Business Sense | Energy Independence is a Curse to War – Standard of the Times

Yes. What are the benefits? Not the global energy market, that’s for sure. In today’s global economy, it is even more evident that a country’s dependence on fossil fuels can undermine the security and independence of a country, a people, and a region.

As an example, look at the current conflict in Ukraine. Kremlin officials reportedly threatened that the Ukrainian people would only see improvements in their energy supplies if they caved in to Russia’s demands as part of its “special military operation.” Comments like this amount to energy blackmail. And, since the EU is so dependent on Belarus and Russia for oil, such talk is clearly worrisome.

Some economists might (correctly) argue that a diverse global exchange of goods and services reduces costs and increases productivity. On the face of it, yes. This is true. From a purely economic standpoint, free market movements and cheap foreign energy production do create economic value. But economics “in practice” is as much about mathematics and finance as it is about psychology and sociology. That’s why consumer confidence (levels of optimism, personal attitudes, and feelings of security) remains the main driver of economic activity.

Lower prices and higher productivity may mean more economic opportunity, but if purchased at the expense of freedom and security, the long-term benefits of this interdependent relationship are diminished. This is why the mutually beneficial exchange of cross-border goods and services can only work in peacetime and when power dynamics are balanced. Energy independence provides districts with confidence that services and operations will continue despite disruptions or supply shortages. Additionally, since energy prices often fluctuate based on supply and demand, energy independence can provide the basis for budgetary stability. These guarantees are extremely important for a country, especially one whose trade and commerce depend on the support of workers, entrepreneurs and businesses.

Opponents might argue that the low cost of fossil fuels still makes them more competitive, because low energy pricing frees up resources otherwise associated with technology. This may be true when renewable energy was new and the ROI was low. But that is changing. Standardization of renewable energy practices, increases in global production, and improvements in engineering efficiency are making renewable energy more competitive with carbon-based energy. In many parts of the world, electricity from renewable sources is already cheaper to purchase than electricity from fossil fuels. The levelized cost of electricity (LCOE) for solar and wind technologies continues to decline year over year. So much so, in fact, that energy experts are now more regularly discussing that green energy will surpass the carbon horizon.

On an individual (i.e., consumer) level, the low cost of green energy may feel distant. I still keep my thermostat locked and I don’t drive (nor can I afford) a Tesla. But wholesale-level renewable energy rates are indeed coming. If renewables outpaced fossil fuels in the market, the gap with the consumer market would close faster. Once closed, the economic benefits of renewable energy to consumers and businesses free up capital for additional investment, spending on goods and services.

Until then, we shouldn’t stop looking for alternatives to expensive energy imports, nor should we limit our creativity and appetite for domestic clean energy production. The quest for energy independence, building energy resilient infrastructure, and getting rid of foreign energy supplies cannot be oversimplified, because imports are bad. Instead, reducing reliance on the exchange of energy resources and providing clean and affordable energy where people live, work and play is good for all societies and countries, not just ours nation.

Someone said “when goods don’t cross borders, soldiers do”. The implication of this sentence is that soldiers can no longer buy the above items at home. So soldiers have nothing to do but cross the border and take it with them. Imagine what better uses our Soldiers could have when energy resources did not need to be traded or bartered, but instead could be obtained cheaply and easily at home. We have better ways to use our limited resources and put our money to work. So helping each other to be resilient and independent is not a threat to business. This is its evolution.

Scott Adair is the Director of Economic Development for Humboldt County.

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