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View Diary: Countdown to $100 oil (40) - Oil production plateauing (198 comments)

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  •  I suppose I want to know . . . (0+ / 0-)

    Why this will not happen without subsidies?  

    If things are really going to get as bad as everyone here claims, why do we need to subsidies the change to different technologies?

    My concern with subsidies is as follows.  They pervert the finding of true, efficient solutions.  Subsidies are written by legislators who are beholden to the companies and technologies of today.  Thus they are written to benefit these companies and technologies.

    What we get, then, is a bunch of crazy corn subsidies for the worst possible version of ethanol imaginable, among other things.

    Far better in my mind to, and I know this is heresy to some, let the market take its course.  Who is to say that the "clean" technologies of today will really be what solves the problem?  If they are, they should be able to do so on the open market, particularly if you really believe in near term sky high oil.

    If, on the other hand, we subsidize today’s tech, we give it an unfair advantage over a possible future tech which may be far superior but may not be developed if it is easier simply to work with existing tech and take the government handout.

    Thus it seems to me that subsidies entrench the technology of today and reward inefficiency and lack of innovation.

    Sometimes I think that I'm bigger than the sound . . .

    by TastyCurry on Mon May 14, 2007 at 11:55:39 AM PDT

    [ Parent ]

    •  We're already subsidizing oil (0+ / 0-)

      with the military in the gulf.  Kind of makes it hard for anything else to compete, imho...

    •  For market to work you need a true carbon price. (0+ / 0-)

      In an ideal world you price carbon emissions today according to the global economic cost of do-nothing climate policy and transportation energy security policy, and the market finds the most efficient way to avoid these costs.

      Four reasons why this can't be done:

      1. We don't have any idea of the full future cost of climate change or our oil dependency if we don't act.
      1. It is morally unjustifiable to discount costs to future generations, but future generations don't vote, so our politics biases towards present voters.
      1. The cost of immediate economic adjustment to a secure and sustainable energy and climate policy is severe enough that voters and politicians will lie to themselves about the need for such adjustment as long as they can. The American voters have not shown themselves to be paragons of deferred gratification in recent memory.
      1. Markets with constrained inputs and poor substitutes tend to have inelastic demand functions, which suggests market-led adjustments in transportation fuels will be made through catastrophic inflection points rather than gradual evolutionary change.

      My proposal relies on current infrastructure and presently-available and domestically-available technology which will become cheaper with order-of-magnitude increases in scale of production, so it produces climate and energy security impacts immediately and allows subsidies to be phased out as costs come down.

      "What is government itself, but the greatest of all reflections on human nature?" - J. Madison

      by berith on Mon May 14, 2007 at 12:22:42 PM PDT

      [ Parent ]

    •  Oligopoly (0+ / 0-)

      With a limited number of companies controlling the majority of energy distrobution it's extremely difficult for outside companies to enter the market.  Market forces rely on competition to take effect.  Subsidies encourage companies that would rather make an increasing profit off of a dwindeling resource, to consider investing in other resources.

      If there were 30 to 50 oil companies, then it wouldn't be an issue.  They would be fighting to get a leg up in the emerging market.  As it is, the oil companies have incentive not to let a new market emerge.  Even if an oil company discovered a way to turn sunshine into carbon free fuel at 99% efficiency, there's no reason for them to make a product using it.  It would destroy the existing market, and give them no garuntee of a leading place in the new market.  The best they could hope for is a boost in name recognition due to the discovery.  Unfortunately, warm fuzzy feelings don't translate into cash.

      Though I have to admit I hate subsidies as much as the next guy. There's not a lot else that can be done.  Existing corporations intentionally do everything they can to increase the costs of entering their market.  Want to compete with Fed Ex?  Fine go get a few thousand trucks, planes and drivers.  You can pay for that up front right?  Want to compete with circuit city?  Fine, buy a half million units from each of their suppliers to match the bulk pricing they get and then open up a few hundred mega stores.  A second mortgage will cover that right?

      The end message is that yes, you can compete with the big boys.  If you already have enough money to compete with them.  If you want to change what they're doing then the only options are regulation, boycott or subsidies.  Since regulations and boycotts are both destructive methods of control, that leaves subsidies as the constructive method.

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