The true cost of energy is hard to calculate
The guest column in last week's News-Times demonstrated how paying close attention to the ostensible bottom line can get you killed, or maybe get your children or grandchildren killed.
In his column, Riazul Islam criticizes government subsidized rebates and tax credits for wind, solar and methane energy generation and states that 'these technologies should succeed or fail on their own merits, not because government officials and lobbyists in Salem or Washington, D.C. favor them.'
By 'succeed on their own merits,' he means they should be profitable right now without rebate or subsidy. But how many of our industries truly succeed on their own merits now?
Government subsidies are well-known not only in conventional energy systems (how do you think those dams got built?), but also in other large businesses and even in conventional farming.
Yes, alternative energy companies have lobbyists in Salem and Washington, D.C. So do every other industry, and even every trade group and non-profit organization that can afford it.
The key point is that wind, solar and methane energy generation are renewable; they don't contribute to global warming; and they may be, or may be able to be made, non-polluting.
The problem with watching only the bottom line is that the bottom line does not include everything. Businesses calculate their bottom lines by subtracting their costs from their income, but they don't pay for all of their costs and neither do individuals.
How many people could afford to smoke if they were charged not only for their health-care costs (many low-income smokers have their health-care costs subsidized by taxpayers) but also for the health care of those who suffer from their second-hand smoke? If that was added to the cost of a pack of cigarettes, no one could afford to smoke.
In the same way, oil companies are not charged for the destruction to the environment caused by the burning of fossil fuels. They are not charged for the loss of life and property caused by the increase in severe weather due to global warming. If they were, the cost of solar or wind energy would look very good indeed.
These subsidies and rebates are designed to keep the alternative energy industries going until there is enough research and technological improvements to make the industries competitive in price with oil and natural gas. This will be easier in a very few years when stocks of oil and natural gas are low and the price is high. But in the meantime, the subsidies and rebates are succeeding.
Mr. Islam himself mentioned that wind and solar energy are falling in cost and technological improvements increase every year. That's because these industries are being kept viable by a government that recognizes that we desperately need alternative sources of energy if we are to survive the next 50, or even 20 years.
Beware of tanks bearing thinkers
Riazul Islam's claim that government subsidies to alternative energy research are skewing the market is a perfect example of how the marketplace of ideas is being 'skewed' by paid propaganda.
Note the credit line at the end of the article: the author works for the Cascade Policy Institute.
This is a 'think tank' that is bankrolled by giant corporate interests, and its sole and only purpose is to manipulate public opinion in favor of those corporations' goals.
Nationwide, well-financed think tanks with positive-sounding names are kept busy generating 'information' designed to convince us, the public, that Big Oil has our interests at heart and really deserves huge tax breaks despite the wild zigzags of fuel prices just before the last elections;.
They also argue that all the old-growth forests ought to be clear-cut and 'managed,' despite the accelerating destruction of forests worldwide, and wildlife species either going extinct or moving into our cities; that a huge political party that serves only the few most wealthy people and corporations is somehow serving us, the general public; that global warming is just a 'theory,' despite melting ice-caps and a vast majority of scientists and scientific evidence agreeing that global warming is happening with unprecedented speed; and that all of us 'consumers' ought to just shut up, sit quietly and allow the giant corporations to finish strip-mining the last of our planet's dwindling resources- and never mind the future of our children and grandchildren.
If Mr. Islam and the Cascade Policy Institute are truly so convinced that alternative energy is such a bad idea, they might check out Brazil, where locally-produced 'green fuel' is powering that nation's motor vehicles - a change that could never have happened without 'government subsidies.'
'Free' markets hardly free from influence
The nation is awash with think tanks whose mission is to promote the idea that there is something out there, somewhere, called a free market - a system of exchange that is unfettered by government regulation or any other type of interference.
The inevitable conclusion of the thinkers in these tanks is that businesses 'should succeed or fail on their own merits, not because government officials and lobbyists in Salem or Washington, D.C. favor them.'
This is the conclusion of guest columnist Riazul Islam of the Cascade Policy Institute in his column on alternative energy (News-Times, Nov. 29, 2006).
The thinking behind such columns is really very simple - markets are good; government regulation is bad. The reality, however, is that all markets depend on a platform of rules and enforcement that are established by extra-market entities. In other words, there are no unregulated markets.
In addition, like all other human created systems, markets are imperfect.
In spite of what some think-tank thinkers say, markets do not have some magical power to efficiently direct resources toward the fulfillment of all the values this (or any other) community holds dear, and markets tend to have unintended negative consequences. One might say that markets tend to be skewed if favor of the remote and powerful.
When someone like Mr. Islam bemoans the fact that a market is skewed, the critical reader should wonder whether the skewing is toward or away from local interests. One should wonder whether the skewing is in favor of a value the market otherwise undervalues.