With all the talk about energy these days, we should recognize one of the most significant sources of wind in the world, the hot air coming from Washington and the state capitals. Just imagine if we could efficiently harness it. This country would become energy independent and still have enough left over to power China, India and part of Mexico. That is based on only rough calculations, so don’t quote me on that.
Renewable energy sources have become the darlings of the political class. It doesn’t matter how inefficient, uncompetitive and economically unfeasible they are. If the title is ‘‘renewable energy’’ or ‘‘alternative energy,’’ there is a lot of wind being generated about it.
One thing is certain. If an energy source – alternative, renewable or traditional – was economically feasible, it would have been in production long before now. The reason that alternative energy sources are ‘‘alternative’’ is that they don’t make sense to any kind of entrepreneur other than a political entrepreneur.
Have you noticed the windmills the size of football fields along the countryside? They are sprouting up all over. They are wind energy generation plants.
Guess who pays for them. If you said ‘‘I do,’’ you would be right on the money, at least for a very significant portion of the cost. Heavy subsidies from the government shift the cost from the producer to the taxpayer. Large investors are clamoring to build thousands of these monstrosities, not because they produce a profit, but because they produce tax credits and accelerated depreciation and lots of cash from your pocket to theirs. It is political profit and not economic profit.
How about ethanol manufacturing plants? Political entrepreneurs are jumping in all over to feast on the free money that you so generously give them. On their own, without monetary subsidies, the plants would fail miserably, but thanks to your tax dollars, they profit handsomely. Solar energy? More of the same. Every alternative energy source is a great source of tax dollars, taken from your pocket.
You may say ‘‘Yeah, but the world is running out of fossil fuels. If we don’t develop alternative sources of energy, the economy will collapse. If the government doesn’t subsidize the development, there will be no incentive to invest and there will be no substitute for fossil fuels.’’
It is pretty well established that, even in the worst case scenario, all of the oil and gas wells in the world are not going to run dry tomorrow or next year or in the next 50 years. If the world does run out of oil, which may happen sometime in the far distant future, there will be a very slow decline over many years. As the supply gets tighter, fossil fuel prices will gradually increase and the alternative sources of energy will become more and more economically competitive. At that point, there will be no need for government subsidies, because they will become profitable on their own.
Over the last several decades, the government has provided many billions of dollars for funding research in wind energy and other alternatives. The result of all that spending is that 90 percent of all electricity generating windmills being installed in the United States are purchased from foreign countries. Your tax dollars have not made American companies competitive, but they have made wind researchers wealthy. That is the case for nearly all subsidized research in every field when science becomes just another government bureaucracy.
Even if alternative energy sources were economically feasible, it might be a helpful reality check to see what they would entail. One analysis of a global solar energy system calculates that it would consume at least 20% of the known reserves of iron and cover an area of at least 500,000 square miles of land, three times the area of the state of California. For wind power, 1,000 megawatts will supply electricity for about 100,000 homes. The EPA estimates that, using a 30% capacity factor, which is high for most areas, a wind farm can produce 5 kilowatts per acre. That being the case, it would take at least 200,000 acres, or about 312 square miles of wind farm supplying 100,000 homes. Now consider that 100,000 homes situated on half acre lots would cover only 78 square miles and you start to get the picture.
There will undoubtedly come a time when certain alternative energy sources will make sense. Until that time, hold onto your wallet, because the political hot air being generated will blow your dollars away.
By Daniel McLaughlin
8 September 2007
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