The Real Price of Industrialization

The near-term trend for oil prices is up, as the basis July light sweet crude futures contract surged above $55.00 to $55.55 on the New York Mercantile Exchange (NYMEX) on Monday.

 For the majority of us busy trying to make money trading off trends, there is a far greater concern out there than the price of oil. This issue is largely ignored by the mainstream media. What I’m talking about is the social cost of such trends.

 Industrialization and rapid population growth has steadily eroded the quality of life the world over. As emerging economies begin to develop and become more industrialized, the growth is largely followed by a superlative rise in prosperity and a demand for non-essential consumer goods. First comes the demand for fancy looking appliances and electronics, then, as wealth creation ramps up, the demand for cars and homes follows.

 The car represents the great icon of Americanism, going back to the days of Henry Ford. But as the number of cars grows exponentially, there will be a significant rise in emission pollutants. To make matters worse, developing countries tend to have lower emission standards. And, with over two billion people in China and India, the thought of millions of extra cars with limited emission controls is frightening indeed.

 Let’s take a look at China. The country’s GDP has grown at a superlative 8% annually since 1980. Recent quarterly GDP growth came in at over 9%. And therein lies the concern. If this high rate of growth continues, it could inevitably lead to some major environmental issues.

 Just like North Americans, the Chinese will soon want state-of- the-art appliances, homes, cars, and the latest gadgets. But with over one billion people and a realistic market exceeding 200 million people, such demand could be overwhelming.

 For instance, there are currently about 17 million cars in China. Sounds like a lot, but, for a country of its size, the number’s relatively low. Estimates call for the number to rise conservatively to over 50 million vehicles within a decade.

 All of the U.S. automakers are working in China to find growth opportunities to replace declining sales at home. The Japanese car companies are there, too, and the Europeans also want a piece of the action.

 The U.S. Energy Information Administration (EIA) warns that global oil demand will grow at 2.20% annually over the next two decades. May not sound like a lot, but it means an additional 3.8 billion metric tons of carbon dioxide emissions will enter our atmosphere by 2020!

 Also, according to the EIA, developing countries will produce more of the globe’s greenhouse gases. By 2020, if nothing is  done, we can expect 9.9 billion metric tons of carbon dioxide emissions annually! This could lead to a steady destruction of our protective ozone, along with higher global temperatures and increased health effects such as asthma and cancers.

 To try to save the earth, industrialized countries have tried to sell the Kyoto Protocol, aimed at reducing greenhouse gas levels in industrialized countries, while developing countries are left alone to pollute as they become more industrialized. But will Kyoto succeed?

 Not all countries are in favor. Why? It’s simple economics! The Bush administration has already declared that it will not partake in the treaty for fear that the pact would hurt the U.S. economy by forcing harsher emission limits. It’s really all about economics–nothing’s new here.

 This shouldn’t be a surprise to you. Don’t expect any major coup against the rising trend of greenhouse emissions, unless it begins to hurt us in the wallet! This is the reason why we need a serious move to alternative forms of clean burning green energy, such as hydrogen fuel cells for cars, along with wind, solar, and water-generated power.

 The reality is, industrialization worldwide may be enriching the lives of the current inhabitants, but, what price does this growth cost if it steadily destroys our atmosphere and punishes our future generations?