Solving America’s Energy Needs Will Take Better Government, Not Less Government

We search for systemwide solutions that will minimize the cost of competition and that will maximize each citizen’s contribution to society. Many suggest that we eliminate government from the equation and let perfect competition work its way through the economy so that all will have the opportunity to contribute. Yet, America has anything but perfect competition.

The reason Thomas Paine’s pamphlet was so important to the Revolution was that it laid out in clear, laymen’s terms the true purpose of government in the evolution of society to be that merely as a representative extension of man through a larger society and not an ordained right of an individual to rule other men.

It was inspired by and dedicated to the writing of James Thompson’s “Liberty” that exclaimed society should not exist in the extreme of every man for himself. This is to a greater or lesser extent what we have today, built on the economic structure of imperfect capitalism. Why imperfect? many reasons….

One involves our energy system. It’s history is anything but perfect competition as you may know. In the beginning, utilities were something of wild west type competitors. Some emerged through mergers but most went the way of petitioning government to set up regulated monopolies to avoid duplication of assets. What then developed were cost plus entities that served local geographies. Some made better economical choices and were better run than others, resulting in much lower costs to their customers than might be experienced just 50 miles in either direction

And grids were designed to manage a local infrastructure as well. For protection against blackouts, utilities connected to each other and began to devise ways to allow physical power to flow between utilities, but the emerging transmission line structure was haphazard and contained many bottlenecks.

Much later, within the past couple of decades, a means to sell excess power to other utilities as a profit center developed, but it was hampered by several physical and political realities. First, power flows through least resistance physically and not by how utilities sell it. Therefore, there are few financial reasons to fix bottlenecks to the grid. Second, utilities are not purely for profit, they are cost plus, and do not have real competitive reasons to optimize profits, only to ensure they make annual targets to meet dividends and to allow the regulators to grant further expenses to continue building and expanding the utility. Therefore, the nation’s true supply optimization does not occur in a regulated environment.

And with such a regulation hindered system, no utility has the economic incentive to build electric grids to areas that could house wind or solar farms to sell to other utilities. And no utilities have the regulatory incentive to buy from such an economically optimized, national asset. For their incentive is not to optimize profits but to meet barely and consistently their annually set, regulated cost targets so they may increase next year’s costs and gain additional “plus” for their investors who invest for the consistent dividend returns.

America is not designed for perfect competition regarding a major segment of our energy needs. We have been hamstrung by government systems of regulation from the beginning and no outlet exists to fix this monstrosity but by redesign of the government infrastructure.

These are the simple facts that cannot be covered up by free market rhetoric. Every problem must be managed within the complexity of a systemwide solution set that pursues societal optimization.

Six Relevant Answers to Global Climate Change Questions

1) Is change occurring? How we can be even arguing about this one. The loss of polar ice is so overwhelming that anyone who denies change is occurring is sociopathically political.

2) Is change occurring due to manmade causes? The evidence suggests so. Scientific theory regarding greenhouse gases is valid. As greenhouse gases have increased, the number of large scale natural disasters has increased dramatically over the past 100 years from 73 per decade in the early 1900s to over 2,780 in the last decade, historically unprecedented. Is this as a result of release of combustion gases from fossil fuels that have resulted from captured hydrocarbon over millions of years? Perhaps so….

3) If the trend is not reversed, will it portend dangers for mankind? There is nothing to suggest that the number and intensity of natural disasters will reverse or that climate change will not continue to exponentially change. Once the polar ice caps are gone, their ability to help regulate earth temperatures will be gone as well.

4) Can mankind do something to help reverse the trend? If fossil fuel usage was eliminated worldwide immediately, the accumulating effects of climate change could be slowed, if in fact it is being exacerbated by manmade carbon combustion. However, even if we attempted to utilize all available technologies to replace all existing fossil fuel combustion, the process to replace fossil fuel use would take decades, and in the interim the crisis would continue to heighten.

5) The more important question is will mankind attempt to reverse or even slow the trend? The simple answer is most likely no. Human population is exponentially increasing and combustion will follow and exceed population trends. The Kyoto agreements were highly politicized and created wealth transfer from industrial nations to emerging countries. The politics of carbon cap and trade has attempted to punish last century’s polluters while giving newer polluters carte blanche to take over the helm. Yet, world power is concentrated in the hands of those that wield control of hydrocarbons and no one that has power gives that power up without a fight. No alternatives exist to allow those that currently have the power to keep it if they give up their control of hydrocarbons. Those that hold the hydrocarbon power are unlikely to relinquish it.

6) What then should be the response of the masses? Even if carbon use does not abate, we must support alternative energy development. Press forward for development of alternatives, even if they are currently more expensive than carbon energy. As carbon energy depletes, it will eventually cost more than alternatives. And as the data becomes clearer, if it in fact shows beyond all doubt that hydrocarbon combustion is destroying the ability of the world to support human life, the demand for change will overtake those that control hydrocarbonic power. If the world does not now develop financially sustainable alternatives to hydrocarbon economy, when and if the evidence eventually cries out for immediate change no matter the financial consequences, technology will not be able to meet the need and the world will suffer immensely. If America does not now lead the effort, our economy will be overtaken by those that do.