The development of the Internet and innovative applications for its use has caused significant disruptions in many industries, but those may pale compared to the wreckage that could be caused if the cost of a barrel of oil remains so high.
The recorded music business will never be the same because of digital downloads. The newspaper industry is trying to find a way to counteract revenue slippage caused by online classified advertising and the movie and television industries are desperate to avoid the fate of the music industry.
Steve Forbes, the ultra free marketeer owner of Forbes magazine, is a glass-half-full kind of guy, but even he admitted the price of oil is wreaking havoc.
He was in Winnipeg last week to talk to MTS staff and clients about the difference between innovation and invention.
(A couple of key examples were military-related -- the Internet and radio originally had no commercial applications and were used purely for military communications.)
His take on the insidious challenges of the oil price spike is to attribute it to the bubble phenomenon. It is probably the only way for any sane analysts to remain sane.
There is no rational explanation as to how big the bubble will get. The only thing you can count on is that it will burst like the recent housing bubble in the United States, and the dot-com bubble earlier this decade.
Commenting on the U.S. economy, Forbes said despite the residential housing crisis and the historic levels of consumer debt, American consumers continue to have greater spending power than ever before.
Because of that, there is record high demand for air travel.
But even with that demand, airlines are being forced to undertake massive cutbacks because of losses sustained from the price of oil-derived jet fuel.
The only potential wrinkle in the "bubble" theory for oil is concern over the fact that oil is a non-renewable resource. The laws of supply and demand might suggest there will be continuing price pressure because of challenges on the supply side.
Airlines and the air travel industry are doing their best to anticipate where the trend will take them.
Boeing seems to have got it right with the development of the lighter, more fuel-efficient 787.
A little luck is also helpful when the economy lurches from unexpected structural changes.
Take the Winnipeg airport for example. For years, various city promoters have beaten the airline bushes for more diverse route offerings, with modest results. (The only direct non-domestic service from Winnipeg is to Minneapolis, Chicago, Denver and most recently Las Vegas.)
But the fact is, only large, wide-bodied jets are able to service far-flung routes, the very ones that the airlines are being forced to curtail.
Being in the middle of the country also means eastern and western Canadian destinations can be reached with smaller planes, so that now Winnipeg's airport is visited almost exclusively by Bombardier regional jets and small Embraer jets -- the type of service that will be last to be cut.
While there is little to no room for cargo on those planes, the Winnipeg airport has been successful in attracting the overnight air-courier traffic and is now the hub for the national cargo operation, Cargojet.
Those cargo carriers have become increasingly comfortable with operating out of Winnipeg and now that fuel-cost considerations are becoming so strategic, the location and convenience of the Winnipeg airport could play an important role in the potential for a larger air-cargo play that could become a full-fledged inland port.
Another piece of good timing is the redevelopment of the airport site. Much work has been done to prepare land that could be developed into an inland port.
Forbes talked about innovation compared to invention, and it probably could be said that necessity is the mother of innovation as well as invention.
Out of necessity, shippers are going to have to stop thumbing their noses at Winnipeg because it's not Chicago when savings can be achieved from just a few hundred kilometres shorter flying distance and a quicker turnaround time.
But Winnipeg can't rely on oil prices alone to generate that demand. The groundwork has to be laid beforehand and that's what's happening now.
martin.cash@freepress.mb.ca
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