Economic essay
In actuality, the development of alternative sources of energy is extremely important for the US economy because fossil fuels, oil and natural gas, and the world will run out of oil and gas that will increase the demand on oil and natural gas. In such a situation, the US may face the problem of the shortage of supply of fossil fuels in the future. This is why the introduction of alternative sources of energy, such as wind power, can help to replace fossil fuel and, thus, to reduce the consumption of oil and natural gas. Therefore, oil and natural gas should be replaced by renewable sources of energy.
In this respect, the suggestion made by Pickens is very attractive in terms of the development of the alternative sources of energy. The wind power can replace a considerable part of the natural gas and leads to the reduction of the consumption of oil. Therefore, the wide introduction of the wind power as the alternative to natural gas and oil, the consumption of oil is likely to decrease (Dessler, 153). To put it more precisely, the drop of the consumption of oil by the US would lead to the decline of the demand on the global market. As the US plans to reduce one-third of its oil consumption, then the oil supply will drop by 8% in global terms because the US consumes 25% of the oil in the world market. The reduction of the oil consumption will decrease the demand (Dessler, 185). The drop of demand will lead to the reduction of supply of oil in the global market. However, shortly after the reduction of the oil consumption by the US, there is likely to be oversupply of oil in the global market that will be consistently higher compared to the demand. As a result, the price of oil is likely to drop as the supply of the oil is higher than the demand because sellers of oil will have to decrease the price to make buyers to buy oil. However, in a long run, the supply and demand of oil is likely to balance because the drop of the supply of the oil will be accompanied by the reduction of the oil available for extraction. Therefore, in a long-run perspective, the drop of demand will just mirror the drop of the supply that will not change the price of the oil much. Moreover, the world and the US will have to reduce the oil consumption even more because of the shortage of oil in the world.
In such a situation, the US government should introduce renewable sources of energy. In this regard, the introduction of renewable sources of energy, such as wind power is very effective but the introduction of the wind power to replace natural gas and oil consumption should be higher than 20%. This means that the US has to introduce the wind power and other alternative sources of energy, such as the solar power. In such a way, the US will replace fossil fuels steadily. In a long-run perspective, the US has to refuse from fossil fuels and replace them by alternative sources of energy.
Thus, the introduction of the wind power supplying 20% of energy is one of the first essential steps to the long-run strategy of the replacement of fossil fuels by alternative sources of energy.
