The brilliant Barack Obama and his advisors think they can create millions of productive jobs by spending billions of taxpayers' money on subsidies for greenie projects. Obama has taken on board the green fiction that spending $US150 billion on windmills, solar panels and 'energy efficiency' would create 5 million jobs and promote economic growth. The President-elect became so taken with the grandeur of it all that during the presidential campaign he expressed the opinion that a mere $US100 billion spent over two years could produce 2 million green jobs.
The fallacious idea behind this economic lunacy is the belief that huge expenditures on so-called green technology will more than offset the costs of reducing the number of coal and oil-fuelled power stations. The Obama administration -in-waiting is relying on a number of studies that claim dollars invested in 'renewable' energy and energy efficiency could create four times as many jobs as would the same dollars invested in gas or oil projects. The leftwing Apollo Alliance, a San Francisco coalition of environmental and labor groups, released a study last September in which they claimed that an expenditure of $US500 billion would create five million green jobs.
These so-called green projects would be a great way to wreck an economy. Let us do this by the numbers. How can any one of these greenies claim with a straight face that an economy that from 1970 to 2006 created an additional 65,749,000 jobs needs Obama's guiding hand to generate jobs? (U.S. Census Bureau, Statistical Abstract of the United States: 2008). America's job machine is a staggering achievement that puts Europe to shame. It's free market processes that generate jobs and raise living standards, not ignorant politicians.
Now that we have dispensed with the nonsensical notion that meddling politicians are better at creating jobs than markets, let us deal with the green argument that their 'energy' projects would create more jobs than they destroy. It doesn't matter a damn whether they do or not. It has never been a question of creating jobs. So long as there is sufficient capital and land (land in the economic sense) to employ all those who are able and willing to work there can be no persistent wide-spread unemployment in a market economy. If it were just a case of creating jobs we could easily do what Keynes suggested and that is
. . .fill old bottles with banknotes, bury them at suitable depths in disused coal mines which are then filled up to the surface with town rubbish, and leave it to private enterprise on well-tried principles of laissez-faire to dig the notes up again (the right to do so being obtained, of course, by tendering for leases of the note-bearing territory), there need be no more unemployment and, with the help of the repercussions, the real income of the community, and its capital wealth also, would probably become a good deal greater than it actually is [italics added]. It would, indeed, be more sensible to build houses and the like; but if there are political and practical difficulties in the way of this, the above would be better than nothing. (John Maynard Keynes, The General Theory of Employment, Interest and Money, Macmillan, St Martin's Press for the Royal Economic Society, 1973, p. 129).
It is of course arrant nonsense to argue that a country can make itself rich by using part of its labor force to bury pound notes in bottles which are then dug up again. (I think Keynes was having a sly dig at the gold standard which he detested for putting a brake on inflationary policies). No one in his right mind could seriously argue that the ancient pharaohs' policy of building pyramids, a practice that seems to have drawn Keynes' admiration, enriched Egypt.
The real trick, as I have said so many times before, is to create more and more higher paying jobs. And this can only be done through capital accumulation. It is this process - usually called economic growth - that raises living standards, something that neo-classical economists would not dispute. But it is also at this point that the Austrians sharply depart from their neo-classical cousins. While the Austrians stress the fact that capital forms a heterogeneous structure consisting of complex stages of production, the neo-classical economists have adopted the view that capital is homogeneous and - in the opinion of many - a self sustaining fund.
This difference of opinion is crucial in discerning the dangers of Obama's green proposals. According to Austrian capital theory a continuing lengthening of the production structure raises productivity and hence real wages. But this can only happen if the community produces more than it consumes, the difference being savings that are used to produce capital goods. It should be clear by now that the process of capital accumulation raises the ratio of capital to labor, something that no neo-classical economist would take issue with.
This point needs stressing because what Obama and his advisors are proposing is the dissipation of capital. This means that the ratio of labor to capital would rise, a process guaranteed to lower the demand for labor thereby cutting real wages. We can see this in the greens' argument that their proposal would employ more people than would the building of coal or oil-fuelled power stations. But these power stations involve huge economies of scale that reduce unit costs. It is these falling costs that create more and more jobs right down the production structure to the point of consumption. What Obama's proposal amounts to is using taxpayers' money to deliberately create malinvestments that will lower living standards.
In a nutshell, according to Obama's logic green projects create more jobs because they are labor intensive. So are wheel barrows and shovels. Does this mean that all earth moving machinery should be banned by law? That scores of factories should be set up to manufacture nothing but shovels and wheelbarrows? Think of the enormous number of jobs this would create. And think of the gigantic wage cuts that such a policy would impose on the masses.
I am deadly serious about this comparison. There is no fundamental economic difference in principle between sabotaging the building of centralized power stations and the banning of bulldozers. The only thing that makes them differ is that the latter proposal is self-evidently stupid while Obama's proposal requires the kind of knowledge that most people do not possess - and that includes himself and his oh-so clever advisors
For those who think I am exaggerating, let us take a swift look at some basic facts. The upper limit for a windmill is about 59.3 per cent. This is called the Betz limit. What it tells us is that it is impossible for any windmill or wind turbine to turn more than 59.3 per cent of the wind’s energy into mechanical or electrical energy. In English so plain that even Obama and his advisors can grasp it - wind power is dilute and that's where its diseconomies of scale come from.
The same goes for solar panels. There is a fundamental physical law at work here. It states that the maximum amount of energy that the earth receives from the sun under optimum conditions is just under 1 kWh per square meter (11 square feet). So even if these panels were 100 per cent technically efficient they would still be grossly inefficient economically. (One should take note that greenies and their mouthpieces are always careful about never mentioning economic efficiency).
Diseconomies of scale mean rising costs, not falling costs. Another insurmountable technical problem is the scientific fact that the maximum power one can extract from a windmill is also proportional to the third power of the wind’s velocity. This means that even small changes in wind velocity will generate huge disproportionate changes in output, even with the best designed windmills.
A 1978 British study should give you some ideal of how inefficient these projects are. It calculated that it would take 20 million windmills with 100 foot diameter blades to meet the country's electricity needs. For America, it would have been something like 250,000 windmills with 300 foot blades. How many windmills would it take today? (That the study is nearly 30 years old is irrelevant. Physical laws do not change with the passing of time or politicians).
Denmark is one country whose energy mistakes have been ignored. It allowed itself to be conned by green fanatics into diverting masses of scarce capital into building wind farms, much to the disgust of real scientists and engineers. The country is now in the ridiculous situation where its theoretical generating capacity is three times that of peak demand.
Yet, according to a 1999 estimate, wind accounts for only about 1.7 per cent of electricity production - at a cost of about $AUS600 million in annual subsidies. On the other hand, gas-fired power stations have concentrated power and economies of scale, which means falling costs. By this means, the price of electricity is lowered. And that means lower input prices for industry which in turns expands the demand for more jobs.
Let us now take a quick look at what reasonably informed and intelligent people are up against. Anatole Kaletsky is the associate editor of the London Times and is considered to be a top-notch economist. He is also a rabid Bush-hater. To him Bush is "doltish" while Obama is of high intelligence. (New president could help US economy recover quickly 4 November 2008). In the same article he argued that if Obama levies "higher energy taxes. . . [he] would raise trillions of dollars in revenues," which in turn would fund greenie projects. In short, this genius thinks you can squeeze trillions out of capital intensive industries and still raise living standards.
Just in case you are thinking that I misrepresented him, this is the same pompous ass who argues that putting severe restrictions on Co2 emissions would stimulate growth and raise the demand for labor because they would "have the effect on the world economy comparable to a large-scale war." (Digging beneath the gloom, The Australian, 29 November 2000). That's right, this joker thinks waging war which means the destruction of men and capital is good for a country. I guess that's why those living in Germany and Japan in 1946 had the world's highest living standards.
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This article has 37 comments:
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Ulysses Benjamin Dover
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9 Comments
My Website
Nov 11 01:08 PM-
mdmrjsds
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94 Comments
Nov 11 01:17 PMAnyone who has studied thermodynamics (by that I mean understands thermodynamic efficiencies), realizes that it is energy that is the key to everything in the economy. The Austrians will tend to appeal to these folks because they are closer to the truth of reality. Their insistence on gold as a medium of exchange is close but flawed, and misses the point that you have made above, that capital is energy stored against entropy. The rest of their analysis is in line with thermodynamic understanding. And the universe, as far as we know, is in line with thermodynamic understanding. Probably our economic policies should be too. ;-)
Of course, Keynesians point to success of their policies. But those successes are all short term (years or decades, not centuries) and not sustainable. That is, they look at only part of a system, disregarding the flows across the system boundaries. They think they have discovered perpetual motion because they are adding energy without realizing it. Economic theory will eventually catch up with reality. Politics keeps it from seeing that connection, but it only slows it down. There are enough smart people there that eventually they will find their errors.
This would be much quicker if so many economists (all?) weren't scientific illiterates themselves.
I'll state it directly for those who still haven't got it. Economics can't contradict the principles of science, the underlying laws that our corner of the universe seems to run on. If it appears to, then you haven't understood the system, or aren't examining the complete system. Financial hijinks can appear to make something out of nothing, but it really doesn't. As we are currently discovering.
Energy is conserved, entropy increases.
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alldonewithtech
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5 Comments
Nov 11 01:26 PMI notice you don't say FOR WHAT TIME PERIOD? You are an idiot
and obviously work for/or long oil and republican. To go to such lengths
and outright lie...wasn't 140 bucks a barrel enough?? 5 dollar gas enough??? Getting nervous at 2 buck gas? This country needs solar
power (and no one can hold the sun for ransom like the frgin oil companies/mid east have) along with other alternatives
Along with the housing and banks...the third reason we are in at least a recession, GREEDY OIL TYCOONS!!
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LeoTheDog
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11 Comments
Nov 11 01:46 PMDid you ever stop to think for a moment that one of the reasons that Obama has taken to this idea is that it addresses SEVERAL problems at the same time? Whether every dollar invested in green technologies is the most efficient use of that dollar in a purely economic sense is not the issue. America is dependent upon a very dirty, very expensive energy source that comes from nations that are largely hostile to our interests.
Investing in green technologies WILL create jobs (economic benefit), while at the same time reducing our reliance on oil (environmental benefit) from hostile countries (national security benefit). A reliance on the free market with respect to America's energy needs, an approach you seem to want to continue, has disrupted our economy, polluted the planet (placing us in far greater risk over time than you seem to understand) and created incentives for the US to invade and occupy foreign countries at great human and financial cost.
Could it possibly be that the incoming president sees the BIG PICTURE a little more clearly than you?
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Mr.G
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104 Comments
Nov 11 01:48 PMam I mistaken or does this excerpt from your article show that denmark is energy sufficient times 3 - if so what is the problem with a country who has more energy resources than it needs?-am I reading this wrong
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1 of 4
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46 Comments
Nov 11 01:54 PM"I notice you don't say FOR WHAT TIME PERIOD? You are an idiot....."
Sorry Alldonewithtech, but maybe you need to read up on what a kilowatt hour (KWh) is:
* Watts is the rate of use at this instant.
* Watt-hours is the total energy used over time.
To measure use over a period of time, we use watt-hours, not watts. The way it works is, watts or kilowatts for the amount at a given instant, and watt-hours or kilowatt-hours for the amount over a period of time. 1 KWh is 1000 watts over an hour's timeframe.
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Foster J Fezziwig III
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4 Comments
Nov 11 02:01 PMWhat does this have to do with "diseconomies of scale?" The percent efficiency of a power generation device don't have anything to do with economies of scale. The question is how production costs of the turbines come down as you scale up manufacture of them.
The point you seem to be missing is that the wind is free. Thus, it's not relevant that you can't capture all the energy that passes through the turbine, as long as you get a non-trivial percent. Sixty percent efficiency from a fuel that costs $0 per unit is a lot better than 90% efficiency of a resource that costs a dollar/unit. (It's sixty-six cents better, to be exact.) And that's where the cost of the turbine comes in.
The math for wind power work like this:
1) amortization of fixed cost of turbine & installation (the plant).
2) the wind (fuel) is free.
3) price of electricity sold (revenue).
if 3-(1+2) > 0, then you have some hope of a reasonable business. The peak theoretical efficiency of wind turbines is irrelevant if the actual efficiency is good enough to make money. In a good location, wind power is currently very close to being as cost effective as other fuels. As traditional fuels get more expensive over time, wind will undoubtedly become more attractive.
So I don't really see what all of the fuss is about.
Finally, your anecdote about Denmark makes absolutely no sense. If wind power is so dilute and inefficient, if it cannot possibly supply our needs, then how did Denmark so easily overshoot? Or does the next paragraph also apply to Denmark? If so, then you are suggesting that they didn't overbuild wind at all, but rather, they over-built gas-fired plants. But that doesn't make sense, either.
This article is a mess.
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bosun.j
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254 Comments
My Website
Nov 11 02:14 PMIndeed, knocking Denmark for producing 3x the energy it needs! Of course this extremist-capitalist nutjob reviles that which disproves his point. Don't get him started by informing him that Denmark is a great place to live, a first class education through to PhD is FREE and superior medical care is also FREE!
I read on the plane the other day that wind farm engineers, that is those that manage the asset once online are able to write their own tickets. Some make as much as in the 70k range a year. Three months of classes! A good way to put more GM, Ford and Chrysler workers back to work too. Imagine that American workers making good wages to build energy independence!
Just more of the rah rah rah sis boom bah, we're number one silliness from the pump and dump folks! Very few outside their little club believe them any more.
On Nov 11 01:48 PM mr.g wrote:
> Denmark is one country from whose energy mistakes have been ignored.
> It allowed itself to be conned by green fanatics in to diverting
> masses of scarce capital into building wind farms, much to the disgust
> of real scientists and engineers. The country is now in the ridiculous
> situation where its theoretical generating capacity is three times
> that of peak demand.
>
> am I mistaken or does this excerpt from your article show that denmark
> is energy sufficient times 3 - if so what is the problem with a country
> who has more energy resources than it needs?-am I reading this wrong
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vitamin_j
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39 Comments
Nov 11 02:34 PMOnce I got past the windy and in this case unnecessary theoretical discussion (mostly ornamental, dressing up a weak argument in fancy terms), you seem to argue that Obama should not try to jump start an alt energy industry because coal and gas have already reached economies of scale. Basically, we wouldn't want to alter the status quo; after all it's already so well established.
This ignores the fact that some pretty modest government support has already brought solar within sight of becoming an economy of scale, with all the same advantages that supposedly can only exist with coal and gas. And that future support is intended to get them to the point of being self-sufficient economies of scale. That's with today's technology mind - that's not mentioning efficiency or manufacturing improvements, or recent advances like the discovery at MIT of a better catalyzed hydrogen production that could work with solar power. Finally, talking about any form of energy generation as if it exists without massive government incentives and direct or indirect support is just naive. The coal, gas, nuclear, and oil industries are already just as supported by government as your supposed anti-free market green sources would be.
You also seem to think that building alt energy generation, at least in the timeframe Obama discusses, means massively decommissioning coal and gas plants and immediately eliminating those industries. This is just not the case, and nobody serious is saying it will be anything but a very phased process. It just serves your argument that Obama's plan will kill jobs, which is the standard entrenched corporate interest argument against doing anything. You give a hysterical, straw man version of the plan so you can easily knock it down.
Finally, your article has no mention of carbon costs. They probably don't exist to you, but the Pentagon and the CIA are already planning for the security ramifications of global warming, insurers are already adjusting actuarial tables for it, and investment banks are already growing leery of financing coal plant building. Though I would argue that the equation is already in alt energy's favor, it really really becomes in alt energy's favor once you factor in the previously externalized cost of carbon.
Really, I could go on, but I'd like to get a sandwich. Very poor. You should read Neal Dikeman on cleantechblog. He's also a skeptic of the Obama plan, but at least he can write.
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Who's the patsy
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9 Comments
Nov 11 02:50 PMHe trots out the same old tired Fox News/CNBC/Larry Kudlow ideological premise that the Church of the Free Market is the Way, the Truth and the Life BUT I guess he hasn't been paying attention to what has actually been happening in the markets where his dearly beloved free enterprise banks have managed to bankrupt themselves misapplying capital. Maybe, just maybe, the free markets aren't perfect. And maybe, just maybe, government seed money does invest capital wisely. Like all the government seed money funding medical research; all the NASA money that produced so many improvements in technology; the Internet; the Eisenhower interstate system. Et cetera. At least there are enough successes when the government invests, and enough failures when the private sector invests, to warrant more than mere sloganeering on these issues.
We are a nation of pragmatists. Let us flush Gerard Jackson, George Bush, the Cato Institute and their coterie of ideological cranks down the toilet and get back to figuring out SOLUTIONS, not SLOGANS.
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bosun.j
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254 Comments
My Website
Nov 11 02:54 PMMay I have your permission to use "the same old tired Fox News/CNBC/Larry Kudlow ideological premise that the Church of the Free Market is the Way, the Truth and the Life" in the future? A great line!
Good post!!!
On Nov 11 02:50 PM Who's the patsy wrote:
> What a bloviator this guy is. Hard to take the great Gerard Jackson
> seriously when he feels it necessary to insert in every paragraph
> a sentence about how dumb Obama is (and therefore, by definition,
> how much smarter Gerard Jackson is). Funny, how I have never heard
> of Gerard Jackson before: he must be the most unsung genius in the
> United States. Him and the Unabomber.
>
> He trots out the same old tired Fox News/CNBC/Larry Kudlow ideological
> premise that the Church of the Free Market is the Way, the Truth
> and the Life BUT I guess he hasn't been paying attention to what
> has actually been happening in the markets where his dearly beloved
> free enterprise banks have managed to bankrupt themselves misapplying
> capital. Maybe, just maybe, the free markets aren't perfect. And
> maybe, just maybe, government seed money does invest capital wisely.
> Like all the government seed money funding medical research; all
> the NASA money that produced so many improvements in technology;
> the Internet; the Eisenhower interstate system. Et cetera. At least
> there are enough successes when the government invests, and enough
> failures when the private sector invests, to warrant more than mere
> sloganeering on these issues.
>
> We are a nation of pragmatists. Let us flush Gerard Jackson, George
> Bush, the Cato Institute and their coterie of ideological cranks
> down the toilet and get back to figuring out SOLUTIONS, not SLOGANS.
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Loopy
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8 Comments
Nov 11 02:58 PM-
alldonewithtech
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5 Comments
Nov 11 03:19 PMSolar Industry (and yes I do know what a KWh) Now you read and get educated>>>&g...
The entire PV industry has been experiencing tremendous growth, and that growth is expected to continue. In select regions that have the right combination of high electricity prices and good financial incentives, solar electricity already competes with conventional household electricity. As expected cost reductions continue, the size of these markets will continue to grow.
According to Solar Annual 2008, a new report by PHOTON Consulting, by 2012, solar power may constitute 35% of all electric capacity additions, and thereby move from the fringe of the electricity sector to the mainstream.
This subject and more will be discussed as part of the Searching for 'Second Solar'" Conference Series, a series of three conferences to be held in San Francisco on Dec. 2-4, 2008 by PHOTON Press, the world's largest publisher specializing in solar energy, and the Boston-based consulting branch PHOTON Consulting.
Dare to go???
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k9s-4-k8
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63 Comments
Nov 11 05:00 PM-
Luca Brasi
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6 Comments
Nov 11 05:22 PM"To measure use over a period of time, we use watt-hours, not watts."
i think the question was exactly that "period of time"
let me help u:
"each peak kilowatt of solar array output power corresponds to energy production of 4.8 kWh per day."
source:
en.wikipedia.org/wiki/...
1.244 m2 sunpower hi eff panel gives 225W peak
source:
www.sunpowercorp.com/P...
a 100 m2 rooftop installation such gives 18KW, approx daily 86KWh
annual electricity use/house: 10660 kwh
source:
www.ul.com/newsroom/ur...
that gives 29kwh daily vs 86 kwh of a currently available 100nm installation.
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Luca Brasi
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6 Comments
Nov 11 05:22 PM"To measure use over a period of time, we use watt-hours, not watts."
i think the question was exactly that "period of time"
let me help u:
"each peak kilowatt of solar array output power corresponds to energy production of 4.8 kWh per day."
source:
en.wikipedia.org/wiki/...
1.244 m2 sunpower hi eff panel gives 225W peak
source:
www.sunpowercorp.com/P...
a 100 m2 rooftop installation such gives 18KW, approx daily 86KWh
annual electricity use/house: 10660 kwh
source:
www.ul.com/newsroom/ur...
that gives 29kwh daily vs 86 kwh of a currently available 100nm installation.
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Tony Petroski
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107 Comments
Nov 11 08:37 PM-
Lin
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63 Comments
Nov 11 09:01 PMRe alternative , safer nuclear energy : There is a US company , thorium power That is working on the last of 3 big breaktrough stages to implement the use of thorium in present+ future nuclear reactors . Thorium is very abundant , unlike uranium which must be mined . Thorium cannot be proliferatized into weapons . thorium is way more energy eff , using up to 98% of the fuel , which has a halflife which is 90 % less than uranium . This firm will have patents on this " new fuel".Several foreign nations are very interested in + looking into the use of this new fuel for their countries . Thorium is one of the ' rare earth elements ".
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Evanoff
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1 Comment
Nov 11 09:22 PMLet's take another example: There are a limited number of trees. Arbitrarily, let's say there are 10,000 trees left in the forest and we are willing to cut down 1000 of them. If one man with a chainsaw can cut down 1000 trees by himself, that is one employed logger. If a law goes into effect banning the use of chainsaws (not so strange really: think about rules on net fishing intended to limit catch), and a man with an axe or handsaw can cut only 100 trees, then that is 10 logging jobs.
The point you are missing completely is the constraint of limited resources. Having the economies of scale, lower unit costs, more efficient (and fewer) employees all make sense only in an environment of unlimited potential growth of a whole industry and competition between companies for share of that growing market.
The world's fisheries are the first place where we have seen the need to reduce total catch and therefore limit maximum possible efficiency (an even BIGGER net could catch ALL the fish at once! why not?). With forestry, the maximum limit is drawing into focus. The question of peak oil production has been asked, if not yet answered.
And coal? How exactly do you put a mountain back together? It is one of the single most destructive sources of energy to extract. Have you ever been to an Appalachian strip mine? Personally, I'd rather have fluctuating electricity in my home on windless days, and a nice mountainside nearby for recreation, than a million watts of power in my house and nothing of beauty left to enjoy outside it.
Inefficient sources of energy are worth it for reasons that trump efficiency. I'll take the wind power, thanks.
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WayneS
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57 Comments
Nov 11 10:01 PMThey were going to become energy companies. When crude oil prices dropped in the 80's, just like now, the government forgot about their promises to back alternative energies.
If the "oil companies' were greedy, they would shut down their refineries and move out of the US. Refineries have lost money all year.
The government gets over half of the cost of a gallon of gasoline.
Over the last five years, ExxonMobil paid $16 billion more in taxes in the US than they made. They are are only one of over 500 "oil companies."
What is the government doing with this windfall tax?
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Illusional Delusion
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94 Comments
Nov 11 10:27 PMRather than depending solely on a resource we could deplete within our lifetime if we insanely wanted to in oil, why not try an interesting and indefinitely unconstrained solution like solar, wind or biofuel. Nothing is unlimited, so oil or even solar energy will dry up one day. One we can definitely see in our lifetime if we wanted to drill. One we don't unless the sun dies out tomorrow, which we can't predict more than the oil resources.
No harm building the infrastructure, although I would agree to concerns that its just another bubble. That is the people of the world's job to see that resources are put in the correct places, not just the government.
Personally, I see the shift from oil as an eventuality of the evolution of energy production, not a necessity nor a benefit. It does benefit us and our children in the long run, rich or poor.
btw, the sharp rise and drop in crude prices does tell us the demand for oil is as fickle as the people who speculates in them. Yes, there is a long term demand/supply issue, but can we move on to developing solar technologies anyway without the price of the oil being 150?
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bosun.j
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254 Comments
My Website
Nov 12 05:45 AMbosunjbkk.spaces.live....
And here:
www.energybulletin.net...
Are what is happening around the planet right now.
The only question you must answer for yourself is how you expect to survive it!
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Tim Miles
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56 Comments
Nov 12 08:31 AMTim
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investment weenie
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5 Comments
Nov 12 09:57 AMOh, btw, I am not really worried about the environmental impact related to all the governments of the world sucking energy out of the wind, sun and oceans...
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huangjin
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282 Comments
Nov 12 11:08 AMEven in a strong economy, the plans are inane. But in the current environment, raising the cost of energy is a recipe for disaster, as it was also government price hikes in the 1930's which exteneded the Depression for years. Although pouring milk into the river and forcing people to build windmills doesn't appear the same, the economic effects are the same. Wasted labor, wasted capital, and higher costs.