Wednesday, August 12, 2009

BIG problems, small solutions

There is a simple theory, or maybe its best called an observation about how things change. Usually people look at a problem, say global warming, and feel that the problem is insurmountable. The problem is large, involves multiple aspects, many countries around the world and the search for a solution just seems so difficult.

Now it doesn't matter for this discussion if you believe that global warming is a real issue or not, but lets just assume that it is. It will be solved and it will be solved faster than the experts think. The reason is that there will be a tipping point.

When people look at a problem like this you see the trends and the massive amounts of CO2 being generated and start to look at the BIG solutions. BIG solutions are hard. I doubt very much we will find one. However, the problem will be solved because as people become convinced it is a real problem, or just because oil is so expensive, they will start to modify their behavior.

Each individual modification is by itself insignificant, but as they start to multiply and add up, they will reduce emissions past the point necessary to start stabilizing the environment. Of course, concerning global warming we will also have some help from Mother Nature as more CO2 consuming plants will thrive.

Now how can I be so sure of this? Mainly because while theoreticians ponder, most people act and they act in their own best interest. Energy has gotten expensive. Also, people are starting to believe that they are causing problems for their children. So for both economic reasons and family reasons they will improve their carbon footprint. Also, as more people do it, it will become the thing to do.

The same phenomena relates to Oil demand. We had an oil shock in the 1970s but the actions we took back then to reduce oil consumption were defeated by the reintroduction of cheap oil and a political environment that didn't support conservation or renewable energy. We have now had another oil shock and further the oil shock sent us into a recession that scared the hell out of a lot of people. We are seeing signs of recovery and we have elected a more environmentally friendly Government. However, people are going to reduce their need for oil. They will want fuel efficient cars, more fuel efficient houses and will start to insist that products they buy are environmentally friendly. Not not everyone will do this, but where it was just a fringe group a few years ago, the numbers are growing and I believe they will continue to grow.

Additionally, the administration will promote energy conservation and whatever you may think about certain programs, it will become more profitable for industry to reduce energy consumption. So as all this happens demand for oil in this country will stay depressed. It may grow some as we expand after the recession, but it will not return to its former levels. Further, this is a worldwide phenomena.

Most BIG problems and not solved by BIG solutions but rather are solved by a series of rather small actions taken by many different individuals and businesses acting in their own best interest. Yes, sometimes the reason certain actions are in their own best interest is because of the tax code or perhaps social pressure, but it is not a BIG solution.

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