Monday, May 12, 2008

Are "Alternatives" Worth the Price?

An opinion piece in the Wall Street Journal today titled "Wind ($23.37) v. Gas (25 Cents" talked about the heavy subsidies being given to wind, solar and clean coal. Its main point is that taxpayers are carrying a heavy burden to bring these clean energies to market, and the clean companies want more subsidies. It also says that these companies have been around awhile and have yet to bring lower costs to the market.

I beleive that a prolonged period of high oil prices, like we are in now, will let the subsidies do their job. The technology will be reached. It won't be instant, as companies have to muddle through mistakes and find the best and cheapest products, but it will sort out. The reason it didn't develop when many of these technologies were introduced (like in the 70's) is oil prices came back down. The infrastructre of oil was in place, and it was cheap to produce and bring to market. As long as oil prices stay high, consumers will demand alternatives at a reasonable price. It can happen, but it will take time. I'm not a big believer in subsidies, but in this case, I'm a fan. This type of transformation will take as much promotion as it can get.

These clean energies can become reliable and sustainable, in my opinion. But they have to be given a chance. In the mean time, our goverment needs to find ways to help lower gas prices. We either have to up production or drop consumption. Pretty simple. It is going to be hard for the goverment to convice oil companies to invest in new production if we're handing out massive subsidies to the very companies that will eventually make oil companies obselete. So to me, we need to figure out ways to lower our level of consumption.

Anyone else have ideas?

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