Wow, Lehman Brothers and Merrill Lynch just fell in the blink of an eye. And other institutions may yet fall in the months ahead.
How can we climb out of this financial crisis -- the worst since the Great Depression? While I can't claim to know the whole recipe, I do believe I know one of the crucial ingredients: energy efficiency with a dash of renewables.
In case you haven't noticed, Americans' super-sized personal debt didn't catch up with us until energy prices skyrocketed. Over the last few years, oil's price has quadrupled, coal has tripled, and natural gas nearly doubled. We now pay more than a trillion dollars for energy every year, with hundreds of billions in new expenses due to these higher prices. It was hard for many Americans to keep up with their mortgage payment after gas bills went through the roof. While our struggling economy has helped to lower prices from extreme highs this past summer by lowering demand, supply constraints worldwide and robust demand from emerging economies dim hopes that energy costs will fall much further. And the fact is, if we try to emerge from the current economic downturn with a business-as-usual energy approach, oil and other fossil fuel prices may knock us back into the recession ditch as they rise along with our demand.
However, if we employ a sustainable energy revolution that creates green-collar jobs, then our economy can grow unrestrained by the physical limits of oil extraction and we can regain global leadership in the marketplace. These green-collar jobs can retrofit old inefficient buildings and design and manufacture state-of-the-art appliances, plug-in hybrid electric vehicles, wind turbines, and solar panels. This new growth would allow us to lower energy costs and carbon emissions at the same time as we increase our GDP. Such products have a reliable and growing base of demand worldwide as other countries share the goal of reducing their energy bills and climate pollution.
It's clear that we can't compete with China's labor costs. But we can compete with their energy costs as long as we mobilize public and private innovation toward a sustainable energy revolution. The most effective first step is to become the leader in efficiency -- something that Big Three automakers ignored far too long at their own peril.
But the story isn't over for the Big Three and the rest of our country. We are reducing our oil consumption in 2008 and wind power is growing faster than anyone had imagined to now surpass oil as a source of domestic electricity. We can rise like a phoenix out of these financial ashes and be a model nation that inspires the world again. Rather than "drill, baby, drill," a sustainable energy transformation based on efficiency and integrating our tremendous wind and solar resources can bring an end to the recession ahead. I hope the crash of such large institutions will help people wake up to the new reality: green is the only way to grow long-term.