1. Action not Words
As a result of the increasing oil price, energy savings are not just discussed in talk shows, but are correspondingly carried out on a daily basis – and this is now even the case in the USA. No longer is it “unamerican” to call for the end of gas-guzzling SUV’s or for the USA’s entry into international agreements over climate protection. Roused by market forces, not new laws, firms are beginning to invest in energy-saving technology.
2. Energy Saving at Home
Even without new taxes and subsidies, high prices have made it financially attractive for households to save energy, modernize and maintain heating, seal windows, and to insulate lofts, cellars and outside walls; it’s also attractive not to heat flats to more than 20 degrees in the day and 15 degrees at night. It’s alone worth switching to energy saving light bulbs and washing on a lower heat, and to use less air-conditioning as well as saving more petrol and driving less.
3. New Investment in Oil Fields
An oil price of $100 makes it attractive to invest in both existing and new oil fields. As a result, the current scarcity of oil is not really a problem of low reserves. The high oil prices mean that it’s all the more worthwhile to adopt new technologies and to extract more from old oil fields. Equally it is more attractive to keep productive oilfields open and to extract petrol from oil shale and sand. Hence today’s oil reserves are no lower than before. They have grown and reached record levels.
4. Germany Profits
It is becoming more and more important for the world economy to look for new energy sources and here the chances offered by an oil price of $100 per barrel really show themselves. Alternatives to fossil fuels are being frenziedly sought all over the world and with complete success. Europe’s oil dependence is already considerably lower than it was in the last century.
The German economy is profiting from the investment boom in oil exporting countries. German companies of the old economy, such as companies in the electric and metal working industry, the construction and machine building industries, and the tool and equipment industries successfully offer their high-quality excellence around the world. The petrodollars of the past century have turned into petroeuros. Oil exporters expend a large proportion of their foreign currency earnings and indeed much of this on highly productive machines, special vehicles, valuable precision equipment, and modern apparatus and innovative tools from Germany.
5. Economic Efficiency
Just as the chances of the German economy lie in new developments, they also lie in the increased organization of resource saving value creation networks. Through management and organization, and furthermore the assembly of each wheel of the value creation process into a harmonious clockwork of high precision, a lot of money could be earned in the future.
Professor Thomas Straubhaar is Director of the Hamburg Institute of International Economics and professor of economics at the University of Hamburg. He also serves as director at the Hamburg European College, an institute for integration research of the University of Hamburg.
This article is a translated and shortened version of Prof. Straubhaar’s SPIEGEL article Warum der 100-Dollar-Oelpreis ein Segen ist. Permission granted by the author.
A longer PDF version is also available at the Hamburg Institute of International Economics: 100 Dollar pro Barrel
Related Materials from the Atlantic Community
- McKinsey on Going Green - Cheaper Than You Thought
- Experts of the Energy Watch Group on Steep Decline in Oil Production Coming
- F. William Engdahl on Beware of False Assumptions on US Energy Policy