The importance of understanding the future of energy for your business

The Industrial Revolution led to a mad race amongst European nations to secure cheap and reliable sources of raw materials for their new industries. Today, the success or failure of a business depends on assured supply of energy at an affordable price. The modern world—from its laser machines and hi-tech industrial equipment to its IT networks and smartphones—runs on energy. A 2010 UN survey of 766 CEOs saw energy sustainability being ranked as ‘important’ or ‘very important’ by more than 90% of the respondents.

A 2012 report by Ernst & Young indicated that 69% of surveyed companies spent not less than $50 million in a year on energy, with around 27% spending more than $100 million per year. In such a scenario, future energy trends, conventional as well as unconventional, will have a huge impact on the survival and growth of businesses—big and small.

However, you cannot afford to plan the future of your business on the basis of conventional fuels like crude oil or coal that may run out within the next 80-100 years, if not sooner. With global population on the rise, and demand from Asian behemoths China and India steadily increasing, the existing reserves of fossil fuels will just not be enough for businesses to meet their energy requirements.

Alternate energy sources

Until recently, any discussion about alternate energy sources focused solely on renewable sources of energy like solar and wind power. While new technologies have enabled firms to exploit these clean, and virtually unlimited, sources of energy in an efficient manner, you cannot run your business in an efficient and profitable manner by immediately switching to these energy sources. With reliability issues and high cost dogging these energy sources, a hasty shift from fossil fuels to renewable energy may prove disastrous for your enterprise.

This is where unconventional fuel sources can make a huge difference. Unconventional oil, like shale oil, along with natural gas and shale gas, can help your business function in an efficient and profitable manner, and, at the same time, reduce pollution and minimize the firm’s carbon footprint.

Experts like Daniel Yergin anticipate unconventional sources like shale oil, shale gas, and natural gas to cause a paradigm shift in the way businesses function. Developments like the USA becoming an energy exporter in the near future and China exploiting the largest reserves of shale oil and shale gas on the planet may transform the way the world consumes energy. You can start preparing for such a change by relying on expert advice to plan a shift to unconventional oil before traditional fuel sources are completely expended.

Benefit from lower oil prices

While such a shift may offer benefits over a slightly longer timeframe, businesses that are heavily reliant on the shipping and logistics industry for transportation of raw materials and finished products can benefit by renegotiating shipping contracts at cheaper prices. Such businesses can lock rates at lower levels by promising higher volumes, or can consider an immediate switch to shale oil or shale gas as its primary energy source to ensure future increase in oil prices don’t impact profitability.

Conclusion

With a dynamic business environment, improved technologies, and access to newer energy sources, the future of your business will depend on your decisions with regard to the future source of energy for your enterprise. With fossil fuels running out, firms that embrace change are likely to survive it and experience sustained increase in growth and profits.

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