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Inward Investment Guides

How Energy Factors Into The Location Decision

While nearly every business sector has an eye on energy availability, it isn't the top consideration for location choices. 

David V. Brandon, Senior Vice President, Site Selection Group, LLC  (Apr/May 10)
(page 2 of 2)
Alcohol- and oil-based products from biomass will supplement fossil fuels and their derivatives such as diesel, aviation fuels, and gasoline over the coming decades. Such intermingling will likely raise prices while extending supplies. Furthermore, new fields may loosen conventional natural gas supplies and moderate price fluctuations while relieving pressures on heating oil supplies in the Northeast. Overall, energy availability and costs will remain key variables in a transition to a more varied generating mix.

The keen interest in "gasohol" and corn-derived ethanol is giving way to fuel alcohol production from other non-food crops. Algae offer great potential as sources of biodiesel and alcohol fuels, as well as foundation compounds upon which plastics rest. How much of a supply and cost impact this will have on energy prices, and when that impact becomes noticeable, remains to be seen.

Efforts to wring efficiencies from our energy systems through smart grid developments and by returning attention to historic energy sources combined with current technologies show promise. The prospect of synthetic fuels produced from coal through a process called "gasification" that can result in synthetic natural gas (SNG) and liquid fuel is regaining popularity. The United States' 800-year supply of coal, only a fraction of the world's coal supply, draws consistently greater attention as a legitimate part of the solution to our energy availability and cost challenges. Federal and state governments and private investments in these technologies suggest that, like nuclear generation, we recognize the potential for new solutions borne of once-discredited means.

While the 2009 Corporate Survey indicates that energy availability and costs were slightly more important than in 2008, it must be considered in context with the shocks delivered in 2008 that bore bitter fruit in 2009. Energy costs are fluctuating higher and will continue to do so.

Energy availability and costs will exert significant influence on virtually every business enterprise as these costs permeate all aspects of manufacturing and logistics. Those factors will continue to color the landscape and influence location investment decisions. But this time, we won't quickly forget the strategic lessons of crude oil dependence. Those communities that use their resources to collaborate with industry, higher education, and public policy initiatives will reap the benefits of private and institutional investments in energy savings and innovative product technologies.

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