Why Energy?
Energy markets are volatile and energy prices have risen dramatically over the past few years. High energy prices are likely here to stay. There are political reasons that cause fluctuations, but the ability of prices to rise substantially is primarily due to rapidly growing demand, and supply not keeping pace. Emerging economies, such as China and India, have seen rapid increases in energy demand, and combined with growth in the US and other countries, energy markets are in a situation in which there is little slack capacity. Relatively small changes in supply, which just a few years ago did not impact price very much, today can cause large swings in prices. While Hurricane Katrina took a good portion of the US oil production off line temporarily, it was a small portion of global oil production, yet global prices soared more than $20 a barrel.
There are a number of consequences of this volatility:
- It is difficult for companies to plan budgets as energy prices fluctuate unpredictably.
- It impacts the account balances of energy importing countries, creating difficult economic problems.
- It gives more market power to marginal energy producers since small changes in production can have large impacts on price. This can cause internal political issues, keeping authoritarian regimes in power, and reducing the potential for democratic change.
Another critical energy issue is of course the negative impact on the environment from energy use. Globally we have seen worsening air quality in most major urban areas. In particular, economic growth in newly industrialized countries has increase transportation-related consumption, causing significant environmental problems in urban areas — with levels of pollution far worse than we have ever seen in Los Angeles. The types of fuels we use, and how we use them clearly has an impact on the environment. Finally, the consumption of fossil fuels is the primary cause of emissions of greenhouse gases which is a major factor in global climate change. Temperatures are rising and the climate is changing. Reducing greenhouse gas emission will be a complex, and daunting task for the coming decades.
Advances in technology, including renewable energy sources, but also more efficient and cleaner fossil-fuel sources, will be critical for future human health, environmental protection and economic growth. While many academic disciplines include elements of energy and environmental issues — engineering, natural and social sciences, policy analysis — new leaders will require multidisciplinary education, training and experiences to create an economically viable and environmentally sound future. In particular, future decision makers and analysts need to be able to develop new paradigms for how to integrate a portfolio of technologies, with changes in consumer behavior and new policies. Students need to understand new approaches to fuel conversion, carbon neutral strategies, alternative energy and energy efficiency. Students will need to know how to fit the pieces together to craft strategies for new portfolios of energy use, and help decisionmakers understand the policy and planning tools to meet future energy and environmental needs.