“Energy Independence” is an idea that’s been kicked around for a long time. Back in 1973 during the Arab Oil Embargo that sent prices rising, gas lines lengthening and speed limits dropping, Richard Nixon first brought up the idea of an energy independent America. It seemed to make sense at the time. The Arab world was punishing us for their losses during the Yom Kippur War with Israel. Curtailing their control over our energy production was logical. After all, we were importing nearly 35% of our oil from the Middle East.
Since then, every president has paid lip service to the concept of energy independence but have you noticed that it hasn’t gotten any better? In fact, since Nixon’s first, tentative words on the subject, we have increased our dependence on foreign oil. We now import over 60% of our oil each year and pump prices go up far more than they go down. In other words, we have had an “energy crisis” of one sort or another for 35 years and for reasons of diplomacy, environmentalism, real politic, industrial intransigence, consumer inertia and who knows what else, very little has been done to solve the problem.
True, alternative fuels like ethanol seem promising, and we are doing better at harnessing wind and solar power. Hybrid, electrical, fuel cell and biodiesel vehicles are slowly making their way into the marketplace while the President has started an initiative to increase CAFÉ standards by 20 miles per gallon within the next 10 years. We are doing better at recycling and using energy efficient devices. All of that is great but most of these efforts depend on emerging technology and none of it deals with the problem that exists right now: Energy prices are out of control and the most vulnerable sector of the economy, the sector most likely to be harmed by this, is small business https://www.businesscatalyzers.com/.
In 2006, back in the good old days of $76 per barrel oil prices, the Small Business Committee of the U.S. House of Representatives issued a report called Impact of Rising Energy Costs on Small Business. It is an interesting read for any small businessman. The conclusions of that report are as follows:
The impacts from the perceived and actual status of our energy supplies are significant.Last month [July, 2006], the Federal Reserve Chairman projected that higher energy rates will create some inflation in the economy. He cited the cumulative impacts of escalating energy prices as causing consumers and businesses to spend less, and to pass on costs to others. U.S. industries are also showing signs of deflation due to energy problems. Last month, the manufacturing sector growth index was the lowest since the previous August. Industry officials attributed energy costs, along with other inflationary impacts, such as interest rate increases, as impediments to expansion.
Given the impacts from the energy crisis, including inflation and slowed economic growth, these firms – in an attempt to cover rising production costs – have constricted operations while limiting their investment and expansion plans. Facing an increasingly unequal playing field, the extreme volatility of energy prices only creates larger financial burdens and operational disruptions for small firms when compared to their corporate counterparts.