Newsletter February 2006

Energy Problems - Here to Stay

• Energy Problems are Here to Stay
• 1) When is the problem going away?
• 2) Is it practical to use less energy?

Energy Problems are Here to Stay

In our last issue , we discussed why we aren't running out of oil, even if it is quite expensive. Now we want to answer two more questions:
When is the problem going to go away?
Is it practical to use less energy?

1) When is the problem going away?

In short, its not. Yes, you shouldn't believe the end of oil doomsayers. None the less, you should still be worried. There are several reasons.

1. The easy carbon is used. Sure there's a ton of carbon locked up in Canandian tar sands. But its going to be years until that energy comes to market. Until that happens, the same old resources in the middle east will be our only source for increased capacity.
2. World usage continues to go up much faster than it used to. The U.S. is definitely the world's largest energy users. But India and China are growing at a phenomenal pace. And unlike in the US - where consumption has been driven in the change from cars to SUVs, consumption is driven by the change from bicycles to cars.
3. The environment is a business issue. Whatever you may think of the politics of global warming, multi-nationals from insurers to global energy companies see what's happening and are taking action. Just one fact which should help get you beyond the devastation of Katrina. a) The global-warming-induced bad weather we've been having is costing this country a lot of money: Inflation-adjusted economic damages from the weather [what? Storms, floods? Be more specific] run $200 billion a year, up from $80 billion in the mid-'90s. Of this, 30% is paid for by insurance agents. (These statistics were reported in the well known left-wing journal Forbes

So, even if there is plenty of carbon, it's not going to be as free and easy as it was just a few years ago.

2) Is it practical to use less energy?

Seems like a silly question, but we think it's important to remind people that if they're smart, they don't need to wait for tomorrow's technology to start saving energy. Numbers speak louder than words:

1. You may have read about "green building." Does it really save money? According to one study, coauthored by our colleague Jeff Perlman, an investment of $4 per square foot when building a school can create $15 per square foot in direct savings and $68 per square foot in indirect savings (For more: Green Schools Study)
2. You can learn a lot just by looking. One company we know saved $600,000 by spending $100,000 analyzing where heat was being lost in their chemical manufacturing facility.
3. Simple changes make big differences. Replacing inefficient lighting can save you up to 30%.

You just have to start thinking. If you own or occupy a building of any sort, that's the first place to look. And if you're a major consumer of energy, you can find even more ways to save.

So, to recap. Don't think that we're going to go back to horses and buggies. You should be concerned and you should know that you can take action to save yourself and your company serious money.

Red Three Consulting: Transforming Information Technology into Answer Technology