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The Economics of Energy

Blog Action Day 2009Blog Action Day

This post was created in participation of Blog Action Day 2009, which is focused on Climate Change.

Bringing Change

In my opinion, the best way to help the environment is to change the cost and economics, so that it favors clean sources of energy.  For example, people will start buying electric cars when they are priced roughly the same as gasoline powered vehicles.  And, they will convert to wind and solar power when it becomes price competitive with utility power.  Until then, people won’t convert en mass to green energy, because most people can’t afford to.

The Monopoly on Energy

Currently, our choice is limited to gasoline vehicles and utility-based energy, because they have a government sanctioned monopoly.  Starting way back in the 1800s with Standard Oil, energy producers have always found a way to limit our choices and avoid competition.  Even though Standard Oil was broken up by the Supreme Court in 1911, Exxon and Mobil have since merged again.  Refinery capacity has been consolidated and this appears to affect gasoline prices, which no longer follow the prices of crude oil. 

The monopolistic practices also continue on a local level.  Oil companies are quietly taking over gas stations, so they can control pricing at the retail level.  I know someone who has owned a gas station for decades who has recently been forced out by the oil company.  They were told their contract won’t be renewed, which allowed the oil company to take over their station.  This has been happening quietly throughout the country for years, which is another reason gasoline remains expensive, even when oil prices drop. 

Renewable Energy

The biggest problem with renewable energy is that it can’t be sold, taxed and controlled.  That’s why we don’t have it available.  Energy providers cannot afford to lose control of their monopoly.  The Government doesn’t want us to have energy sources that are freely available and cannot be easily taxed.  There are some issues related to cost, storage and efficiency.  But these could easily be overcome by commercialization and mass production.

If you follow the development of electric cars, they are being created in partnership with utility companies. Utilities stand to make huge profits in our shift from gas to electric cars.  The effect of these partnerships is that none of the electric cars under development contain a solar panel.  (I don’t count the Prius, which only runs a cooling fan.)  If you ask auto makers why a solar option isn’t available on their new electric car, they will give you a vague answer.  The real answer is they don’t want to lose funding from utility companies and the DOE.

Personalizing Energy

My vision of the future of energy is very positive.  I foresee a revolution unfolding much like it did in the computer industry.  Once people got their hands on a personal computer, it empowered them with innovative and creativity new technology.  The Internet allowed virtually unlimited communication, connections and resources.  Mass production of computers drastically reduced costs and improved technology.  Most important, knowledge and power shifted from the few to the many.

Revolution in Computing

Energy Independence

One thing holding back renewable sources of energy is a suitable energy storage device.  People still need energy after the sun goes down and the wind stops blowing.  And, battery technology is expensive, caustic and inefficient to run a business or a household.  Fortunately, there is a lot of research being conducted in this area.  One potential solution is being studied by Dr. Nocera at MIT.  It is similar to a hydrogen fuel cell, but it mimics photosynthesis and uses non-toxic materials.  This discovery could revolutionize the storage of energy.

Revolution in Energy

The Bottom Line

The bottom line is that we have been manipulated, polluted and cheated for far too long.  And, we are never going to get a fair break from energy providers, because their business model relies on keeping us dependent on them for energy.  We need to seize control of our energy resources and demand products that are powered by nature.  And, we must demand that our elected representatives respect our wishes for clean and renewable energy.  Until we take control of energy, we are at the mercy of those who poison our world for a profit.

“Competition is a sin.”

John D. Rockefeller – Chairman of Standard Oil

Recommended Reading

Finance bloggers participating in Blog Action Day:

DebtGoal.com
LenPenzo.com
PoorerThanYou.com
TheDigiratiLife.com

Here is an intersting article in Fast Company:

Beyond the Grid

This post was featured on the Carnival of Personal Finance. If you aren’t familiar with the Carnival of Personal Finance, it’s the premiere carnival of its kind. If you want to read informative articles from knowledgeable bloggers, this is the place.

10 comments to The Economics of Energy

  • Great article, Bret! You’ve hit the nail square on the head. It all comes down to economics. Clean, renewable energy will not overtake carbon-based fuels until the technology is available to make it a cheaper alternative.

    The time will come, but how far off that is, is anybody’s guess.

    As an example, the first computers were not only crude and very large, but they were ridiculously expensive. Computers were around for decades before technology finally made them affordable for everybody. It was only then that the revolution took hold.

  • Awesome piece. Thanks for covering renewable energy and the dilemmas we face. The diagrams are great. Very very informative. Hat tip.

  • That really is a fantastic article.

    You’ve outlined all the pros and cons in the energy issue of today.

    I do think that the future really does consist of a good MIX of renewable energies.

    But they will have to be properly researched from all angles. Not all energies will be perfect and totally 100% green.

    For example: Some “green” energies such as water dams are not very green in the end, as the motors that are required to collect the energy from the rushing water actually dump waste and toxins into the water.

    Not so green after all.

    Awesome post.

  • James

    Great article. Reminds me of the movie Chain Reaction with Keanu Reeves and Morgan Freeman. The premise is that Keanu works on a team that creates a form of fusion that makes cheap, abundant, green energy. Morgan Freemans character kills the team and once confronted by mr Reeves explains the ramifications of all this cheap energy…pointing to the same things you have namely the massive investment in public and private utilities our governments have made and the governments ability to tax that power generated, very unfortunate situation

  • Hi. I just noticed that your site looks like it has a few code errors at the very top of your website’s page. I’m not sure if everybody is getting this same bugginess when browsing your blog? I am employing a totally different browser than most people, referred to as Opera, so that is what might be causing it? I just wanted to make sure you know. Thanks for posting some great postings and I’ll try to return back with a completely different browser to check things out!

    • Rafael,

      Thanks for the heads-up.

      My blog uses the Atahualpa theme, which is supposedly cross-browser compliant. However, I’m not sure if it is compatible with Opera. I will check with the devlopers to see.

  • […] Bret Frohlich – Like me, Bret participated in Blog Action Day 2009 on Thursday where the topic was “Climate Change.”   Thousands of bloggers all over the world put in their two cents on the topic.   Why isn’t renewable energy ruling the day right now?  I thought Bret did a great job answering that question with this his article on the economics of energy. […]

  • […] Bret Frohlich says we’re being hoodwinked in the energy issue, and we need a revolution […]

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