Oil Shock May Prove to Be Boon to IT Industry
By Cho Jin-seo
Staff Reporter
Rising fuel prices harm people in oil-importing countries but they are at least helping the Internet and other information-processing industries, said Google's vice president.
Vinton Cerf, the vice president and chief Internet evangelist of the search engine company, said that the oil price hikes will make people turn to information technology to minimize the use of petroleum-burning activities such as traveling.
``In a very peculiar way, it may have a positive impact on the Internet. Information technology can sometime substitute for transportation, for example, and be used more efficiently than scarce resources,'' Cerf said in a press conference in Seoul, Wednesday.
``As an example, we may turn increasingly to video conferencing or other types of electronic media in order to avoid having to travel.
``We may make use of computational capability in order to minimize our use of petroleum products for example by calculating the routes of cars and aircraft to minimize the cost of the fuel,'' he said.
The price of light crude oil has been continuously rising this year to threaten the $140-per-barrel mark, more than double the price of last year. Many analysts and investment banks are warning that it is only a matter of time until the price breaches $150 and probably rises to $200 in a couple of years.
Such soaring fuel costs have pushed up the price of other commodities and services globally, especially public transportation and food. But the information industry has remained relatively unaffected, due to a low dependency on natural resources.
``So in my belief, although I'm not happy with the increase of oil prices, the Internet actually benefits as people turn to it to improve their efficiency,'' the Google vice president said.
Cerf's opinion is supported by the trend of stock prices at several Internet companies. Big IT and telecommunication firms in the United States such as Google, Yahoo, Cisco, and AT& T's share prices have shown little correlation with oil prices and are remaining at similar levels to those of a year ago.
Only Microsoft is being traded at a lower price, but the slight decline is believed to have been caused by the firm's bid to buy Yahoo earlier this year. At the same time, major market indexes such as the Dow and S& P 500 have lost more than 10 percent of their June 2007 value.
Cerf is visiting Seoul for the OECD Ministerial Meeting on the Future of the Internet, which ended Wednesday. The 64-year-old is sometimes dubbed as ``the father of the Internet,'' for his contribution to the industry as a computer scientist. He is credited for co-designing the TCP/IP protocols that were used to develop the Internet's underlying architecture.