Sunday, May 04, 2008

The Cost of Energy

With high oil prices in the news, a certain talking point has gained traction, and it goes something like this: "When conventional energy prices get high enough, it will make alternative energy sources economically viable." This argument astounds me, because it is both literally true and at the same time not very helpful. It is bad news made to sound good. It is much like saying that once the price of a glass of water reaches $100, drinking a glass of Dom Perignon champagne instead will be economically competitive. That's great, except that most of us won't be able to afford either one.

What this talking point really means is, "in the future you might have a choice between expensive alternative energy and expensive conventional energy." That may be good news for the environment (if it results in less pollution and other undesirable side effects), but it is certainly not good economic news.

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