March 11, 2011 | Energy Policy, Leadership, Sustainability + Energy

As a finance guy, I love to harp on the importance of long-term financial planning (which I’ll do in a moment) but I’m thinking about it today from a global energy standpoint. Our addiction to oil has been discussed for ages. It’s an issue we have failed to solve again and again, and one that is now staring us in the face as we watch the possible domino effect of regimes falling across North Africa and the Middle East.

What we talked about

Back in the good old days when the national debt was only a few billion, we worried about how expensive energy could get. Every now and then a spike in oil prices jolted us back to reality and we made a commitment to reduce our consumption of oil. Some people even pointed out that the supplying nations we depended on were not very stable. So, when gas went above $4/gallon we resolved determinedly to “take significant steps to minimize our dependency on oil and other fossil fuels.”  Politispeak is great isn’t it? Once again however, our lack of action is rather apparent as one nation after another, in the aforementioned areas, seeks to overthrow their dictators, creating uncertainty about the future supply of oil.

What we did, and did not, do

Now we did do some things. Our giant oil companies found some alternative sources for their raw material. We all know about the Gulf of Mexico, for instance. And they found ways to bring the product to market less expensively. We all know about the Gulf of Mexico, for instance.

We’ve taken baby steps to curb consumption. Emissions standards for vehicles are rising and car companies are finally responding to more cost-conscious consumers. But in the U.S. aggressive commercial development of renewable energy sources in the areas of wind and solar has been sporadic, and support quickly evaporates when oil prices fall. So instead of us being well down the road and deep into the execution of a long-term plan to reduce our dependence on oil, we are sputtering along and shifting our strategic focus as frequently as houses of Congress change hands. The result of this stop/go policy and lack of long-term planning is that we will now need to react to a situation and find resources in a tight economic environment to fund a long term fix for this dependency. It could have been much less painful if the long term strategy had been executed.

What we need to do

Our leaders need to come to grips with the fact that, here in the US, we will have to accept a lower standard of living as immediate needs (e.g. for food, shelter, unemployment benefits) continue to rise while the need to invest in the long-term becomes more urgent. (What can I say? I’m from a socialist democracy.) In business this is an equally tough balance, and an even tougher sell if the business is healthy with no obvious sign of financial pressure with stakeholders looking to maximize short term returns, but this is absolutely the time to be planning ahead. In government, it means showing courage to make the difficult decisions and the skill to communicate them. It also means electing politicians whose interest is the health of their community, not their own reelection.

Can this happen? History has shown that come the hour, cometh the person. This time we may need a few of them.