Global Energy Industry

The recent events, associated with the environmental and energy changes bring about numerous negative economic externalities which keep raising the public’s attention to the problems of sufficient availability of natural resources for the people’s economic activities. It is clear that economic activities of people are highly dependent on the available natural resources. It is explained by the fact that a vast majority of economic activities use natural resources as a source of energy to maintain their life and expand output production. Until recently, availability and quality of natural resources have been mostly ignored in the general macroeconomic models of production. As a result, a lot of events that have been related to the environmental and resource issues raised previously have not seen dilemma. The traditional economic theory turned out to be unable to provide an adequate explanation of certain economic processes that took place during the last three decades of the 20th century when domestic oil production reached its peak and oil prices experienced multiple shocks. Tools and framework of the relative majority of the conventional economic models that were used during the mid 1950s did not have the capacity to explain and provide recommendations for elimination of the observed negative economic effects, as a result of the ascertained environmental and resource events. Hence, it is cleat that natural resources play an essential role in the maintenance of economic activities and provision of energy sources for people.

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Every new generation of people experiences more opportunities than the previous one. However, at the same time, new generations also meet with considerably larger amount of problems that need to be solved. Given the restricted capacity of the planet, it is often the case that opportunities that are discovered by one generation turn out to be a challenge for the next coming one. For example, during the whole 20th century, people have been enjoying the astonishing opportunities that have been offered to them in the form of fossil fuels. However, currently the mankind finally starts experiencing transformation of fossil fuels from opportunities to all-embracing challenges that arise from the intensive exploitation of fossil fuel as a source of energy. A number of research studies showed that reserves of fossil fuels have been progressively decreasing and will disappear eventually. Moreover, the intensive use of fossil fuels is associated with severe negative environmental effects, including health threatening pollution as well as increased emissions of greenhouse gases that are largely associated with global warming. The current rates of the fossil fuel consumption are reaching their peak. For instance, about 1,000 barrels of oil are demanded every second in the world, which is equivalent to almost 2 liters of oil per every person on the planet every day. Overall, the total contemporary global consumption of energy is equivalent to 13 trillion watts of the energy power demanded. Therefore, it is questionable for how long non-renewable sources of energy would be able to satisfy constantly increasing demand.

According to the information provided by the International Energy Agency, an average consumption of energy per person during 1990 – 2008 has increased by 10% while the size of the global population during this period has increased by 27%. In the regional perspective, the growth rate of per capita energy consumption during the last two decades has been rather volatile, ranging from 170% in the Middle East and 146% in China to 7% in the European Union, 20% in the United States, 66% in the Latin America, 70% in Africa, and 91% in India.

Given a constant increase in the demand for energy, produced from various sources, and scarce natural resources, there is a need to elaborate on the search of alternative sources of renewable energy. The recent researches and development of renewable sources of energy have set up promising perspectives for the global energy industry.

Role of Energy in the Society

The development of energy plays a vital role in the society in terms of the provision of essential sources of energy for production purposes, sustaining of life. At the same time, the research and development of the energy industry improve a current climate and environmental situation, reduce air and water pollution, minimize costs of production, as well as mitigate negative patterns in the climate change on the planet. Along with the development of the energy industry, those countries that are more technologically advanced and developed are found to be more dependent on numerous energy sources to maintain their current level of production, transportation, heating of houses, and ventilation and/or air conditioning of houses, etc. However, the developed countries also experience a large amount of environmental pollution, traffic congestion, and other negative externalities associated with the increased energy use.

It is clear, that energy plays indispensable role in shaping the modern society. Energy is used in almost every sphere of human activities, starting with the everyday life, (for example, energy is needed to cook food, heat and light houses, transportation, etc.), and ending in the industrial manufacturing (for example, energy is vital for sustaining production processes in every industry, secure operation of machinery, cars, etc.). Therefore, it is apparent that production and consumption of energy are two most significant processes that take place in every society. It has been widely established that energy is one of the “keys” to the technological progress of the modern civilization. It is also proved that the evolution of human societies depends on the capacity of people to convert energy in the desired form and use it according to the observed needs. There are consistent findings in the literature that the quality of civilization and standards of people’s life is proportional to the amount of energy that is consumed by these people. Some of the researchers consider that the energy consumption has an indirect impact on the life quality of the civilization through the technological progress. In other words, research findings indicate that the technological progress in the country is largely affected by the level of the energy consumption, while quality of people’s life in turn is substantially affected by the level of the observed technological progress.

The common belief that there is a direct correlation between the quality of people’s life and energy has an extensive historical background. For centuries, people have attempted to control energy sources, as well as flows of energy, a wide majority of which were of natural origin. Until recently, most human activities relied on the chemical sources of energy that was originated from food, which in turn produced mechanical energy of the human muscles when they were working. However, as a result of the human’s intellectual development, physical limits of the mechanic energy were overcome by the introduction of different tools and vehicles that substantially facilitated and improved energy production in the society.

One of the explanations why energy is considered to be a means of civilization’s development is through its assistance in adapting and controlling the environment. Therefore, developing management techniques for rational use of energy are unavoidable for every nation. In the setting of the industrialized countries, enhancement of modern energy is crucial for sustaining effective transportation systems, agriculture, information technologies, collection of wastes, as well as other spheres that have turned to preconditions of the developed civilization. Thus, a growing demand for energy use is resulted in the numerous problems, including global warming, that pose considerable risks for the future development of the modern civilization.

In the prism of the contemporary society, energy is often associated with energy resources. Frequently, energy resources are perceived to be petroleum products, various fuels, and electricity. Overall, these sources of energy belong to the usable kinds of energy resources that are often further transformed into other forms of energy and applied in different settings. A certain confusion that is common in the field of energy studies is related to the notion of energy from the physical point of view. In particular, the actual physical energy content is conserved in the natural form. However, when this content is transformed or converted into another form, such as heat, this energy content often becomes useless and is considered to be “used-up”.

Production and Consumption of Energy in the Past

As different sources of energy have been discovered in nature, humanity has been developing new tools and machines that make life of people considerably easier, due to the use of energy. Therefore, even though utility of fire as a source of energy for cooking food has been known for centuries, the invention of modern devices, for example, microwave ovens, has increased the usage of energy substantially. Similar trends are also observed in other spheres of social life, such as production of clothing fabrics, communication, air conditioning, transportation, etc.

It is clear that energy has been playing an essential role in the development of the civilization. However, along with the development of the mankind, the need for the new energy resources has been growing exponentially.

Energy has been constantly transformed and converted by people from one form into another, which is considered to be more desirable. For example, meat is more preferable form of energy than grass; heat is more desirable form of energy than wood, while electricity is more desirable form of energy than fossil fuels. Over time, people have learned how to collect and save energy resources in different forms. Approximately 1,000,000 years ago, during the primitive period,an average person is estimated to consume a smaller amount of food than a modern one does, due to the reason that he/she needed considerably less energy. Normally, fire satisfied their need for energy to cook food.

More recently, about 100,000 years, ago during the hunting period, energy consumption of an average person was estimated to be approximately more than two times higher compared to the primitive period. The following fact is explained by the fact that during this period in history, a person has more developed tools for acquiring food, and therefore, his need for energy increased from only cooking to cooking and heating.

Furthermore, energy consumption of an average person during the primitive agriculture period has also doubled (approximately 5,000 years ago). During this time, people have tamed animals to assist them in different agricultural processes and growing crops.

Again, energy consumption and production have increased more than twofold during the modern advanced agricultural period (about 15th century AD). During the following period, people invented various technological devices that have helped them to tap the energy of wind and water. Also, the first attempts of using coal for heating purposes have been also found. Moreover, people started using energy of animals for their private transportation purposes.

The further stages of human development have been accompanied by new improvements and developments of technologies of energy production, such as the invention of the steam electricity, engine, etc..

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