The Most Dangerous Crisis of All

Running head: THE MOST DANGEROUS CRISIS OF ALL

Black Gold

AXIA College

University of Phoenix

Black Gold

Between rising demand for energy and the growing inability to increase energy production, a threat of economic collapse is approaching the global economy. The energy frenzy of the world has oil and food prices reaching historical records on a daily basis. The United States has historically been effective with action to prevent future breakdowns and turn them into opportunities. However, there has been a recent interruption in our nation’s capacity to understand the human and business concerns, and their strong relation to oil. How much time is left to sort these issues? In my report there will be a review of different options to relieve the supply and demand pressures on our energy supplies through the exploration of current consequences of our actions, oil alternatives, and awareness to energy consumption. Oil surpassed $130 per barrel in May of 2008, which depending on how they measure it, means that it is about 20% percent higher than the highs reached in the late 1970s and early 80s. In other words, this is getting serious. It is not the intensifying discussion of gasoline prices that we hear, but rather the impact that the price of oil is beginning to have on our nation and the global economy as a whole. If oil prices continue at this level or rise, there will be long-term shifts in how our economy works. According to Oliver (2008), the U.S. is the largest single consumer of energy on Earth. If the United States wants to remain as a strong nation (against other nations in the world) it must find its equalization for overcoming its biggest obstacles: Finding alternative sources for energy that will not trade one crisis for another and finding a way to become independently energy wealthy.

Leeb, Phd, and Strathy (2006) states “Most authorities continue to reassure the public that today’s soaring energy prices are temporary, that oil reserves are virtually limitless, and that production will outpace demand for the remainder of our lives.”, and the group thinkers of all nations are inclined to believe in the declarations and honesty of their national leaders. However, unlike previous economic chaos that our world has faced, the price of oil has led to increased consumer fears. As a result the cost of money is rising and institutions that are less inclined to grant new loans, thus causing consumer fears to grow and spending to slow. A vicious circle repeats itself and the poor judgments of our nation to develop alternative energy sources to limit our exposure to the global crisis join the recipe for the perfect storm; a global recession. In March of 2008, CNN published a story: Food Prices Rising across the World. In this web article it was explained that while freak weather was a factor, so was dramatic changes in the global economy, including higher oil prices, lower food reserves and growing consumer demand in nations such as China and India.

While the U.S. is blessed to not be subjected to the volatility of food prices and allocation scares as many of its allies, it certainly has created some issues with food costs itself. Deane Morrison, in a column for the University of Minnesota, researched if ethanol from corn requires more fossil fuel energy to produce than it delivers. She found that although the process delivers 25% percent more energy than used in production, much of that added energy efficiency is absorbed in ethanol byproduct like animal feed. It seems that animal feed is important. A cow, for example, supplies our nation with two of our four main food groups as dietary needs. With the price of feed for the cows on the rise, so are the costs for cheese, meat and milk. Additionally, issues have been raised regarding the possible effects on natural resources resulting from the continued ethanol expansion and changes in farmers cropping choices. While our discovery for the use of ethanol may have addressed our concern to create alternative energy sources, it created a new set of concerns that cannot go on without being addressed. According to the U.S. Department of Agriculture, this year the country is going to use 18% to 20% percent of it total corn crops for the production of Ethanol, and by next year that will jump to 25% percent. This is an obvious reinforcement of the suggestion that corn is a culprit to the rise in food prices nationally as well as globally.

While supply uncertainties and environmental concerns are perturbing the U.S. to rethink the consequences for its actions in the development of new energy sources, there is a collaborative effort