Conservative View on Future of Energy

Have you noticed an increase in your utility bills? Do you feel a pinch every time you fuel up? Who do we blame; capitalism, the EPA, OPEC? The truth is we should blame ourselves. We are so wrapped up in maintaining the status quo, that we fail to realize the technology all around us.

The focus on clean energy is centralized around making fossil fuels cleaner. We forgo burning coal for burning “cleaner” natural gas. We use ethanol and get an energy ratio of 1.38:1 instead of oil which has a ratio of 100:1. The problem with this strategy is that it is very short sighted. LNG is cheap now, but what happens to the price when everyone uses it.

Another problem with “burning” anything for power is that it needs constant replenishment. Instead of looking for what else we can burn, we should be looking for how to get energy without burning. 2/3 of the money for a LNG fired power plant is used for fuel, whereas, 2/3 of the money for a geothermal power plant is for the initial capital investment. In fact, this same long run/short run paradigm exists for every alternative energy system. Unfortunately we as a people are unwilling to finance the larger initial investment.

This happens for two reasons: 1, we see it as an unnecessary cost in the now, with no regard for future costs. And 2, because of the long-run “cheapness” of alternative energy, it doesn’t have much financial appeal to spur investment. If you want proof, look at the Gillette business model; make a product that people have to keep buying.

The straight razor had a higher initial cost, but the life of the razor was much longer. The disposable razor was cheap, but you have to keep buying them, making the long-run cost much higher than its competitor. Another reason Gillette had so much success was his product was marketed under the guise of safety, disposables were “safer” than straight blades.

We take the same approach with nuclear energy, it is unsafe right? Wrong. A standardized nuclear program is incredibly safe, but it is 100% dependent on competent operators, just like the straight bladed razor.

In the beginnings of oil production, unsafe gasoline was originally burned off because of it’s volatility. The more stable kerosene was the fuel of choice, and a standardized blend of kerosene was the absolute safest fuel. This was the birth of Standard Oil.

In closing, the moon pulls the ocean up 50 ft every day. There is a way to harness that energy, the fact that we haven’t yet represents how content we are with the status quo. So next time you watch the dollars tick up at the pump, give it some thought.

via A Conservative View on the Future of Energy.

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