Oil prices up, American economy down, right? Not necessarily!
The Japanese and German economies have much higher prices at the pump. Japan is the world’s third largest economy. German is the world’s second largest exporter. High oil prices and pump prices above $4 per gallon does not have to mean reduced economic growth.
And it won’t for America either. Right now America is re-engineering its manufacturing around smart factories that use less energy and materials. That includes our car factories. READ THIS article by Professor Meyer of Cambridge on how smart manufacturing offers an economy like America’s new opportunities for growing and creating jobs.
And emerging in our utility industry is a new technology called the smart grid. The vision for this technology is that every home, office and factory is seamlessly connected to optimize the efficient use of energy. More efficiency means lower costs, increased business competitiveness and less pollution.
The employment results for this move into smart is smart jobs. A lot of smart jobs. And these smart jobs will accelerate in their numbers as the price for fossil fuels continues its inflationary path.
Why? In economics it is call capital substitution. For example, the price of gasoline goes so the economics of buying a more efficient car becomes more attractive. In this example the consumer is substituting an operating cost (gasoline) for a capital expenditure (a more efficient car). The more the price of fossil energy goes up the more capital substitution will take place in homes, offices and factories.
And creating these more efficient cars, more efficient appliances and offices will require workers in smart factories. So the “winners” in Part Four of this series on oil price shock winners and losers is jobs. Smart jobs located in the United States building alternatives to higher priced fossil fuels.