The reality of the big-business landscape involves a whole series of immediate pressures, and they don't necessarily provide a landscape where social enterprise can feature highly. As oil prices rise to $60 per barrel and gasoline remains well over $2 per gallon in the U.S., the future of fossil fuel is of increasing importance in American politics, to public relations and to profits. Here we look at just some of the implications this presents for the energy sector and the sustainability agenda.

The bid by the China National Offshore Oil Company (CNOOC) to purchase Unocal generated a flurry of activity in Washington. Some members of Congress expressed serious concern about the deal and bills have been proposed alternatively to require a national security review, or impose an outright ban on the deal. Others, including Federal Reserve Chairman Allan Greenspan and Treasury Secretary John Snow, have warned against "protectionism." Meanwhile, both Chevron and CNOOC have mobilized their lobbyists and public relations machinery to press their case. While the outcome (at the time of writing this looks as if it will go in favor of Chevron, without Congressional intervention) likely will have little impact on either the availability of oil or the price Americans pay for it, the response in Washington reflects the importance that energy security and China play in America's future.

A comprehensive federal energy policy, on the other hand, would have a significant impact on the U.S. energy picture. Congress has tried and failed to pass a comprehensive energy bill in each of the last four years. Will it be any different this time around? President Bush has said he wants a bill he can sign before Congress recesses in August. The House and Senate have passed differing versions of an energy bill, which now go to committee for reconciliation. Many environmental organizations have criticized both versions, stating that they weaken environmental protections and provide billions of dollars in subsidies to the oil and gas industry, while the American Petroleum Institute has declared support for both bills. The Senate version of the energy bill includes incentives to increase renewable energy, and both versions of the bill include incentives to construct nuclear power plants.

A step in the right direction to address climate change? Perhaps, but don't expect the White House to take up leadership on the issue. Going into the Gleneagles G8 summit, it was clear that the U.S. was not aligned with its G8 partners on climate change policy. The agreement which emerged from the summit did not surprise, omitting any reference to solid reduction targets. While on the surface it appears the Bush position prevailed, U.S. media coverage of the issue of climate change continues to grow. The administration's position is slowly moving from a sign of strength and alignment with business, to a liability: yet another indication of Bush's intransigence and willingness to ignore facts in favor of ideology.

Meanwhile, business is taking action on its own -- or at least talking about it. Three of the world’s four biggest oil companies have launched ad campaigns in the U.S. discussing the future of energy. In early July, Chevron launched a series of ads and a Web site (which SustainAbility played a role in developing) intended to generate discussion (perhaps even action) about dilemmas and solutions to the energy challenges the world faces. BP has reinvigorated its "Beyond Petroleum" campaign, posing dilemmas to customers, such as "would you give up your car for a clean environment?" And ExxonMobil’s new TV spots state that .the world needs more energy and less greenhouse gas emissions (though ExxonMobil is still deeply committed to a fossil fuel future, as its CEO recently proclaimed renewables "inconsequential" for now and for the foreseeable future).

Southwest Airlines a couple of years ago anticipated a run-up in oil prices (perhaps seeing the convergence of a growing China, constrained refining capacity, conflict in the Middle East and concern over climate change) and entered into hedge contracts to lock in lower fuel prices.

How good a decision was that? The hedging program saved $196 million in the second quarter, and promises more of the same -- as far out as 2007, nearly half of Southwest’s fuel purchases will be locked in at $31 per barrel. A great example of how energy foresight can benefit the bottom line.

Are all the stars aligned? Hardly. GM’s Hummer recently had its best sales month ever, and even though SUV sales across all manufacturers are down more than 10% from last year, SUVs are still outselling hybrids almost nine to one. But as talk of energy security, peak oil and global warming increases, so value at stake will increase for companies large and small. Wise business leaders will ensure they understand how the energy picture is developing, and where the real risks and opportunities lie.

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This column has been reprinted courtesy of SustainAbility RADAR. It first appeared in the August/September issue of that publication.