Advocacy on Behalf of New Energy

Current renewable energy sources have had a stifled start to say the least.  Electric vehicles have been around for over 100 years, yet due to an entrenched oil industry and government subsidies, they have not been able to gain traction in the market.  We have developed many different forms of energy which are substitutes to oil, and by further implementing these technologies we can gain many economic benefits.  We must increase government subsidies to renewable energy while decreasing tax breaks and subsidies given to the oil industry, in order to incentivize the market in adopting alternative energy and its products at a greater rate than we are at present.

Electric cars go back to before the Model T produced by Henry Ford.  Yet, we have failed to incorporate more than a token amount of our resources toward development of alternative energy sources.  This is a problem because we are still an oil driven society when we don’t have to be, which is impeding our future economic security.  There are many reasons why we need to wean our nation off of oil dependency, and it is not reduced to personal transportation factors.  Some of the factors include: where our oil money is going and who we are supporting, the volatility of the global oil market and its effects on our economy, and the limited funding into other energy sectors because we focus on oil.  We will discuss these factors in depth to frame why we should put forth a greater effort in our pursuit of alternative energy. 

By using a Porter’s 5 forces analysis to discuss these factors we can analyze the U.S. oil industry, and discuss what can be done to support renewable energy.  This type of analysis was designed to compare different units within an industry, the more similar the units are the more accurate the analysis.  The 5 forces are categorized by: the different rivals in the industry (competitors), the barriers to new companies entering the industry, the available substitutes to the industries products such as natural gas, the power of energy suppliers in the industry, and the power of the consumers in the industry.  By using these 5 forces we will be able to highlight some of the reasons why oil is the dominant energy source, and what we can do to make the energy industry more balanced within the United States. 

Our main oil imports have historically been received from countries in the Middle East, and other members of OPEC (Organization of the Petroleum Exporting Countries), such as Venezuela.  Many of these countries have been engaged in questionable ethical practices, suppression of women and ethnic minorities among them.  By purchasing our oil from these countries we are indirectly supporting their policies and procedures which are in conflict with our own nation’s ethical standards.  In 2013 total OPEC oil production was valued at 1 trillion dollars, the U.S. purchased roughly 10% of that total value.  This is a major amount of funding toward countries which we have shaky relations with at best, while also taking money away from our domestic non-oil technology growth.

OPEC creates circumstances which are very damaging to business in several of the five forces dimensions.  We purchase much of our oil from the OPEC cartel which has supplier power over us, which is the power over prices a small group of producers has over a large number of buyers.  Due to there being only a few countries producing large quantities of oil, and many nations attempting to purchase it, OPEC can raise and lower prices at their discretion with no negative impact to themselves.  The oil suppliers, OPEC, will always have power over the buyers, the U.S.; because we are many people trying to buy products from a small group of companies. 

OPEC also has natural barriers to entry as a result of few nations being able to produce and sell high volumes of oil in the global market.  Barriers to entry make it very difficult for any other companies or nations to enter the energy industry and compete.  If OPEC or the major oil companies feel threated by new technology they can simply lower prices to the point where the new form of energy cannot earn a profit, ultimately going out of business.