Monday, April 28, 2008

The beginning of the end of the oil crisis

It may very well be a stupid statement. John Cassidy contended in a recent issue of Conde Nast Portfolio that oil prices would begin to drop as the high price spurred more exploration and production--and that was when oil was a relatively cheap $100 per barrel--not near $120, as it is at this moment.

But there's no doubt that the oil replacement/carbon-reduction innovation machine has swung into high gear. Two articles caught my eye recently. In yesterday's New York Times, reporter Michael Fitzgerald wrote about a new home still that can create ethanol from sugar, reducing carbon emissions (the owners say) by seven-eighths. And in Saturday's Times, Matthew Wald discussed A123 System's power pack that converts the Toyota Prius into a plug-in hybrid.

These projects very well may end in failure. But they are but two of thousands of important initiatives around energy diversification, conservation and carbon reduction. And that's a recipe for dramatic change. As Rosabeth Moss Kanter wrote in Harvard Business Review in November 2006 (link - $$), "an organization is more likely to get bigger ideas if it has a wide funnel into which numerous small ideas can be poured. One of the secrets of success for companies that demonstrate high rates of innovation is that they try more things."

And so it is with industries. More ideas at the top of the funnel means more, bigger successes at the bottom. The energy innovation pyramid is well-stocked, which means, sometime in the future, when petroleum is just another niche chemical, we can say it all started today.

Kanter's Innovation Pyramid
Chevy Volt: automotive revolution or flavor of the month?
What in hell is the Electron Economy?
Shop Talk Podcast #6 - Todd Mittleman on Honda's Fuel Cell car

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