Posted by: Dan | August 21, 2006

On Innovation, Peak Oil, and alternative fuels

Along the lines of the old addage “Necessity is the mother of invention,” Cornell material science and engineering professor Stephen Sass recently advanced the school of thought that rising gas and oil prices will drive innovation regarding alternative fuels. In the August 10th NY Times Op-ed “Scarcity, Mother of Invention,” Sass suggests the following:

In the wake of the closure of a BP oil field in Prudhoe Bay, Alaska, oil prices shot up to $77 a barrel on Wednesday, and the chorus of doomsayers concerned about the dire consequences of our fossil fuel dependency has reached a crescendo. If oil hits $100 a barrel, the impact on our economy and lifestyle could be catastrophic, the handwringers warn. But while such a specter seems novel and terrifying, it is in fact familiar and useful.

Throughout history, shortages of vital resources have driven innovation, and energy has often starred in these technological dramas. The desperate search for new sources of energy and new materials has frequently produced remarkable advances that no one could have imagined when the shortage first became evident.

I agree with that, mostly. Our society and economy will continue even if oil greatly surpasses $100 a barrel, albeit with significant changes in lifestyle that many are fearful of. As oil prices rise, so could cost-of-living, and we might observe corresponding decreases in travel (both tourism and business, but mostly decreases in recreational travel and individual mobility), and lowered standards of living – but nothing that would fit the dire description of “economic collapse,” a la Jared Diamond, in my opinion – not on a global scale, anyway.

Sass concludes his op-ed with:

If there is anything to be learned from history, it’s that we need to face the harsh reality of fossil fuel scarcity and begin something like a Manhattan project to develop clean, economical, and preferably sustainable new sources of energy. Just as importantly, we need to innovate on the side of conservation and efficiency. The Indians of Mitchell were able to move to the Missouri, but if we use up, or more realistically, greatly deplete, the resources of this earth, we have no place to go.

I have problems with that logic – the creativity and innovation that he calls upon is incapable of something on the scale of a Manhattan Project. I agree something of that scale would help, but as with the original Manhattan Project, a technological breakthrough of this scale requires executive leadership of the sort that our society is only capable of with regards to military applications. Even the Internet itself has its roots in defense funding. (as an aside, I think this says something depressing about our society)

But heck, that’s just my two cents, as neither an economist nor an engineer, on a local expert’s opinion. There can be no doubt though, that we need brilliant, innovative minds in the areas of science and technology. And, dear readers, that is why science education matters.


  1. This brings up some good points. We should be accelerating the process of technological innovation though. Right now, high gas prices lines the pockets of folks hostile to the US as well as invigorating the private sector. With appropriate policy, we could keep the money at home. Check out

  2. Nice site – and the concept of a two-fee system (security and carbon fees) with fee returns is a new twist that I’m not familiar with. I’ll definitely revisit the topics you bring up in your proposal in an upcoming post, though.

    In the meantime, I think that how research funding for renewable energy is managed needs to be a major focus as well, if we’re to promote innovation. I touched on this topic last month, albeit regarding NIH-funded research, but I think the same issue is applicable – we desperately need better funding for creative and innovative young (30’s and 40’s) researchers, driving technological change.

  3. Dan,

    I think that both the public and private sectors should be funding new energy technologies. I am certainly seeing a surge in private sector research for renewables, as well as many new businesses starting up around consulting for green solutions. This is probably due equally to high gas prices and growing attention to global warming. The government also needs to step up to the plate, however. In order for us to reduce fossil fuel use and maintain our standard of living, we will need new technology.

    Current funding for renewables is not sufficient, despite the attention that the President gave in his State of the Union address. I will give GWB credit, though, for starting us along the right path (though he is still no friend of the environmental movement). Note that I am not a great source on research funding, since my salary comes from the Dept of Energy via NREL and I am a young researcher (age 32 as of 8/24). This conflict of interest is partly why I focus on market solutions at Fair Price Energy.


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