energy — VOICES for REASON

Today’s MasterResource features the first entry of a four-part Series by me titled “Energy at the Speed of Thought.” MasterResource is a leading free-market energy blog.

Today’s segment is called “The Original Alternative Energy Market.” Part 2 will be released tomorrow. (The article was originally published in 2009.)

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“The most important and most overlooked energy issue today,” I wrote in “Energy at the Speed of Thought,” “is the growing crisis of global energy supply. Cheap, industrial-scale energy is essential to building, transporting, and operating everything we use, from refrigerators to Internet server farms to hospitals. It is desperately needed in the undeveloped world, where 1.6 billion people lack electricity, which contributes to untold suffering and death. And it is needed in ever-greater, more-affordable quantities in the industrialized world: Energy usage and standard of living are directly correlated.”

In a recent post on Master Resource, Donald Hertzmark elaborates on this point. Hertzmark gives many valuable facts and figures about the degree of “energy squalor” that exists in the world, but to me the most powerful part was this image–a picture of the entire world at night, revealing which parts of the world (such as North America) are alight with plentiful energy, and which parts (such as much of Africa) are dark with energy poverty. Remember that image next time you hear that the whole world needs to drastically cut its usage of practical forms of energy (coal, oil, natural gas).

In today’s economy, which is an unstable mixture of capitalism and socialism, it is all-too common for executives to demand special favors for their companies at the expense of other companies. Nowhere is this more true than in the government-infested energy industry, where solar and wind companies demand (and get) exorbitant subsidies at the expense of taxpayers, and at the expense of truly practical energy technologies such as coal, oil, and natural gas.

Given this sad state of affairs, I was particularly delighted to see a sober, realistic analysis of the many pitfalls of solar power by an executive in the solar industry.

David Bergeron, president of SunDanzer Development, Inc., which manufactures solar-powered refrigeration equipment for customers in remote locations without access to cheap electricity from an electricity grid, recently wrote an analysis of why solar is woefully incapable of providing the reliable, cheap, large-scale electricity generation that solar advocates claim it can.

Here are some highlights:

Solar Photovoltaic (PV) electric panels are far too expensive to provide a sustainable energy alternative to homes and businesses already connected to the electric utility grid. The on-grid solar industry and associated jobs are artificial and only exist because of special government favor.

For PV to be economically feasible, the “installed” cost would need to be equal to or less than $1/watt. This is the holy grail of the industry and consistent with the statements of Dr. Chu, the Secretary of Energy. Very large-scale PV systems are reaching $4/watt today, which is admirable, but still four times too expensive to be a credible solution.

…

Can we get to $1/watt any time soon?  At present, solar panels are about half of the system cost. The remaining cost is mounting hardware for the panels, the inverter to make AC power, wiring, labor, and permitting. So even if it were possible to manufacture panels for free, the balance of system cost is still about $2 per Watt and the industry would continue to be non-sustainable without substantial subsidy.

…

Perhaps the most egregious myth is the claim we are helping our economy and creating jobs. This is false. Money for the solar subsidies comes from taxpayers and ratepayers. As this money is taken from us, spending for other goods and services must fall. This causes economic and job losses in other segments of the economy, such as in restaurants, department stores, and service and manufacturing companies.

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In today’s Wall Street Journal, I have an op-ed piece entitled “Obama Follows Nixon on Oil Spill.” It explains how Richard Nixon’s anti-oil, anti-development response to the Santa Barbara oil spill of 1969 helped bring about an energy crisis–and how President Obama’s policies are ominously similar. Read it here.

In general, I have found that studying the history of oil is essential for understanding the present world. For example:

• How did so much of the world’s oil end up in the hands of dictators even though it was discovered by citizens of free countries?
• How is the history of oil connected to the history of terrorism?
• What policies led to the greatest amount of production and innovation, and what caused the least?

I cover these and many more questions in my course “The Triumph and Tragedy of the Oil Industry.” Listen to it online or download in MP3 here.

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In the Wall Street Journal, my colleague Alex Epstein argues that overreaction to the 1969 Santa Barbara oil spill left the country dangerously vulnerable. The piece begins:

Which former president does Barack Obama most resemble? When it comes to handling oil spills, the answer is Richard Nixon. Like our current president, Nixon too presided over a major offshore oil blowout—the three million gallon Santa Barbara spill of 1969. And, like Mr. Obama, Nixon responded by whipping up anti-oil sentiment and passing a sweeping moratorium on drilling.

This parallel is important to keep in mind, because Nixon’s reaction helped cause the worst energy crisis in American history.

Read the whole thing.

If someone were to propose today that the United States implement a “new,” “exciting” economic idea called “socialism,” in which government central planners effectively owned and controlled the entire economy, we would surely point out that such a system has already been tried and implemented, with disastrous results.

We should do the same with the supposedly “new,” “exciting” economic idea known as the “green energy economy”–in which government central planners mandate that practical energy sources (coal, oil, natural gas, nuclear) be replaced by solar panels, windmills, dung piles, and corn fields. (Thomas Friedman’s latest column is a typical endorsement of such policies.)

There is nothing new and exciting about the “green energy economy.” There is a place overseas that has already provided stark evidence of what it means to pursue a “green energy economy,” and it’s not pretty. That place is called Europe, and it’s a testament to what happens when you force unproven, inefficient energy down people’s throat. A recent post at the free-market energy blog Master Resource explains:

Renewable energy has proved an expensive and unreliable source of energy everywhere it has been tried on a significant scale…Italy, Spain and Germany are cutting back on their taxpayer/ratepayer-funded generosity toward politically correct energies….In all, Europeans have tested the theory of a “clean energy revolution” to destruction.

For the gory details, read the whole article here.

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My colleague Alex Epstein has published a new commentary at Forbes.com, “Three Myths About Oil.” Noting that the average American consumes three gallons of oil a day, Alex observes that nevertheless,

… oil’s detractors call it an addiction, downplaying its enormous benefits as fleeting pleasures that will necessarily bring long-term pain and destruction. An oil-based economy will inevitably collapse, they say, because oil is finite and will run out, because foreign oil causes terrorism, because oil, as a fossil fuel, will bring about climate catastrophe. Let’s examine these myths about oil.

Read the whole thing.

Whenever you hear about the miracles of wind power, always keep in mind one thing above all: because the wind blows erratically, and sometimes doesn’t blow at all, wind power is inherently unreliable. As I wrote in a recent piece on “green energy,”

where coal, oil, and natural gas can be burned whenever power is needed, at the exact quantity needed, wind and sunlight can be harnessed only when the weather cooperates–and electricity can’t be stored [in significant quantities] for a rainy day. Thus, they are always used as supplemental, not primary, sources of power on electric grids.

An engineer friend of mine recently witnessed this fact firsthand while driving east of San Francisco. He sent me this still picture that is as good as a movie–because the windmills were not moving. As he wrote: “Good thing Californians have reliable coal and gas-fired power on the grid elsewhere; Gaia did not see fit to bless us with breeze-based power today. Hundreds of them, dead still.”

Anytime you see an electric car you are likely to see a “zero emissions” sticker on it, implying that the driver of the car is driving without emitting CO2. Electric car companies are using this idea to market their cars, and to imply that those of us who drive gasoline-powered cars should feel guilty. For example, Coda Automotive, an electric car company, brags that its not-yet-existent sedan, once it exists, will be “An all-electric car to let you drive your way out from under the thumb of big oil. To help steer us away from climate change, polluted skies…”

It is true that electric motors do not emit CO2, and electric cars don’t have tailpipes that emit CO2 or anything else. But ask yourself (or Coda): Where does the electricity that charges the “zero emissions” car come from? Answer: It almost certainly comes from burning coal or natural gas, by far the leading sources of electricity production in America, because they produce the cheapest, most abundant power. Another question: What happens when you burn coal or natural gas to produce electricity? CO2 is emitted.

To call a car “zero emissions” because it generates CO2 at the power plant instead of the engine is intellectually indefensible–and dishonest. And it is a particularly dangerous form of dishonesty, because it promotes the idea that oil and other fossil fuels are dispensable to our standard of living. They are not.

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In his latest piece, Wall Street Journal business columnist Holman Jenkins argues that today’s electric cars are “welfare wagons”–overpriced, underperforming novelty items that the rest of us will be subsidizing for upwards of $7,500 apiece. Of Nissan’s much-touted Leaf, he writes:

the Leaf is a car for a wealthy hobbyist, good for a trip of 100 miles after which it becomes an inert lump at the end of your driveway (or behind a tow truck) for the many hours it will take to recharge.

Read the whole thing.

For those inclined to believe that today’s electric cars are just going through the growing pains of any new technology, consider what a wise man told Henry Ford over 100 years ago, when electric cars were also considered the wave of the future.

Electric cars must keep near to power stations. The storage battery is too heavy…Your [gasoline] car is self-contained—carries its own power plant—no fire, no boiler, no smoke and no steam. You have the thing. Keep at it.

The wise man’s name? Thomas Edison.

Of course, we can’t and shouldn’t rule out the possibility that some brilliant company will overcome all the obstacles to practical electric cars–but that company must prove itself on the free market, not gorge itself on other people’s money.

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