Externally Induced Innovation in the Oil Industry

Argosy University/Twin Cities

Innovation, as a term, is commonly thrown about without much thought as to what innovations are, how they come to be, and how they grow in intensity and popularity. The origins and rise of innovations makes more sense when put into explanations that put aside all of the complicated jargon and simply present the facts. One of the preeminent theorists in the field of innovation, and more precisely the proliferation of innovation is Everett Rogers, an American economist and business theorist who, in the mid-1990s, developed a theory of Innovation Diffusion, which explains that new ideas are spread literally around the world in many cases through the use of communication channels, with varying speeds and over varying time periods (Bryson, 2006). This is not to say that all innovations are for the betterment of society, or even popular. What it does mean, however, is that the lightning-fast methods of communication and collaboration that exist in the modern world make it possible for Rogers' theory to prove itself over and over again. Therefore, it is important to realize that innovation, in its most basic form, is contagious, for good or bad.

With a better understanding of the somewhat contagious nature of innovation as a result of social forces, as professed by Rogers and others, it is much easier to realize exactly how the innovations in energy on a global scale would in turn have a similar "ripple effect" on government, international relations and business. It is this type of externally induced innovation which is the focus of this research. Energy, particularly oil, is the basis of many actions and decisions the American government, and, indeed, individual Americans make. Many have argued that the war in Iraq is about oil, as have some claimed the seemingly endless war in Lebanon. Whether one realizes it or not, the quest for available oil is literally the main lubricant in the international business system. For example, business theories by Bryson and others have proven in recent years that because of the fact that the world's oil supply is for the most part controlled by a limited number of nations and interests, both supply and demand for oil influences the overall strategic planning of an endless number of different businesses, and of course has led to much bloodshed over the years (Smith, 2005). The use of energy over the years has been a cause for concern to the world's population, as sources of energy are limited while the international demand has continued to grow. The consequences of the use and misuse of energy can be highly negative and even disastrous (Ginosar, 2007).

The daily news reports from around the world show the obvious warfare, terrorism and shattered lives that lie in the wake of the misuse of energy which leads to an endless international thirst for oil and other energy sources. Harder to see, but just as deadly, are the damages to the environment that occur when energy is not used properly and wasted, as is the rampant greed of huge energy companies which exploit customers who have no choice but to pay the inflated rates imposed by the energy companies, opening up yet another chronic need for innovation in the oil industry itself.

In the last two centuries oil has brought dramatic advancement in the economies of many countries and lifestyles of their citizens. The massive development allowed by the use of oil cannot be diminished by rapidly skyrocketing oil prices, the wholesale destruction of human life in the many terrorist actions and wars which are fought over oil, or any other happening (Youngquist and Eugene, 1998). This has rendered many modern societies completely dependent on oil for their well-being.

A critical consideration, however, is the finite and limited nature of oil as an energy source. The debate among geologists concerning the world's oil supply remains unresolved ambiguous one. According to the U.S. Geological Survey, a report published by CNN (2000) says the world's oil reserve is 20% greater than initially thought, this putting peak production around the year 2040. Some are not as optimistic as the Geological Survey and they argue the world will start declining in oil production in the next 10-20 years. The appropriate question, however, is not for how long oil will be available, but at…