Energy costs

posted by Jeff | Wednesday, March 9, 2022, 2:00 PM | comments: 0

With the Russian invasion of Ukraine (about which I can't write anything remotely cohesive yet), there is understandably some pressure on energy prices, which Americans can already see in the spike with gas prices. You can also see a lot of hyperbole and misunderstanding about how the economics of energy, especially how oil works.

It's unfortunately predictable. The right blames Biden, despite the fact that presidents can't, and never have been able to, appreciably affect gas prices. The left blames "greedy" oil companies. Neither is correct. Oil is a globally traded commodity that is produced all over the place and consumed all over the place. The US roughly exports as much oil as it imports, but of course as demand and supply can be dynamic, oil companies can't just keep what they have here sitting around. That's also why "banning" Russian oil is largely symbolic, because you can't completely control where the stuff comes from. The price isn't simply set domestically. If Chinese demand increases, the price goes up globally. It's fundamentally supply and demand, and I'm surprised at how many people don't understand that.

The real problem is the reliance on fossil fuels in general, because they come out of the ground, and it's often not ground that you own. It's terrible for the environment of course, but once again, it's not like we don't have a solution for this problem. Renewables now cost less than the fossil fuels, and building new facilities to generate that power, it's not even close. Renewables are a solved problem, there just has to be the will to use them, which puts incumbent energy businesses at risk. The model of distributed electricity generation and storage is also more robust and less prone to failure.

Fully two-thirds of our energy use comes from the sun, including the power to operate our cars. Imagine if my neighborhood had its own solar plant and storage installed over one of the otherwise empty retention basins. Or if the utility installed more large-scale solar and storage. Other areas could benefit from on or off-shore wind. Much of the Pacific Northwest already runs on hyrdo. There is low-cost energy all over the world, right now. We shouldn't be stuck relying on fossil fuels. If you're serious about demanding "energy independence," a still nebulous idea if the equipment is manufactured globally, then renewables are the only logical way to go.


No comments yet.

Post your comment: