Energizing the Economy

 

Everyone is talking, or at least thinking these days of what we can go to turn our economy around and restore fiscal sanity. There are lots of ideas out there but I believe that there is one simple idea that could have immediate impact on our economy – and that is to allow us to harvest our own rich energy sources.

In the Bible, God instructed Israel to be a nation that lends rather than a nation that borrows. This makes everyone wealthier, increases our freedom, and allows us more margin to help those in need.

If we took the same approach to to energy, we would realize that we have become far poorer as a nation because we have essentially farmed out our energy to foreign countries while we pursued green alternatives.

The US Chamber of Commerce has estimated that if the EPA and our federal government approved the 365 pending energy projects that it has stalled on, we could create over 1 million jobs and more than $1 trillion in gross national product. That will certainly pay a lot of bills and free up a lot of gov’t assistance funds.

But we have decided to go down the green road which unfortunately, after watching world governments spend trillions, are left with the result that NONE of the green alternative sources have any potential to significantly replace our current carbon sources.

None!

And why is this? Without going into long explanations let me offer a few short points:

1. Green alternatives have a low energy density – i.e. it costs 5x-6x more per megawatt. They are just not an efficient means to draw energy.

2. Green alternatives raises the cost to everyone. No one wants to buy energy at 5x the price so you have to force it by legislation. Fund it with taxpayer dollars. And then taxpayers pay again when their utility bills skyrocket. This is a huge drag on any economy that tries to pursue this in a large scale.

3. Green alternatives are not reliable. You can’t guarantee the sun will shine, the wind will blow or the rains will come to water your crops. And even once you produce electricity, you can only send it over a short range. This can cause huge disruptions in energy which injects uncertainty into your economy.

4. Green alternatives can’t be stored (except for biofuels which have a short shelf life). Thus you need a backup which can’t be another unreliable green source. And the backup needs to be able to 100% supply your energy needs. So you’re back to carbon based energy. And even when the wind is blowing and the sun is shining, you can’t turn off your carbon energy source. They have to keep running anyways.

5. Green alternatives cannot scale. There isn’t enough wind, sun, or agricultural land to fulfill our current energy needs. Even the most optimistic goals only point to 25% replacement and that goal is nowhere near attainable today.

Spain, the harbinger of the green promise to come, is finding that the green dream is a fantasy. Their largest wind generator manufacturer wants to exit the business. And the gov’t has run out of stimulus money to keep the projects going. And the net effect has been to shed a ton of jobs. Germany is in the same boat, so is the UK. Except that their economies still have enough in them to continue down this path even though there is no payoff in sight.

On this side of the ocean, T. Boone Pickens, the oilman that wanted to lead the American transition to green energy now wants to exit the business because he can’t make any money. The projections were far too rosy and returns far too poor for even the rich among us to stomach.

I think it’s time for America to do what America does best. Let the free market decide. The supply and demand of the free market will drive innovation and  keep costs down. It will create jobs as it takes risks to find new sources and new means to produce abundant energy at a low price with minimal ecological impact.

There isn’t an oil company on earth that would love to drop oil and be able to provide green energy at a competitive rate. They would rake in the coals (pun intended) and put their competitors out of business.

But the present reality is that carbon based energy is required now and the foreseeable future for our world to function.

 

 

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