Monday, March 7, 2011

Here We Go Again

Not surprisingly, oil prices are on the move up.  In fact, last week gas prices recorded their second biggest jump in the history of the gasoline market.  I say this isn't surprising, because as the global economy recovers from the "Great Recession", we would expect commodity prices to rise as demand increases for food and energy.  

The question on everyone's mind is, how high will gas prices go?  The answer, of course, is that prices will continue to increase until supply and demand are in equilibrium.  That's how markets work.

My bigger concern is the longer-term future of energy.  Our current dependence on fossil fuels is not good, to say the least.  Besides the environmental problems caused by burning coal, oil, and gas, it leaves our economy susceptible to significant price shocks, which then hurt the most vulnerable parts of the economy.

Fortunately, help is on the way in the form of my favorite economic super hero: innovation.  This article from the Wall Street Journal discusses three technologies that may help provide energy in the future.  Even Bill Gates is in on the alternative energy wave.  He is a significant investor in TerraPower, a new way of using nuclear power.  You can see Gates explain his vision in this video.

There is no easy, single answer to our energy problems, but there are huge opportunities and scores of smart and entrepreneurial people working to take advantage of those opportunities.  Unfortunately, we still have to face the likely pain of increasing gas and oil prices in the near future.  However, the more expensive energy becomes, the sooner innovative ideas will be put into place that will have significant long term benefits.