On March 31, the price of oil hit its highest level since September 2008 – which was just about the time that the world realized it had been falling into what has since been dubbed the Great Recession.
The main culprit isn’t what you might think, according to some analysts. My mind immediately goes to regime disruptions in the Middle East – where any uncertainty seems to send oil prices upward.
But the bigger reason for the rising price of crude, apparently, is economic recovery in the United States and elsewhere. Factory orders are up, trucks are getting full, and the engines of commerce are using more oil – which is exactly what we’ve all been waiting for.
In the context of competitive manufacturing, this news makes current environmental debates irrelevant. Discussion of peak oil, global warming, and alternative energy policy all become mere academic exercises.
What’s important to know is that the cost of doing business will rise simply because people are doing exactly what they’re supposed to do – i.e., buying the stuff you make.
And yet, many executives still view the cost of oil and other basic commodities as a necessary expense that affects them and their competitors equally. By extension, they view sustainability investment as a touchy-feely do-gooder exercise that doesn’t help the bottom line.
They are wrong.
Businesses that are serious about sustainability simply recognize that when you use less stuff, the next price increase has less impact. Read it another way: The next price increase makes them more competitive.
The common complaint against green initiatives is that their cost exceeds the return. In the short run, that may be the case. But does anybody really believe that oil, chemicals, paper, basic metals, and landfill space – to name a few – are going to cost less in 2021 than they do today?
By Bob Rosenbaum, contributing editor, The MPI Group
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