[quote=afx114]Why shouldn’t we be paying more for energy? Clearly what we pay isn’t equal to the true total costs of discovery/extraction/refining/transportation/defense/environmental cleanup/etc. Yes, I understand that higher energy costs are bad for the economy, but maybe our economy should learn to survive on the true costs of energy. Wouldn’t that make it stronger in the long run? Problem is, our current economy is an energy welfare queen.
Perhaps solar/wind/etc would be much more cost competitive if we were paying the true cost for things such as oil & coal. What is the current threshold at which solar becomes cost competitive — both with and without the subsidies that oil & coal receive?[/quote]
I’ll take it even further — Price points have no way of “valuing” energy or any natural resource for that matter.
The relationship between prices and natural resources is nonlinear. In other words, the market does not reflect long-term declines in natural resources such as oil. It has a default assumption(see blind spot) that replacements will be found. The market is like the float in a carburetor: as the engine demands more gas, the float falls and allows more gas to flow in from the tank. But the float has no information concerning the amount of gas left in the tank until the fuel line is unable to keep up with demand.
So it is with the market. As the demand for oil increases, the increase in price signals oil companies to pump more oil out of the ground – which lowers prices again. The oil market has no information about the amount of oil left in the ground until production is unable to keep up with demand.
Oil, in BTU terms, is the equivalent energy as a fit adult male working 40 hours a week for about a year. $20-30-40…..??? It’s completely subjective
As well as externalities, which completely exceed the scope of a pricing mechanism and would like to be forgotten by most economists and corporations, for obvious reasons — because the can’t deal with them in a realistic manner.
