Saturday, October 22, 2011

The World, the Whole World!

A hundred years ago the idea of a world powered by anything but coal would have seemed a daydream. The transition to petroleum took place naturally and through ordinary market mechanisms. 

The transitions away from it, driven both by market mechanisms and by political will can make the changeover to other forms of energy quicker and less costly than the change from coal to oil was. 

Henry Kissinger once said that the way to become energy independent was to put a floor under the price of oil. The reason capitalists are so reluctant to invest in alternate energy sources is that the price of their main competitor, oil, is so volatile. No one will lay down a billion to build an energy plant if the price of oil might plunge and make the plant unprofitable. If there were a floor under the price of oil, money could be invested in any number of ventures to produce energy by other means. 

The actual radicals are not the conservationists. The real radicals, the ones who will do any crazy thing at all if there is a chance of a decent return on it, are the capitalists. Let them have a shot at the problem. They can't until they have some way to know what the prices are going to be.


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