Energy Policy, Global Warming and Economics

One of my economic students wondered what all the ruckus was about “Global Warming” and how its might be related to the recent bankruptcy of Solyndra. We had the following conversation.

We can talk about Global Warming, or whatever that notion might be called today, but that is not the point. The point is money, or in the language of economics — supply and demand interaction, specifically.

Alternative fuels like solar, or wind, or thermal, or wave power, are not cost efficient at this time. Production costs are high, demand is low and therefore the price willingly paid by consumers is also low.  That is why Solyndra asked for and got over $500,000,000 in government loan guarantees, then filed for bankruptcy a few years later, because their product was not selling. These alternative fuels mostly exist today because of government subsidy — not because entrepreneurs are getting rich producing them.

Why does the government subsidize alternative fuels?

Good question. Perhaps it is because burning oil and natural gas produce carbon dioxide (CO2) emissions that ends up in the atmosphere, which is bad. Don’t forget, coal fuel burns carbon too, producing more CO2 emissions, so more bad, because when CO2 gets into the atmosphere, climate changes occur, according to many scientists.

BTW – If you are concerned about the approximate doubling in gasoline prices during Obama’s four years in office, you may not want to raise those gasoline price increase issues with Obama’s Secretary of Energy, because he (Steven Chu) likes the price increases as government subsidies for alternative fuels paid for with taxpayer dollars are more effective today than they were four years ago.

But science is untainted by money or politics, so we can believe scientists, can’t we?

Of course we can, therefore, we MUST use alternative fuels immediately, or disaster lurks. Or does it?

Is there a  mostly cost efficient,”clean” fuel whose burning does not produce CO2 emissions?

Yes, there is – nuclear power, and France produces 70% of their energy using nuclear plants, but that is another story.

Wait, nuclear power  is dangerous, so claimed the movie China Syndrome – and movies only tell the truth, right? Stop please, you are confusing me. What is exhaled by humans when we breathe oxygen?

That is an easy question, CO2. Oops, we humans are bad too, I guess.

But wait, what do plants breathe?

Oh, yeah, CO2. And guess what plants give off during photosynthesis — oxygen, which humans breathe!

Hold on, I am really confused — is there a hoax going on here, or something?  All we need to do is plant more trees and we should be fine? Is this a joke? What about the money trail?

As I said earlier, the entire matter is really related to economics. Billions and billions of dollars are at stake, even trillions of dollars, over whether the taxpayers support alternative fuels as the main energy source to be tapped in the future such that coal, oil and natural gas are supplanted around the world.

Power and control and money are all bound up together with energy policy. If politicians successfully change the energy policy to one they can tax and control, then they can easily find the money for their re-election campaigns. Finding money for election campaigns is a hard and arduous task. President Obama went to over 140 campaign fund-raisers this election cycle. Much easier to change the energy policy and create an endless supply of new energy money by rewarding special interests with political favors you can control.

If you ask the question “who benefits?” when you hear government officials and people like Al Gore demonizing natural gas, oil, and coal, then your picture of what is happening grows clearer. If one follows the money and asks reasonable questions, then the game is up. Look at recent history. Over the last 12 years or so, the temperature of the earth has cooled a bit. In response, the wordsmiths changed the name from “global warming” (since it was no longer happening) to ‘climate change’.

Hold on, how can ‘climate change’ not happen?

Of course climate change happens, but it is just natural and not necessarily harmful.

Are you suggesting that scientists are not telling the whole story? Are you saying that in order to obtain funding (billions of dollars a year) there is a conclusion your research into so-called “scientific climate studies” must draw to be eligible for funding?

Hmm. Drawing a conclusion, before you do the study and amass data to test your hypothesis, is not science. It seems science has been politicized and money is really at the heart of the notion of “Climate Change”.

So what is going on, really?

Another good question. Anyway, is there really such a thing as man-caused climate change? I see too much money and too much power being chased by people who want to influence policy issues to come to that ballyhoo-ed conclusion.

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