Should there be any controls over the production of energy when the need for it is so great?
Production of energy: refers to the production of petroleum (crude oil), natural gas, coal and other alternatives such as electricity and even nuclear energy etc.
Controls- what kinds/methods of controls? Controls over the quantity of production? Controls over the kind of energy to have?
This question assumes that energy production should be produced as long as demand meets supply needs in the market. There should not be any controls by any nations to artificially restrict the supply in order to push up the price of this much-needed resource, as it could be seen as unethical.
Yes there should be controls
- Controls are essential to ensure that no rouge nations have access to production of these essential energy supplies, which they can use as a leverage against other nations. It is detrimental if production falls into the hands of an extremist state especially if the state decides to pursue nuclear production as a form of clean energy for their state. This phenomenon has the potential to disrupt world security and peace.
For instance, countries that would like to pursue nuclear energy should be under the checks and supervision of the United Nations (UN) yearly in order to ensure that they are really using it for energy and not to build up a nuclear war zone to use against other nations. There has to be some checks and balances involved and accountability to the rest of the nations.
- Countries that are highly dependent on oil or any energy source for that matter as part of their country’s revenue should look into controlling production, as oil is their main source of income. Cheap oil and energy prices have widespread ramifications that go beyond their own countries. Demand will automatically adjust itself due to such expensive prices.
For example, many Arab states have been hurt by the low oil prices recently as they are dependent on the revenue of oil for their social spending, otherwise it will result in a social turmoil in their states. Cheap oil does not necessary mean well as it will lead to a widespread unemployment in many industries, which may stall future economic growth. Also, countries that are dependent on oil may witness their currencies plummeting with cheap oil prices. Malaysia, Australia and even Indonesia have seen their currencies losing value in this last one year due to cheap oil and commodities prices. If such a situation continues, the world may be thrown into a currency crisis.
- Greater innovation and research into alternative energies are likely to follow when there is high-energy price following production restriction. This is to meet the high demand of these energy resources. This helps to develop the world in terms of green technology, and allow industries to pursue more efficient methods of production for sustainable development in the world.
For instance, Japan and Germany have been looking at investing in wind, solar and even uranium to supply their energy needs. Developments have taken place to reduce the usage of oil through electric cars in the market. Telsa has been one such example of electric cars that is likely to replace fuel-emission cars today.
No, there should not be controls
- Countries should be free to pursue their own energy self-sufficiency so that no country can have a political leverage over them, especially when demand for energy is so high.
Production should be left up to the supply and demand of the world economy considering how oil is seen as a precious natural resource that every nation needs in order to run their economies. Due to this importance of oil, the restriction of the supply and production of oil has the ability to create war and tensions among countries fighting for this natural resource, and any restriction or embargo could manifest itself in a full-scale war.
An example would be Japan’s aggression in the Second World War due to an embargo. Also, the USA has been investing in their shale gas revolution so that they can be a net exporter of oil in order to have energy self-sufficiency. USA does not want to be dependent on the cartel in the Middle East (OPEC) to meet their demands of oil, as it would mean that OPEC has a strong political leverage over the USA.
- It is to most countries’ benefit in the long run if there is no restriction to the production of energy. When technology advances to the point that there is an oversupply of oil like currently, this will be met with a drop in price of energy. Oil has plummeted from US120 a barrel to as low as US42 a barrel, and this “cheap oil” has been welcomed by many industries that are highly dependent on oil for growth.
For instance, airlines and transportation will have better profit margins due to cheaper oil and this has translated to cheaper air tickets allowing the mass-market to benefit from this. Also, in Singapore, our transportation fares have been adjusted downwards in 2015 due to cheaper oil that has resulted in a lower production cost for SMRT, and these extra cost savings can be passed on to consumers, helping to ease the burden of the lower socio-economic class. Finally, core inflation has dipped for many nations worldwide due to cheaper energy costs such as natural gas and oil, and this has helped to improve the standard of living of many individuals.
Students should note that by the nature of the subject, there is several other possible pointers too, so feel free to discuss freely below!