In many discussions about Peak Oil, economists are smug that the market will provide an alternative when oil gets too expensive. This, of course, focuses purely on the most pedantic definition of “alternative” – which includes things like demand destruction to the point of worldwide economic collapse – which is probably not what most people have in mind when they think of “solution”. Most “cornucopians”, as they’re called, believe the Magic Of The Market will provide new energy technologies when rising oil prices make them profitable; which ignores the reality that there is no energy source out there with anything approaching the “energy balance” of oil – i.e. the difference between the energy you get out vs. the energy you put in.
However, it’s been difficult to express this – for some reason, economists believe their soft science over the hard science of physics (specifically, thermodynamics, or in this case, energy return on energy investment).
Here’s a good short explanation of the difference between money economics and energy economics – IE, why the market can’t beat the laws of thermodynamics – for those Peak Oil cornucopians.
Fuel cells won’t save us. Electric cars won’t save us. Only taxing carbon and doing it quickly has any hope – and even then, it’ll be using the market to move from today’s default setting of “government provides more incentives for you to waste energy than to save it” to “energy becomes very expensive, giving you automatic incentives to conserve”.
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