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Toward New Horizons - Energy and Environmental
2007-11-04
Today’s energy and environmental challenges are driving fundamental changes within our transportation and economic systems. Key challenges include the vulnerability of critical infrastructure to terrorism and other threats, our dependence on fossil fuels, and the long-term risks posed by climate change and other environmental problems. However, these same challenges present enormous opportunities if the region adopts a proactive, strategic approach to planning and decision-making.
The September 11 terrorist attacks magnified the vulnerability of critical infrastructure supporting and comprising our transportation system and economy. The complex interdependency of our major systems—transportation, electric power, water supply and wastewater, communications, financial institutions, and oil and gas supply—make widespread disruption and a technological domino effect a possible scenario. These critical infrastructure problems have long been understood. Unfortunately, it has taken a national tragedy to prompt significant actions to address this issue.
The recent spike in national energy prices and the California power crisis in the summer of 2001 once again focused attention on the United States’ dependence on apparently cheap but price-volatile fossil energy. A number of costs, such as environmental damage, tax incentives, research and development spending, and other public subsidies are not reflected in fossil energy prices. Other externalities, such as pollution, habitat destruction, and risk management of global supply chains, are also not reflected in retail prices. Downward trends in gasoline prices after the spike, followed by rapid increases in spring 2002, illustrate the volatility of fossil energy markets. Continued merger and acquisition activity in the energy sector only worsens price volatility. As a result of consolidation, many refineries were closed and supply inventories were reduced to cut costs. Thus, the supply system is more vulnerable to disruptions when they occur (e.g., the refinery fire in the Midwest in the summer of 2001).
Further, the price volatility of fossil energy often thwarts attempts to develop or redevelop domestic supplies or transition to alternative fuels. As the nation seeks new solutions for maintaining a strong economy, healthy trade, and national and international security, growing numbers are voicing the importance of securing America’s energy sources. While the debate ranges from drilling in Alaska to investing in renewable and energy efficient technologies, one thing remains clear: the United States imports almost 60% of the oil that it consumes, with much of it coming from volatile areas such as the Middle East. As long as this condition persists, the U. S. remains vulnerable to supply disruptions and price fluctuations that could disrupt our economy.
In addition to the immediate pressures growing out of our dependence on petroleum and petroleum products, a worldwide consensus is emerging about the longer-term risks of climate change, which are magnified by the intensity of our burning of fossil fuels. Because of concerns about climate change, many corporate leaders—including executives from the automotive, oil, and chemical industries—are looking at ways to hasten our transition to renewable, clean energy. For these and other reasons, energy and environmental issues are central to planning and development at all levels, including regional infrastructure, industrial clustering, and community revitalization.
The NGP region can meet these challenges by developing unique, new opportunities that build on its existing strengths and assets. The Region can shift to an economy that is sustainable and prosperous, maintains cultural vitality and security, and works in balance with the ecosystem.
