John Krehbiel
Common sense is a double oxymoron
by John Krehbiel on 30 April 2008
So gas prices are too high? Well lets cut the tax on gasoline. It’s just common sense that we’d save money, right?
Uh, no. Slightly lower prices will stimulate demand. Supply is inflexible. Price goes back up, and we just lost revenues.
The biggest problem is the lack of a coherent energy policy.
From the article:
While all the presidential candidates were railing about lost manufacturing jobs in Ohio, no one noticed that America’s premier solar company, First Solar, from Toledo, Ohio, was opening its newest factory in the former East Germany — 540 high-paying engineering jobs — because Germany has created a booming solar market and America has not.
2008-04-30 » John Krehbiel
1 May 2008 @ 4:01 am
I think the payback on solar power is now about 25 years. That’s how long it takes to pay for the system and start making money instead of paying for electricity.
If, as the article states, installing wind turbines is even more “capital intensive,” then that is some serious investment to risk.
I guess I’m awful, but I am not as enthusiastic about solar power as my DH is. I figure the technology is still developing. Let other folks work out the kinks. DH is ready to invest ASAP (I think he has a pretty gloomy forecast for energy prices in mind, and we are electric only here.)
Tax rebates or at least write-offs directly affect families like ours in our decision-making. The other big factor is that there is a significant wait from order to installation due to manufacturing / demand strain.
1 May 2008 @ 8:38 am
I disagree that supply is inflexible. Supply changes dramatically with the cost of oil.
If oil is $20 a barrel, it’s not economic to drill in a lot of locations. But lots of places are worthwhile is if it’s $100 a barrel. Likewise, various coal to gas and coal to oil technologies become cost-effective with higher prices.
The problem with the gasoline tax is that it raises the cost to the consumer without spurring development in alternative technologies (because the government is getting the money and not the energy company, which is who will be drilling new wells or developing new plants or whatever).
Last night on Glenn Beck I heard a discussion with the head of Jet Blue who said that he’s trying to use other technologies, like sugar to ethanol, but that the government is getting in the way. They didn’t elaborate, so I don’t know exactly what the story is, but it sounded as if there are lots of other technologies available for fuels that are being opposed by the government.
If that’s true it’s absolutely crazy.
1 May 2008 @ 10:55 am
Supply of petroleum is not the issue. You can’t burn crude oil in an automobile, and refineries run full tilt in the summer months and still don’t meet demand.
Using ethanol in an airplane is even dumber than using it in an auto. The amount of energy per gallon is 70% (IIRC) of that in gasoline, and jet fuel is even more energy efficient as a proportion of mass.
Raising the cost to consumers does spur development, as Deb’s comment shows. I think the payoff is better than she quoted, but tax rebates make it a lot more attractive, depending on where you live. Unfortunately, my house gets almost no sunlight when there are leaves on the trees.
1 May 2008 @ 11:41 am
Raising costs to consumers increases demand for a new technology, but if the money isn’t going to people who can effectively invest in developing that the new technology, it’s not as effective.
The problem in this country is that we have too much energy policy. If the market were allowed to decide — free of ethanol subsidies, limits on nuclear plants, limits on refineries, limits on drilling in Alaska, limits on offshore drilling, etc. — we’d be far better off.
21 May 2008 @ 3:00 am
Eat a third and drink a third and leave the remaining third of your stomach empty. Then, when you get angry, there will be sufficient room for your rage.