How the world has changed

The argument today is whether or not the U.S. should export oil. I continue to marvel at energy developments of the last ten years. The U.S. will soon be the world’s largest energy producer, an energy superpower. All the experience of the past forty years has been overtaken by events. It is the energy equivalent of the fall of the Berlin Wall and will have consequences as far reaching.

I should not be so surprised. I have been an optimist all my life, trusting that human imagination, intelligence and innovation can overcome all obstacles. But I came to maturity during the dark and cold days of the late 1970s, when President Carter told us that we would have to recognize limits, when books and movies emphasized the end of our resources. It is hard for me to believe that it is all so different.

When I was young, people around me made stuff out of raw materials. It seems perfectly intuitive that you could – would – run out of raw materials if you kept on making stuff. I remember hearing stories about the great range Mesabi Range in Minnesota just running out of iron ore. I pictured it just as empty.  It was the end of the line.  Those big iron ore boats coming through the lakes would come no more. I remember being a little surprised by the great song by Gordon Lightfoot about the wreck of the Edmund Fitzgerald in 1975. I thought those boats had mostly stopped already.

It seemed to make sense to see the world as a bunch of boxed filled with resources. Our ancestors had emptied lots of these boxes and we were emptying them even faster. Soon there would be no more full boxes and we would be out stuff and out of luck. This formulation is easy for child to understand, maybe because it is childish.

In real life, we have constantly developing technologies and techniques. We do indeed “run out” of some stuff, but by the time we do we have transitioned into something else, usually something that works better for our needs.

I recall my first class is business policy. We were assigned a well-known business and told to ask what business they were in. I was assigned McDonald’s and it seemed an easy answer. McDonald’s was in the hamburger business. This was the wrong answer. I expanded to fast-food. Still not right. I finally ended up with a vague “customer satisfaction” explanation. This was almost right, but still not broad enough. McDonald’s is in the customer satisfaction business, using mostly a fast and integrated process to do that. It is also in the logistics business, the technology business and the real estate business, among others. If people stopped eating hamburgers, McDonald’s would face challenges, but it would not necessarily go out of business, especially if the changes took place over some years. In fact, we have seen McDonald’s diversify its offerings since that time many years ago when I first gave my incorrect answer.

McDonald’s is just one firm. How much more adaptive is the great diversity of our society? I could have been asked a similar question about energy. Back in the 1970s, I might have talked about the need to secure foreign energy sources and to cut way back on energy consumption, maybe put on a sweater, turn down the lights and sit in the cold as President Carter implied. But things don’t really work like that.

So today we talk about how much energy we should export. The big energy producers in the world worry about the U.S. as a competitor. They can no longer ration our energy or use it against us. If they embargo oil to us, we don’t really care. In fact, the big geopolitical talk of today is whether or not we will ALLOW Iran to sell more oil. How the world has changed.