Is telecommuting facing a new oil crisis?

Over the past few months the global energy situation has made some significant shifts. One of the potentially most far reaching of these is the drop in oil prices. Last Thursday, after Opec decided to continue pumping its oil at the same rate as it had been doing, oil prices hit a four-year low of just over $71 per barrel. The reason is that the availability of oil exceeds the demand for it; Economics 101. America’s greatly increased oil production, largely from shale, is clearly distorting the market by adding to that surplus availability. Our previous forecasts of hitting the absolute peak of oil production have to be modified.

For some stakeholders in energy this situation is an oil bonanza; for others it is an oil crisis. For commuters worldwide the lower price at the gas pump is a gift, an incentive to buy a new gas guzzler rather than a hybrid or an electric car, to increase the rate of global warming. For those of us trying to persuade people to telecommute this situation feels like a new oil crisis. High oil prices supposedly help encourage individuals to  telecommute. Will low oil prices act to discourage telecommuting? Here is some history.

Our first formal research on telecommuting started coincidentally with the mid-1970s mideast oil crisis, during which Opec decided to drastically reduce oil production. The result was skyrocketing oil prices and, eventually, cars lined up for blocks waiting to fill their tanks. Economics 101 again: demand for gasoline was inelastic — people complained about the higher prices but paid them because they needed their cars to drive to work. It was when gasoline no longer was available that the situation really got tough for commuters.  Also at that time few people had ever heard the term “global warming”.

Since those days we have rarely had trouble finding employees willing to telecommute regardless of gas prices; our problem usually was finding employers willing to allow telecommuting. Many employers still don’t realize that the cost to their employees of telecommuting does affect their willingness to work for them. Yet the price of oil— the cost of the commute — is only one of the factors behind employee A wanting to work for organization B. In fact current telecommuters probably don’t think much about changing their schedules because of lower gas prices. More important to employees is having work that is satisfying and allows personal creativity.

But what about prospective telecommuters? Will decreased oil prices create a crisis in adoption rates of telecommuting? I don’t believe so, at least not in most parts of the world. Even in countries that are adversely affected by low oil prices, countries like Russia, Venezuela and Iran that are in peril of encountering negative GDP growth, reducing transportation costs will still be important. Then there are the millennials who increasingly shun car ownership, to the dismay of the auto industry. All in all I expect that the climatic effects of global warming — the blizzards, floods and tornados — will outweigh any fluctuation in gas prices.

Meanwhile, Opec will continue to keep the oil supply up and prices down in hopes of discouraging small producers of shale oil and returning the world to its Opec-controlled energy regime.

Stay tuned.

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