Linking Petroleum Uncertainty to Teleworking

Perhaps the most visible byproduct of lingering uncertainty in the Middle East is the soaring price of petroleum. A year ago there were some who speculated that a quick war in Iraq might stabilize gas prices, but over the past few months nothing could be further from the reality as prices continue to rise. So far, there are no signs of stability in the near term. These circumstances are starting to bear an eerie resemblance to the energy crisis of the 1970's when there were long lineups for gas and even if one made it to the pump there was no assurance any gas would remain. There was perhaps no event since the Great Depression that has caused such consternation for policy makers than the Energy Crisis which was marked by the rise in oil prices during the 1970's. This began October 17, 1973 when OPEC first flexed its monopoly muscles and quadrupled the price of oil. In the months that followed, people across North America and Europe literally shivered through the winter. The effects of this single event reverberate today, and affected policy making in areas one would never associate with fuel. (Ever wonder why adjustable rate mortgages came into being? You can thank the '73 oil embargo--we'll save that discussion for another day.)

Given the current state of uncertainty (especially during an election year in the U.S.), there are many ways to analyze and react to these circumstances. For one, despite consumer fears of prices going north of two bucks a gallon, this should be put into a broader global context. As it turns out, the sky isn't entirely falling for those in North America, whose fuel prices are among the cheapest in the world. Says John Wada of Rochester, Wisconsin-based Runzheimer International in an article comparing global fuel costs:

"When you view the U.S., and even Canada, from a global perspective, North American fuel prices are still relatively inexpensive"

In fact, there are some who even make the argument that the prices we have paid for petroleum in North America over the past two decades have been artificially low, and this has actually created more chaos. In an article written in the Los Angeles Times in 2000, Edward Luttwak explained this paradoxical truth:

"Almost two decades of cheap petroleum have had devastating effects on both the demand and the supply side of the world's energy balance. The great conservation efforts, originally launched in the aftermath of the 1973 Arab oil embargo and the resulting explosion in oil prices, have been abandoned. By 1975... the smallest cars on the market were the ones most in demand...In recent years, with gasoline prices already low and still falling...the market for the smallest and most efficient cars virtually came to an end. More than 60% of American car buyers were not content even with full-sized eight-cylinder cars, choosing instead sports utility vehicles--in fact powerful four-by-four trucks, which have been getting bigger and bigger."

Regardless of the well-reasoned arguments put forth by pundits such as those cited above, the fact remains that oil prices are determined by an intricate web of competing factors, which range from Iraq, to political instability in Venezuela to the emergence of China as a munufacturing superpower. More than ever, we must make tactical changes to our lifestyles in order to adapt to this period of uncertainty. Might we be angling toward a familiar theme?

Despite the long gas lines of '73, motorists had to make due because the lack of alternatives. Today we have a greater degree of flexibility, and can make lifestyle changes without without making significant changes to our routines. Last week AAA suggested several strategies that Americans might consider to mitigate problems associated with petroleum price uncertainty. AAA recommended familiar standards such as clean fuel policies and more fuel-efficient cars, but they also mentioned an option we have promoted on this forum: telecommuting. Although technology allows many organizations to effortlessly establish telecommuting arrangements with their employees, providing them the tools to be as productive in a decentralized setting as they would be in an office, I was suprised by not only the simplistic way in which telecommuting is presented - for example this quote from an information guide from Canada:

"If you work in an industry or service whereby the work that you provide can be provided by telecommuting then ask your boss if this is possible. Saving even one or two days out of five depending up how far you usually commute will save lots of gas, money and time over one year. Telecommuting or working from home is the growing trend. With the advent of company chat rooms, even conferencing or meetings are possible without using gas."

But I was unsettled by the take of some southern media outlets that not only fail to understand the global roots of petroleum price uncertainty (they seem to blame those in the north for using too much energy if you can believe it), but also seem to cast telecommuting in a negative light, as demonstrated by this quote:

"We might hit a threshold price where you see dramatic changes, and you might see more people trying to find carpooling options or more companies being pressured to have telecommuting options"

More than anything, this seems to suggest that public and private agencies have to engage in a fundamental reworking of efforts to promote teleworking. Thus far, most institutional initiatives are targeted toward the end-user, i.e. the worker. To provide greater context and urgency. policy makers should also be formulating comprehensive teleworking business cases targeted toward the organizations that are backed by sellable statistics, such as detailed cost-benefit analyses, as well as standards of business continuity. By doing this, subject companies will be greatly incentivized to step up there efforts - thereby making gas lines a curious relic of a bygone era.