Tag Archives: friedman

Thomas Friedman wants you to pay more for energy

I can’t say it any more clearly than that.  Watching Meet-the-Press, he advocated that government should mandate a certain percentage of electricity be generated from renewable sources.  The only reason that they would need to be mandated is that they are more expensive, which power companies would avoid in order to reduce their costs*.  If renewable sources were more cost-effective, then energy companies would already be using them (or moving to them) to displace dirty-dirty-coal energy.  In fact, this is the case in some areas, namely where hydro-electric power is a big contributor.  Which raises the question — why doesn’t anyone talk about hydro-power anymore?  Now it’s all solar and wind farms… did Hydro cease to be a renewable, clean, technology?  Just curious.

Did anyone tell Friedman, or the rest of the alternative-energy loving population, that we’re in the middle of a financial and economic crisis?  If McCain claims that the economy is ‘fundamentally sound’, they’ll rip into him for being out of touch.  How is this any different?**

Anyhow, as long as mandates are driving adoption, you’re only going to get the minimum amount of ‘alternative’ energy sources to meet the mandate.  Above and beyond that, power companies exist to make a profit, and for the most part consumers are going to choose the least expensive energy option.  (Of course, there are some outliers who will pay more for alternative energy our of some sense of duty, guilt, or piety.)

Friedman’s hope is likely that by forcing enough power to alternative energy sources, there will be some innovation in alternative energy production that will radically change the game.  I’m not sure if there are any examples of this working in the past:  MPG mandates on automobiles have not encouraged innovations that created huge gains — even hybrids are barely enough to keep entire manufacture fleets above their EPA standards.  If federal mandates magically pushed us through these types of barriers, we’d all be driving 100 mpg (likely 100% internal combustion, since hybrid’s are more complicated than they’re worth) cars.  Or electric cars that go farther than 40 miles per charge…  Seriously, how that dinky little Smart car gets less than 100mpg, I’ll never understand.

OK, so MPGs was only one example — if anyone has an example of a federal mandate spontaneously causing leaps in innovation, I’m all ears.  And no, the government never mandated anything related to TCP/IP adoption…

Friedman: “What I say is if climate change is a hoax, it’s the greatest hoax ever perpetrated on the United States of America.” (which I thought was a Jesus reference, but now Google seems to be betraying me and not indicating the original source of the phrase; only recent antecendants).  He made this reference as though it was proof that global warming is real (after all, it couldn’t be an elaborate hoax!), completely oblivious to the fact that many reasonable people think otherwise.

“Because everything we would do to get ready for climate change, to build this new green industry, would make us more respected, more entrepreneurial, more competitive, more healthy as a country.”  Respected for falling for an elaborate hoax?  Entrepreneurial for developing solutions to a problem that doesn’t exist — and that in the end nobody is going to want to pay more for?  More competitive by investing more in basic scientific research? — OK, that might actually be valid, but if global warming is a hoax and we fund science aimed at solving global warming problems (ie. a level or two above basic science, like building a better hybrid-engine) then we miss the boat on that.  More respected?  Do you think the truly poor in the world have a huge amount of respect for us, while they starve, knowing that we’re spending discretionary dollars on wind-generated energy instead of dirty coal?  Do you think they’re thinking, “gosh, I’m hungry today, but at least American’s are treating the planet better”?  I’m guessing they’d rather have a full belly.  Better to buy dirty energy, send our savings to Africa, and sustain a young life that might solve some entreprenurial problems closer to his own home; and which might spill over to the rest of the world.

[quotes from Meet the Press transcript]

* let me state this another way:  if alternative energy sources were already more cost-effective, power companies would be turning to them en masse to reduce their energy costs and extract more profits from consumers.  the fact that this is not so is proof that alternative sources cost more (fully-loaded, lifecycle costs; not marginal costs)

** I know, I know; just as they’ll call for alternative energy mandates, and at the same time call for subsidies or exceptions so the poor won’t have to bear the burden.  so the Rich will pay all the alternative-energy excess…  and in their eyes it couldn’t be more fair than that.

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as dumb as he/we want to be

I just love picking on Thomas Friedman, for some reason:

Hillary Clinton has decided to line up with John McCain in pushing to suspend the federal excise tax on gasoline, 18.4 cents a gallon, for this summer’s travel season. This is not an energy policy. This is money laundering: we borrow money from China and ship it to Saudi Arabia and take a little cut for ourselves as it goes through our gas tanks. What a way to build our country.

No, not Saudia Arabia — Canada and Mexico! Canada is our #1 oil source (both crude and refined), and Mexico is #3. Combined they provide more oil than Saudi Arabia, Nigeria (#4), Venezuela, and Iraq, combined (or very close, depending on the particular month).  We import almost twice as much from Canada then Texas produces (I did not realize that).  But I guess shipping money to Canada doesn’t sound so nefarious, doesn’t have all the connotations of Cheney-Haliburton-Iraq backroom deals and such.

I think I figured out why so many people make the Saudi mistake — they are clearly the #1 oil exporter in the world. And I suppose the assumption is that since the US is the #1 importer, we must be buying their oil… but the reality just underscores the nature of the global oil market. I imagine we get oil from our closest neighbors first because pipelining is so much cheaper than shipping via tanker ships. As the price of oil goes up and oil shale in Canada becomes more cost-effective, the percentage of North American oil imported to the US could increase.

Anyhow, Friedman is all upset that the US government doesn’t have a significant wind/solar program:

The Democrats wanted the wind and solar credits to be paid for by taking away tax credits from the oil industry. President Bush said he would veto that. Neither side would back down, and Mr. Bush — showing not one iota of leadership — refused to get all the adults together in a room and work out a compromise. Stalemate. Meanwhile, Germany has a 20-year solar incentive program; Japan 12 years. Ours, at best, run two years.

Well, good for Germany and Japan. This shouldn’t be a source of consternation for Americans — we should take comfort that somebody, somewhere in the world is committing time and resources to develop better wind and solar power. Because here’s the thing — and I can’t believe Friedman ignores this point — IT’S A GLOBAL ECONOMY (isn’t he’s supposed to be Mr. Globalization?), and when/if great advances are developed, Americans and Canadians and Saudis (if they’re so inclined) will be able to buy this technology from the Germans.  German engineering gave the world the automobile and Heidi Klum — I’m willing to give them a shot at this…

I thought we had moved beyond the Cold War mentality of Not Invented Here, or maybe I’m just overly optimistic.  Transistor technology and computing was invented and revolutionized in America — does that mean that we’re the only country to benefit from computers and information technology? Of course not. The same will be true of eco-friendly power.

Unless, of course, the investments of Germany and Japan do not reap any rewards, in which case we should all be glad it is their misguided investment and not ours.  After all, don’t we have a recession to dig ourselves out of?

All I know is the next six months are critical… maybe then we should re-evaluate a federal/nationwide investment.  (just kidding)

Final thought:  domestic oil production peaked in 1970 at 9.6M barrels per day (about 2/3 of our current needs) but has trailed off to 5.1M barrels per day (a decline of 48%)… anyone got an easy answer why that is?  did the wells dry up?

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