Monday, November 06, 2006

Where To On Energy

A frequent visitor, Kathy, asks whether I am in favor of alternate sources of energy. The answer is both simple and very complex. I believe in the market. If the market is left alone it will almost always do the right thing. I will make my conservative friends a bit nervous by saying that I think government may need to not only protect its citizens from invaders outside our boarders, but from those who would destroy our environment to make a dime. However, to the extent that government wields that sword, they need to move slowly and cautiously.

For the latest on global warming, head over to Mike William's latest post on the subject. I can't improve on his analysis or his sources. I believe we should be developing every possible source of energy, and the cleaner the better. And we should be seeking to conserve as much as possible. However, these efforts will happen with the market. If the smart guys who run energy companies and buy energy futures believe that oil is running out or falling out of favor, they will absolutely start putting their money into options that SELL and that are available. The market is "intelligent."

But if there is plenty of oil, and if folks keep buying all the makers can make, then smart owners of energy businesses will continue to put their efforts into oil. Simple.

The complexity comes in with the long development curve for many alternatives. Due to this long curve, there is also a whole lot of money needed to get to a new approach before there is a payoff. Should government have a hand in that investment? Maybe. That is a much harder question.

Where should we be spending the most money. Batteries. No matter what we do, we need storage. The government has been paying for storage of energy for over a century. Dams and the lakes behind them are just that. If solar power, electric cars, or hydrogen based systems are to ever have a chance, we will need much better batteries.

More another day.

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