Quiz 5: Political Forces That Affect Global Trade

How Immediate Is the Fossil Fuel Crisis? How do we know when our oil reserves have reached their midpoint and are starting to decline? The answer to that important question is a critical point of contention, a bit like figuring out when we've fished the next-to-the-last fish from the ocean. You don't know for sure until it has happened. Specialists are divided and of many, even contradictory, judgments and predictions. Gold­man Sachs analysts and OPEC officials themselves have said that the price of oil could hit $200 a barrel within two years. One school of analysts argues that oil production has already reached its peak and is on the decline. The peak oil theory, developed by Marion Hubbert, a geolo­gist for Shell, holds that oil's decline will follow a bell curve. This terminal decline, fringe analysts warn, would bring us out of our cars and our economy to a standstill. Chaos would ensue. The time has come to stash in survival guides and freeze-dried food, to get ready for the economic collapse. Increasingly this evidence is reaching people beyond the eccentric fringe so that regular citizens are becom­ing concerned about their carbon footprint. The largest proven oil reserves are in Saudi Arabia, and we know little of what is actually happening there. Satellite recon­naissance might suggest that the Saudis are having to push harder to get more out of the world's largest field, Ghawar. After all, Ghawar has been a major source of energy for our fossil-fuel economy for 75 years. Mat­thew Simmons, author of Desert: The Coming Saudi Oil Shock and the World Economy, has reviewed outputs of the world's oilfields, noting that 20 percent of the world's oil consumption is sourced from old fields, and no new fields in their league have been discovered in almost 30 years. In addition, many of the producers face political unrest and nationalism in countries with siz­able reserves: Nigeria, Russia, Iran, Iraq, and Venezuela among them. There is a brighter point of view. Cambridge Energy Research Associates suggests that no decline in ability to produce oil would occur before 2030. Guy Caruso, head of the U.S. government's Energy Information Administration, has faith in the market to drive consumer behavior, gov­ernment policy, and innovation. He thinks that the primary risk is not reserves, but above-the-ground political issues. Developed world consumption, especially in the United States, will face challenges as India and China draw from the same supplies to build their economies. People realize that the price of oil is destined to rise and that they have to adjust to these realities. To many in the United States, conservation and the development of renewable resources look like a rea­sonable path, much more so than five years ago. Conservation and a call for renewable energy sources is becoming mainstream. Colleges have green dorms, where residents recycle and reduce their energy consumption. Recycling has become commonplace in most areas. Towns are erecting wind power and solar farms to meet their municipal needs. And SUV gas guzzlers, one of the valued American indul­gences, are becoming burdensome beyond their value. Increased gas efficiency in our vehicles; improved domestic oil supply, including untapped reserves; deep sea drilling; the application of new technologies to coal; and the increase of ethanol production are ways to address the oil scarcity/unavailability issue in the United States. True, increased production of ethanol reduces food production at a time when there are worldwide food shortages and food prices are rising dramatically. 19 Does a developed country have a moral duty to produce food over fuel crops when hunger is a global issue?

In 2006, the United Steel Workers and the Sierra Club launched a collaboration to focus on environmental policy and expand the number of jobs and the quality of the jobs in the green economy. The collaboration surprised many because environmentalists and unions have been opposed on many issues in the past. For example, the environmentalists have opposed drilling for oil in the Alaska Arctic National Wildlife Refuge, which the unions supported. The unions have often opposed environmentalism because their belief was that it cost jobs. Yet, the collaboration found common ground and has been wildly successful, taking on manyadditional partners, including the Communications Workers of America, the Natural Resources Defense Council, the Service Employees International Union, the National Wildlife Federation, and the United Auto Workers. The BlueGreen Alliance unites more than 14 million members. There are four main issues the BlueGreen Alliance is presently working on. The first has to do with increased investments in clean energy sources. This is a strategy to create green jobs, reduce global warming, and move the United States toward energy independence. The second concern is climate change , and BlueGreen is urging passage of comprehensive climate change legislation. Such legislation would create jobs and reduce emissions. The right trade policies can lead, BlueGreen argues in its third concern, to arenewal of the American middle class if we increase trade and the jobs are located in the United States. The final concern is green chemistry. The BlueGreen Alliance is pushing for greater control of toxic chemicals and the development of safe alternatives through what it calls "green chemistry." 44 Is the BlueGreen Alliance a partnership of convenience, or do you think it has the potential to move into a new way of approaching sustainability, with limits, interdependence, and equity?

Of the 38 nations listed by the UN as the least developed nations in the world, 16 are landlocked. How might being landlocked contribute to slower development? Remember that Switzerland is landlocked as you think through this question.

Use the globalEDGE site (http://globalEDGE.msu.edu/) to complete the following exercises: You are working for a company that is deciding whether or not to enter South Asia. Top executives have requested a report on the natural environment in this region. Specifically, they are interested in gaining a better understanding of the main trends with respect to the land, air, and water. Using the South Asia Environment Outlook in the South Asian Association for Regional Cooperation website as reference, prepare a short report summarizing the key environmental trends in South Asia.

In 2006, the United Steel Workers and the Sierra Club launched a collaboration to focus on environmental policy and expand the number of jobs and the quality of the jobs in the green economy. The collaboration surprised many because environmentalists and unions have been opposed on many issues in the past. For example, the environmentalists have opposed drilling for oil in the Alaska Arctic National Wildlife Refuge, which the unions supported. The unions have often opposed environmentalism because their belief was that it cost jobs. Yet, the collaboration found common ground and has been wildly successful, taking on manyadditional partners, including the Communications Workers of America, the Natural Resources Defense Council, the Service Employees International Union, the National Wildlife Federation, and the United Auto Workers. The BlueGreen Alliance unites more than 14 million members. There are four main issues the BlueGreen Alliance is presently working on. The first has to do with increased investments in clean energy sources. This is a strategy to create green jobs, reduce global warming, and move the United States toward energy independence. The second concern is climate change , and BlueGreen is urging passage of comprehensive climate change legislation. Such legislation would create jobs and reduce emissions. The right trade policies can lead, BlueGreen argues in its third concern, to arenewal of the American middle class if we increase trade and the jobs are located in the United States. The final concern is green chemistry. The BlueGreen Alliance is pushing for greater control of toxic chemicals and the development of safe alternatives through what it calls "green chemistry." 44 The right trade policies, in a union view, may mean protectionist measures to build jobs. Do you think such a policy could fit into a sustainable approach?

Comment on the potential of oil shale and oil sands as future energy sources.

Use the globalEDGE site (http://globalEDGE.msu.edu/) to complete the following exercises: Your company wants to become more environmentally sustainable. Utilize resources available on the globalEDGE website regarding sustainable development and business to prepare a brief report that explains the concept of sustainable development and discusses why it is important for companies to engage in environmentally sustainable practices. In addition, compile a short list of steps that companies should take to become more environmentally sustainable.

a. Why do you suppose the blank areas on a population map generally coincide with the areas of higher elevation on a topographical map? b. Why are the tropics an exception to this rule?

"International businesspeople, unless they are in the business of refining minerals or petroleum, have no need to concern themselves with world developments in natural resources." Agree or disagree with this assertion, explaining your reasoning.

Mountains, deserts, and tropical rain forests are generally culture barriers. Explain.

In 2005, Switzerland, a landlocked country, won the America's Cup sailing competition. How might this be explained using Porter's factor conditions?

From an international businessperson's point of view, how would you apply what you have learned about factor conditions as you explore locations for manufacturing?

Explain how the stakeholder model applies to a specific example of sustainable business. This example can be from your community, the business press, or a class discussion.

How is the concept of sustainable business practice both local and global?

Can a petroleum-based business incorporate sustainable characteristics?