Archive for December 6th, 2008

Sustainable Energy Reformation Will Drive New Economy Forward

Saturday, December 6th, 2008

Economies move positively forward from two main causes: New concepts or new inventions.  Sometimes serendipity gives us both at the same time.

Democratic government and free market capitalism are good examples of new concepts that positively helped the human condition.   The discovery of petroleum and all its uses can be considered an invention which transformed the world during the past 150 years.

We now have a new concept that will drive our economy forward.  A new paradigm, if you will, that will improve the human condition.

The concept is sustainable energy.  We have to embrace this concept for the most basic reason:  We have no other rational choice.  The world’s economies have grown dramatically because of the huge leap forward provided by fossil fuels.  This has been our basic energy.  Unfortunately, it appears certain this energy source is not infinite.

And thus our critical need to develop sustainable energy.  Although dramatic inventions might make this effort easier, we can produce a sustainable, healthy economy with what we know already. 

Any reformation on the scale that’s needed will require cooperation between government and free markets.  Historically, it’s always been governments that engage in national, large scale efforts.  Private market investment will follow these kinds of efforts, not lead them.  Much of the private investment will be towards portions of these large scale efforts where profits can be made as a result of the government action.

Strong government leadership can rally popular support to the new paradigm.   Effective government can enable and assist free markets and investment to the myriad tasks necessary for reformation.  Building more wind farms will help General Electric make more money as the manufacturer of generators, for example.

A free people with protected individual rights will provide all the labor and invention needed to make the transformation successful.  And more labor will mean more jobs which will mean more demand for products (yet more jobs) and more savings (more powder for future private investment).

The first necessary task for the government is to gain the support of its people.  Without that support, without that basic consensus, sustainable energy reformation will not be possible.   Even a wildly successful move to sustainable energy will have to overcome dissension.   A vision that is believable must be described to the public.  Short, intermediate and long term goals have to be explained and put in the context of how the entire effort will improve our condition and security. 

Pricing existing fossil fuel with the long term in mind, will probably mean a government policy that puts a floor under price.  If the floor is $4 per gallon, and the “free market” price is $3, then only a government with strong public support will be able to sustain the $4 gallon price–the price at which sustainable energy can compete.   But exactly this has been done for years in Europe, where governments have taxed fossil fuel prices heavily in order to fund long term projects and social programs like universal health insurance. 

A lot of this reformation work is embarrassingly obvious.  Embarrassing because we haven’t already put our shoulders to these projects.  What have we been thinking all these past 30 years?  We are a better country if we have a strong, robust rail system that uses energy efficiently.  We are a better country if we have robust, sustainable base electric generating capacity, and a well developed transmission system with redundancies built in for our security.  We are a better country if we have a personal transportation industry producing hybrid, biofuel and eventually all electric (once we have a modern base energy and transmission system) vehicles.

But being obvious is not enough–obviously–because nothing’s been done despite all the warnings and mounting evidence of our present danger.   The wild swings in petroleum prices, and virtually all other commodity prices, the past several months are yet another serious “shot across the bow” for America.  As is the current recession.

Four dollar pump prices helped put us in a tailspin mainly because we so depend upon gasoline to ferry us around.  We have developed no alternative systems.  For too many of us the only choices were to pay that price or go nowhere.

Property price bubbles grew and burst, plunging our economy into recession.  Property prices rose in part because we haven’t been investing in more productive projects, like those needed for our sustainable energy reformation.  This bubble was just another example of what happens when wealth can’t seem to find productive investments and starts chasing paper investments such as mortgage financing.

This money was chasing illusory profits because the real investment needs for America now are infrastructure investments–the traditional provence of government.  And our government has been asleep for decades, whether Republican or Democrat dominated.

We can still get it done.  But it is precisely now that we must act.  There’s the old question about the cells that double every minute and can fill a 10 oz chemistry jar in 10 hours.  When is the jar half full?  At 9 hours and 59 minutes.  We may not have as much time as we think.

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