The California Gold Rush of 1849 was the greatest hoax in living memory – more so than any other, because people still believe it created widespread prosperity.
But it wasn’t a hoax from anyone in particular. It was a hoax from nature, leading thousands of prospectors to believe they held literal glimmers of success in the palm of their hands.
However, the truth was far starker. Prospectors slaved down mines, which collapsed regularly and killed hundreds, lived on piecemeal portions of food and created sophisticated machines to separate grit from gold. More often than not, barring a few success stories, people went home empty handed – and usually poorer than when they arrived.
The same could be said of the oil industry in recent times. While Mother Earth has given up the goods for decades of untold richness, the price of oil has been plummeting to depths deeper than amining drill on an exploratory mission.
The price of a barrel, at a steady constant of around $110 per barrel, has fallen to $51 per barrel. US crude oil has, for the first time since 2009, fallen below $50 per barrel, sending the industry into a spiral of crisis.
The impact of oil
So, what’s happening? Is this yet another hoax from nature?
The main reasons for this downturn are twofold – a slowing in economic growth has led to a drop in demand, while the US has continually increased its production.
However, it’s Russia which is being hit the hardest. The country, which reaps 70 per cent of its revenues from the energy industry, has been forced to prop up the rouble by hiking up interest rates, showing the weaknesses in relying on the oil industry.
Looking on a more local level, then, how are smaller businesses supposed to deal with this apparent downturn of oil?
The energy flow and businesses
One option is to modernise. Invest in a product like a meter asset manager, which will replace your common-or-garden meter with the kind that can track your energy usage down to the specifics. In the current climate where energy can cost exorbitant amounts, knowing every outgoing is vital.
Your next option is to move into the burgeoning field of alternative energy. A few solar panels on your roof can give you a reserve of energy to take the edge off the cost of your standard suppliers. And the price of panels is falling all the time – where they cost an average of £14,000 in 2010, they’ll now set you back £6,000.
Alternative options are piling up left, right and centre, and they’re threatening to steal the throne from oil barons and oligarchs.
Ultimately, oil is no gold rush-style hoax – the price of a barrel will rise from the ashes, like a particularly profitable phoenix.
But your company has to decide where its energy allegiances lie. So choose your energy provider wisely.