a lack of demand? Or could OPEC increase production of oil to squash the uptake of cheaper alternatives?

So to answer Grant's earlier question, I think the eventual uptake of clean-tech technologies will fuel another economic boom (much like how steam power fueled the industrial revolution and cheap oil spurred growth in the 1900s). However, the more interesting question is what becomes of the current oil producing nations when oil can no longer fuel their growth given the decreased cashflow (from lower demand and/or lower prices). Will they become more stable or less stable? Could regional instability offset the economic boom experienced by the rest of the world (consider potential simultaneous conflicts in South America, the Middle East, and Africa)? Or will traditional oil nations invest HEAVILY in alternatives (rather than football teams and stock exchanges) to hedge against such a result?

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