By Mike Mulvihill
Fortune magazine released its annual list of the nation’s 500 largest publicly traded companies last week and it speaks volumes about how hard it will be to move our economy away from fossil fuels. Of the top five companies, three were oil companies (Exxon #2, Chevron #3 and Conoco Phillips #4) and two more in the top 10 were transportation companies (GM #8 and Ford #9). Another, General Electric at #6, is arguably intertwined with energy production through its large unit that produces turbines used in electric generation.
The five companies cited above operate businesses completely linked to oil and, together, account for more than $1 trillion in annual revenues. That’s a lot of economic clout to apply to Main Street or the halls of Congress.
Meanwhile, during a May 3 House floor speech, Rep. Gerald E. Connolly, (D-Va.), speaking on the recent rise in gasoline prices, pointed out that America owns less than 2 percent of the world’s oil but consumes 22 percent of the world’s oil resources. Yes, we are way too dependent on foreign oil sources. Enough so that despite the pale of the BP Gulf oil rig explosion and ensuing spill, the House of Representatives voted last week to pass a measure intended to jump start off shore oil drilling.
Separating our economic future from our dependence on fossil fuels for transportation and electricity is a tall order. Despite access to large amounts of venture capital, fledgling companies developing new alternative energy technologies are hard pressed to gain a foothold against these behemoth incumbent industries, save perhaps electric cars being developed by major car companies.
For these technologies and their creators to overcome, our government needs to handicap the game via funding and tax breaks. Meanwhile, we need energy policy that lasts longer than a single administration so private markets can bet on fledgling companies with some level of certainty that changes in the rules of engagement won’t eviscerate their investments.
This vision of government help does not include consumption based discounts that can’t be maintained, but rather production based funding. In this manner, we can bring the handful of technologies swirling around among hundreds of contenders in the primordial mist to commercial viability so we can harness solar, wind, wave and more at prices that will not put our economy into a deep freeze.
At best, this process will take up to decades to be successful, but in the end it can create an economy based on green energy manufacturing companies yet to be born. Perhaps 20 years from now, some of those will fill the Fortune magazine top 10 slots.