What is energy?
Remarkably, modern science is not very clear on what exactly energy is. The term defies clear definition, so much so that famous physicist Richard Feynman said “it is important to realize that in physics today, we have no knowledge of what energy is. We do not have a picture that energy comes in little blobs of a definite amount.” The world’s most popular thermodynamics textbook, by Yunus Cengel and Michael Boles, has this to say on the subject: “Thermodynamics can be defined as the science of energy. Although everybody has a feeling of what energy is, it is difficult to give a precise definition for it. Energy can be viewed as the ability to cause changes.”
A common definition usually heard is that energy is “the ability to do work”, or “the ability to do work and transfer heat.” Wikipedia has a more precise definition: “In physics, energy is the quantitative property that must be transferred to an object in order to perform work on, or to heat, the object.”
I like to think of energy as an animating force that can move or heat objects, and access to energy as the ability to command this force to perform tasks valuable to humans. Humans bodies need energy to survive and function, and they obtain it from eating, primarily, but also from sunlight. This energy allows humans to function cognitively and physically, it is what allows human action. And beyond the energy of our own bodies, humans can act by directing outside energy sources to the satisfaction of our needs. From ancient times, humans have used their reason to devise ways of deploying outside energy sources to perform work for us, resulting in a higher productivity of their actions, helping us economize time. Deploying energy is an economic act which deserves close inspection by economists, as it is no different from trade, capital accumulation, or money as a method for increasing the quality and quantity of our time on earth. While economics textbooks, both the mainstream and Austrian variety, will not generally discuss the economics of energy as a main topic, I believe the economic reality of the modern world merits the inclusion of this topic, as understanding it is essential to economic decision-making in the modern world. One cannot understand the economics of the division of labor and capital accumulation without reference to the increased energy that inevitably accompanies them.
Energy in human history
The utilization of energy sources external to the human body is an act in which humans have engaged all throughout recorded history, and even before that, as can be discerned from archaeological records.
In nomadic pre-agricultural societies, humans used the raw energy of nature to survive. Fire would help man stay warm, running rivers would clean his body. As humans became more sedentary and settled, they developed the capacity to invest in more powerful, sophisticated, klom,;-+ and reliable energy sources.
Man’s own energy: energy of our bodies obtained from sun, firewood, and foods.
Stationary natural resources and domesticated animals
Energy from domesticated animals, woodfire, wind, running water.
Highly processed earth sediments with high energy content: coal, oil, gas.
The utilization of large amounts of energy ending slavery.
I don’t think modern capitalism of the late 19th century as described by Mises would have been possible without the steam engine.
We can understand each major change in human economy as a function of the change in the source of energy
Energy and freedom
In times when human productivity was very low, and technology primitive, there were very few ways for humans to get more work done to meet their ends. One of the most effective sources of energy one could use was the labor of other humans. But if man had very low productivity, he needed his own labor for his own survival; this meant he could rarely afford to pay others, or have them pay him. Opportunities for mutually-beneficial employment would be scarce in such a setting. Should one man want to procure the energy of another to serve his needs, he would have to coerce him to do so.
As productivity increases through the development of technology, it becomes possible for humans to secure their needs through the deployment of increasing quantities of capital rather than the labor of others. The pressing need for the labor of others that could drive one to enslave them declines. Machines can do much of the work of the slave, and can cause fewer problems than a human constantly yearning to break free. On the other hand, as productivity increases, the value of an individual worker increases.
Low productivity makes survival critical, and makes enslavement profitable.
In the context of energy poverty, having another human being provide you their energy was extremely significant. It could roughly double the energy you are able to direct to meeting your needs. But in the context of energy abundance, where each human uses the energy of 200 humans, adding an extra human as a slave contributes very little added energy in percentage terms. As energy sources invaded human life increase our productivity and standard of living, the marginal benefit of enslaving a human being shrunk significantly. Further, as capital accumulation and modern machinery became more central to the production process, the worker’s ability to maintain the machinery and not damage it became far more valuable than the energy they can dedicate. A slave could not be trusted with expensive machinery. A free man could.
As the capital causes productivity increases, the role of the worker moved from grunt work to more intellectually stimulating work, requiring intelligence. The
The value of energy
Energy offers us utility, and it is scarce, so that makes it valuable. The progress in the quality of human life can best be understood as the increase in the energy available to the human being to perform the tasks they want. Comparisons across the world today, and across time, can vividly illustrate the enormous value that access to energy entails. Our modern world is largely the product of the development of technologies that give us regular access to huge quantities of energy. Modern civilization and most its achievements and essentials would not be possible without levels of energy consumption that are complete outliers by historical standards.
The attached Figure 2, from the study ‘Energy Consumption and Quality of Life’ by Cesar Pasten and Juan Carlos Santamarina shows the correlation of energy consumption per capita with improved water access, life expectancy, infant mortality, mean years of schooling, electrification, and gross national income. As is apparent, the more a society is able to harness and consume energy, the more it is able to provide itself the basic needs of modern life.
Taking a closer look at GDP, the relationship is very clear and has been for a very long time: More energy consumption translates to more economic production, and consequently, better standards of living.
Figure 4 shows the relationship between energy consumption per capita and the share of the population living in extreme poverty. No country that eliminated extreme poverty consumes less than 10,000kWh/capita/year, and no country that has more than 20% of its population in extreme poverty consumes more than 10,000kWh/capita/year.
The progress of humanity has been driven by technological advancements that unlock the energy latent in hydrocarbon fuels. The fact that most humans today live protected from most of nature’s harms, can stay warm in the winter, and can travel faster than their running speed is due to the industrial revolution innovations that gave us various forms of engines to access the energy present in the three main hydrocarbon fuels: coal, oil, and gas. As John Cross put it:
“The history of economic development is the history of the amount of energy brought under human control. Economic historians have observed the close relationship between economic growth and energy consumption as we put more energy to work for us. American economist Deirdre McCloskey called the surge in energy use that began around 1800 “the Great Enrichment.” The benefits to mankind have been enormous, extending life expectancy, increasing food output to sustain burgeoning populations, and lifting the standard of living for most people to levels not even royalty could aspire to just a few centuries ago.
The late Italian economic historian Carlo Cipolla attributed both the Agricultural Revolution thousands of years ago and the Industrial Revolution starting in the late 18th century to people harnessing energy power…
Fossil fuels played a negligible role in supplying energy until the Industrial Revolution. While everything on the planet is a possible source of energy, fossil fuels proved especially efficient and convenient in meeting the energy demands of industrialization. In Cipolla’s words, the Industrial Revolution “can be regarded as the process whereby the large scale exploitation of new sources of energy by means of inanimate converters was set on foot.” Coal was the first widespread source of inanimate energy, rising from 10 percent of Britain’s energy supply in 1560 to 60 percent by 1750, in the process ending Britain’s deforestation. This began a cumulative process, where a rising supply of energy stimulated more economic growth, which boosted education that led to the discovery of new sources of energy, notably other fossil fuels.
The first commercial use of fossil fuels was kerosene to generate light and end our perpetual plunge into darkness after sundown. (This stopped the widespread slaughter of whales, whose oil until then was the main source of indoor light.) The U.S. pioneered the exploitation of oil in the 19th century, a mantle it is reclaiming today thanks to innovative technologies to develop shale deposits. By 1860, the oil age had begun in earnest due to the development of drilling technology in Pennsylvania.
In his excellent book The Moral Case for Fossil Fuels, Alex Epstein makes the compelling case for how hydrocarbon fuels are the root of modern prosperity. Life everywhere until the 16th century primarily relied on burning wood for the provision of energy. Compared to modern hydrocarbons, wood contains much less energy per unit of weight. As the utilization of coal started in the 16th century, and later was followed by oil and gas, the amount of energy available per person expanded enormously, and with it our quality of life. To visualize the true benefit of energy for our lives, Epstein invites you to imagine the energy you consume today in terms of the energy consumption of humans performing tasks for you. By that measure, he finds that the average American has 186,000 calories at his service daily, or the energy equivalent of 93 humans. Before modern fuels, such an amount of energy was rarely ever available for anyone. Only the richest kings could dream of having as much energy at their daily disposal, either in the form of combustible wood, or enslaved humans.
Another way to appreciate the importance of hydrocarbon fuels to our modern way of life is to realize how much more power it has afforded us. In physics, power is defined as the rate of doing work over time, which is what matters for many jobs that call for high quantities of energy over short periods of time, such as moving heavy weights. For instance, energy is plentiful in sunlight and wind, but it’s difficult to quickly harness it for generating enough power to move heavy loads. The introduction of hydrocarbon fuels has vastly increased humanity’s potential for generating power, as can be seen from Figure 6 taken from Vaclav Smil’s World History and Energy:
The amount of power that a modern day steam turbine produces is more than a million times the power that can be produced by a horse, which was the state of the art in power generation up until around 2,500 years ago. It is worth noting that the power from water turbines is almost up there with the power of steam turbines. Water turbines are placed at rivers and waterfalls and, combined with an electric generator, they convert running water’s energy into electricity. Hydroelectric energy is responsible for around 16% of global electricity production.
Transportation can happen through walking, or cars. Cars consume far more energy per km traveled by the passenger. And yet, people still use cars. Why? Because it’s not human energy.
As human ingenuity has advanced, the ways in which we’ve taken advantage of the naturally occurring energy in our planet have multiplied in both magnitude and efficiency. The result is that people every day from all around the world are climbing out of poverty is in no small part due to their ability to use more energy in their daily life.
One of the most common misconceptions about energy is that it is scarce or limited. In the popular imagination, the earth has a limited supply of energy that humans consume whenever they heat or move anything. This scarcity perspective views energy consumption as a bad thing because anything that consumes energy depletes our planet’s finite supplies of energy. Reality is very different.
The total amount of energy resources available for humans to exploit is practically infinite, and beyond our ability to even quantify, let alone consume. The solar energy that hits the earth every day is hundreds of times larger than total daily global energy consumption. The rivers of the world that run every hour of every day also contain more energy than global energy consumption, as do the winds that blow, and the hydrocarbon fuels that lie under the earth, not to mention the many nuclear fuels we have barely begun to utilize.
To begin with the most obvious of energy sources, the sun alone showers the earth with 3,850,000 exajoules of energy every year, that is more than 7,000 times the amount of energy humans consume every year. In fact, the amount of solar energy that falls on earth in one hour is more energy than the entire human race consumes in one year. The amount of wind energy alone blowing around the world is around four times the total energy consumed worldwide. Some estimates put the potential hydroelectric yearly power capacity at around 52 PWh, or a third of all the energy consumed in the world. There are no accurate estimates of the amounts of hydrocarbon fuels that exist in the earth, but the closest estimate we have (proven oil reserves) is constantly increasing due to new discoveries, and at a pace greater than that of the increase in consumption of oil, as discussed in Chapter XX.
The belief that resources are scarce and limited is a misunderstanding of the nature of scarcity, which is the key concept behind economics. The absolute quantity of every raw material present in earth is too large for us as human beings to even measure or comprehend, and in no way constitutes a real limit to what we as humans can produce of it. We have barely scratched the surface of the earth in search of the minerals we need, and the more we search, and the deeper we dig, the more resources we find. What constitutes the practical and realistic limit to the quantity of any resource is always the amount of human time that is directed toward producing it, as that is the only real scarce resource (until the creation of Bitcoin). In his masterful book, The Ultimate Resource, the late economist Julian Simon explains how the only limited resource, and in fact the only thing for which the term resource actually applies, is human time. Each human has a limited time on earth, and that is the only scarcity we deal with as individuals. As a society, our only scarcity is in the total amount of time available to members of a society to produce different goods and services. More of any good can always be produced if human time goes toward it. The real cost of a good, then, is always its opportunity cost in terms of goods forgone to produce it.
In all human history, we have never run out of any single raw material or resource, and the price of virtually all resources is lower today than it was in past points in history, because our technological advancement allows us to produce them at a lower cost in terms of our time. Not only have we not run out of raw materials, the proven reserves that exist of each resource have only increased with time as our consumption has gone up. If resources are to be understood as being finite, then the existing stockpiles would decline with time as we consume more. But even as we are always consuming more, prices continue to drop, and the improvements in technology for finding and excavating resources allows us to find more and more. Oil, the vital bloodline of modern economies, is the best example as it has fairly reliable statistics. … According to data from BP’s statistical review, annual oil production was 46% higher in 2015 than its level in 1980, while consumption was 55% higher. Oil reserves, on the other hand, have increased by 148%, around triple the increase in production and consumption.
There is no energy scarcity problem, because energy cannot run out as long as the sun rises, the rivers run, and the wind blows. Energy is constantly available for us as humans to utilize as we like. The only limit on how much energy is available to us is how much time humans dedicate toward channeling these energy sources from places where they’re abundant to places where they’re needed. All energy is ultimately free, but the costs lie in paying the supply chain of individuals and firms to transport this energy to where it’s needed and in a usable form. It thus makes no sense to discuss energy itself as a scarce resource, which implies a fixed, god-given quantity for humans to consume passively. In its usable form, energy is a product that humans create by channeling the forces of nature to where they are needed. Like with every economic good other than bitcoin, there is no natural limit to the production of this good; the only limit lies in how much time humans dedicate to producing that good, which in turn is determined through the price mechanism sending signals to producers. When people want more energy they’re willing to pay more for it, which incentivizes more of its production at the expense of producing other things. The more people desire it, the more of it can be produced. The scarcity of energy, like all types of pre-bitcoin scarcity, is relative scarcity, whose cause lies in the opportunity cost of securing resources.
The non-scarce nature of energy implies that energy cannot be an economic good, as discussed in Chapter 1. Further, based on Menger’s work, a good is something useful that can be directed to the satisfaction of human needs. Energy sources in the abstract cannot be viewed as a good in that regard. The total quantity of energy available on earth is not a metric with any relevance to any individual, it is neither scarce, nor can it be directed to the satisfaction of our needs. Solar, wind, fossil, nuclear, or hydroelectric energy that is not directed to satisfying human needs is not a good. Only when directed to the satisfaction of our needs can energy sources be considered goods, and only when directed to the satisfaction of our needs does energy indeed become scarce, and thus, an economic good. Energy, then, is not an economic good, but power is.
Humans cannot value energy sources in the aggregate, but only at the margin; they value the next unit of energy directed to the satisfaction of their needs over a forthcoming period. Applying the framework of subjective valuation at the margin to understand energy is a powerful explanatory tool that illuminates the nature of energy markets.
When man devises technological solutions for harnessing these energy sources into meeting his needs, then
Whereas energy is understood as the capacity to do work, power is a measure of that capacity divided by the period of time in which the work is performed. Power measures the intensity of energy over time, which is what is necessary to make energy sources useful for satisfying human needs, which are time sensitive, since time is finite and scarce, and time preference is positive. The total solar and wind energy that hits your home in a day is irrelevant to your economic needs, no matter how large it is, as is the amount of energy contained in the hydrocarbon fuels under your house. People do not pay for these energy sources, nor should they, as they are not performing any tasks valuable to human beings.
Mises’ explanation of marginal valuation, which we saw in Chapter XX, can be applied to thinking about the energy market. Mises explained that nobody ever has to choose between all the iron and all the gold in the world, they only have to make choices concerning the next marginal unit of these substances they want to consume. Whereas iron might be more useful for humans than gold, this will not be reflected in a higher price on the market, because nobody ever has to choose whether to bid on gold or iron for his entire life. People only make choices about the next marginal unit, and due to the relative scarcity of gold next to iron under normal market conditions, people usually value the marginal unit of gold more than iron.
Energy is analogous to the total supply of gold and iron, in that they are more like nebulous concepts than economic goods that can be directly brought into satisfying human needs. People do not buy the total supply of iron, but only the marginal quantity they need to satisfy their marginal need at the particular time and place in which they buy the good. Similarly, they do not buy energy in total; they buy definite quantities of energy delivered with high intensity over periods of time in which they want work done; they buy energy over the marginal time unit; they buy power.
It makes little sense to speak of ‘energy markets’, or ‘buying energy’. Energy as a good cannot be divorced from the time in which it performs the work required of it to satisfy human needs. A breeze blowing at your house for a week is enough to operate the lights of your home for an evening, but managing to concentrate that energy over a week into operating the lamps is what matters. The breeze blows for free, but channeling it to light the lamps is not free.
The scarcity of energy lies not in its absolute availability, but in its availability in sufficient quantities when and where it is needed. Energy in its raw form is not an economic good because it is highly abundant, and because it has very little utility at its naturally occurring levels, without being channeled into productive uses.
In order to operate a car, airplane, computer, phone, loudspeaker, ventilator, or any of the many critical and ubiquitous technological devices of the modern world, a specific amount of energy needs to be directed at the device per second of operation. The economic value that accrues from the operation of these devices is dependent on this continuous stream of energy entering the machine at the required rate. To benefit from them, someone needs
, and humans make economic decisions at the margin, the scarcity of energy is achieved when
Time is what is scarce, and being able to concentrate a burst of energy over a short period of time
Harnessing the power of 1,000,000 children to turn a power turbine won’t work.
Hydrocarbons have value because they’re chemically stable, light, and easy to transport forms of energy, which lend themselves to usability for purposes that demand high power at any time and location in the world. Concentrated populations anywhere in the world can regularly access energy through the importation of relatively small volumes of hydrocarbons.
The scarcity of energy lies in the scarcity of power, at the time and place where we want it.
For the delivery of highly reliable power at the time and place where humans needed, there is no alternative to hydrocarbons. Throughout the 20th century, hydrocarbons have constituted the vast majority of the supply of power. This will continue for a very long time.
The twentieth century’s transformation of billions of lives came through the rapidly growing utilization of hydrocarbon fuels. All three main hydrocarbon energy sources grew in absolute quantity, but the positive news was in the faster growth in the utilization of oil and gas rather than coal, which is the most damaging to the human environment. As technology advances and standards of living improve, one would expect more of a shift to natural gas for energy generation, but modern coal plant deployment still shows little sign of abating. Coal is incredibly cheap and the technologies to generate energy from it have been getting perfected over decades.
What matters is the amount of power that can be consumed at peak demand hours. If your alternative energy cannot provide that, then its ability to reduce peak demand slightly, and intermittently, is a pointless waste of resources. Since you cannot count on the intermittent energy sources, the reliable energy sources need to be able to cover the peak demand. If you need to build a plant to cover the peak demand, then it can operate at all times. Building the infrastructure to handle peak load is the most expensive part of the power supply. Reducing small amounts of energy consumption at non-peak load times would only reduce fuel consumption slightly, but will also involve large capital expenditures.
Given the preceding discussion of value and scarcity, wouldn’t you expect that solar energy, being so plentiful and abundant, would be far cheaper than hydrocarbon energy, which needs extensive prospecting, drilling, and transporting to utilize. The sun shines down on every inch of the earth for almost half of the year, and its rays bring large quantities of energy. It is estimated that the solar energy that falls on earth in one hour is larger than the energy that all humans consume in a full year. Why would solar energy then not be cheaper than hydrocarbon energy?
The answer is that in its raw form, solar power is cheaper than hydrocarbons, but in its raw form solar power can only satisfy the human needs for skin exposure to sunlight, and for growing plants. Solar energy in its raw form cannot satisfy the majority of our modern energy needs, since humans do not need large quantities of energy in the aggregate; we require a mechanism for concentrating that energy over short periods of time in order to produce power (defined as unit of energy per unit of time). High power is the driving force of modern technologies that makes modern construction, industry, transportation, electronics, and many more modern accomplishments possible. One cannot use the rays of sunlight directly to move a car or power a factory, and their absolute quantities are irrelevant. Whereas solar energy is plentiful, being able to concentrate it into high power is a very complex operation that requires significant investment in capital infrastructure through solar panels and batteries. As a form of energy in the abstract, solar is infinitely cheap. But as an economic good that meets our needs, solar energy requires highly sophisticated and expensive equipment to become usable, and that is why it remains far more expensive as a source of energy th an hydrocarbons. It is not the aggregate quantity of the good that matters, but its ability to satisfy our particular needs, at the time and place where we need them.
The term “alternative” is a misnomer, as no “alternative” energy source constitutes a satisfactory alternative to hydrocarbons. None of these energy sources could be used exclusively for building and transporting the equipment that makes its production possible. It would be extremely expensive, if not impossible, to build a windmill factory that operates purely on wind power, or a solar panel factor that operates purely on solar energy. The low power associated with these energy sources make a factory operating based on them very difficult. An attempt to collect these energy sources into high power applications would require extremely expensive equipment, the production of which is also highly energy-intensive. The more familiar one becomes with the industrial processes involved, the more you realize how utterly contingent they all are on the presence of hydrocarbon fuels.
And even if someone had managed, against all common sense, to build a windmill factory running on windmills, it would be far more difficult to transport these enormous wind turbines to the locations where they need to be installed using wind energy. The technology needed to transform wind energy into electric energy, and then store it into a battery is far more expensive than just refining oil and putting into a car engine.
The production of electrical batteries and solar panels is extremely energy intensive. The extraction of the rare earth metals that go into them is a highly sophisticated process requiring large amounts of power to dig very deep holes into the crust of the earth. None of these processes would be practically possible without hydrocarbons, in a technical sense. In an economic sense, they are even less feasible when one remembers that in a world without hydrocarbons, we will have far more pressing and basic needs to invest our time and resources into. While engineers might in theory devise roundabout ways of producing batteries and windmills without hydrocarbons, in reality, without fossil fuels humans will have nowhere near the resources available to invest in such highly sophisticated methods of production, when survival in the winter is far from certain, and when basic transportation has become massively expensive.
Beyond very small-scale non-commercial applications employing windmills and solar energy sources, the vast majority of humans’ actions (and not their empty virtue-signaling) clearly show that humans prefer hydrocarbon application. The growth of the renewables energy industry has simply been almost entirely a function of growing government subsidies. This was the case in the 1970s, and that left behind a large number of white elephant projects. Today, easy money is creating a similar misallocation of resources in these industries.
Energy Aftermath in the 1970s.
These are not alternative energy sources, they are unreliable energy sources.
The only viable alternatives to hydrocarbons are hydroelectric power and nuclear power, but these are extremely limited in their scope for growth. Hydroelectric is only economical in areas near large sources of hydroelectric power, while nuclear faces very strong political and regulatory barriers to its expansion. Even if all political and regulatory barriers to nuclear adoption were removed tomorrow, it would still take many decades before the infrastructure for nuclear energy can be built to match hydrocarbon fuels. Building the plants, training and education the engineers, and generating enough market demand to invest heavily in nuclear fuels will be very time consuming when one remembers that existing fossil fuel infrastructure is still highly functional.
The same analysis is true were we to discover a superior technology tomorrow, it would still take many decades to roll it out in place of all the existing massive infrastructure that has been spent on hydrocarbon plants.
All that subsidies to alternative energy is achieving is making reliable energy more expensive.
A lot of people complain about energy sources being unacceptable to them but very few of them will live without the benefits of these energy sources. Everyone complains about hydrocarbons, but nobody wants to live in a house that did not require hydrocarbons to build. Or to give up on all forms of modern transportation. Or to give up on heating in the winter.
The only sustainable way to increase the share of renewables in the global energy mix is to drastically reduce global energy consumption, and bring it back to pre-industrial levels. In a time of mass economic illiteracy, it is normal to find people who pine for the world of pre-industrialization. There is, perhaps, no higher compliment to the incredible achievements that modern capitalism, trade, technological advancement, and energy resources have brought about than the fact that people cannot even imagine how hard life would be without them.
Alternatives are great for virtue-signaling, but when it comes to surviving the winter, crossing the Atlantic, building a house, or medical equipment, everyone wants theirs made from wholesome hydrocarbons.
The “alternative” energy subsidies in the 1970s wasted resources, but they did not go far. Today we witness laws demanding reductions in the consumption of hydrocarbons. We are seeing in Australia how this kind of legislation is causing a reduction in the reliability of the grid. It cannot be understated how much of modern life is the result of reliable access to cheap energy, and how massively costly and disruptive even the smallest disruptions to this reliability can be, and how expensive it is to get around them. Should the growth in unreliable energy sources continue to be subsidized, in spite of the market’s clear judgment of their failure, the consequences to the world’s advanced and industrial economies would be devastating.
the unstable monetary system means that oil has been partly monetized, and people use it as a store of value, and not just as fuel. This leads to very large volatility in energy resource prices, and makes long-term planning harder.
Without this insanity, we would arguably have much cheaper energy everywhere. And we would have a much clearer idea of the prices of fuels in the future, allowing for more accurate economic calculation.
Explain how I came to understand economic calculation through trying to do it on biofuels.
If it does not deliver high power, then it’s a waste.
The power required on a balmy Sunday spring afternoon, when all business are shut down and most people are outdoors, is a tiny fraction of the energy required on cold workday when businesses and industry are operating at full capacity. Energy requirements are not about aggregate amounts of energy over an entire year; the critical requirement for modern civilization is the ability of power supplies to consistently and reliably deliver at all times. As someone who has lived in Beirut, I can from bitter personal experience attest to the enormous differences in economic productivity and quality of life between places where electricity is reliably available at all times, and places where it isn’t.
The equipment and infrastructure necessary to make safe modern civilized living possible requires constant reliable power. The problem of all energy sources other than hydrocarbons, nuclear, and hydroelectric, is that they cannot provide the high power required at peak demand levels. Even after trillions of dollars have been wasted worldwide subsidizing these energy sources, there is not a single city in the world that can operate without the five reliable energy sources.
Reliables vs Unreliables
Reliable sources of energy are ones that can reliably produce their highest load on demand. These are the only energy sources that are essential for modern life. Nobody wants their energy sources to be intermittent.
Alternative energy as the toy steering wheel in a car. Hydrocarbons are the actual steering wheel. If the driver has enough money, he can afford to give the child a plastic toy steering wheel to distract the child from the boredom of the trip they must sit through.
How trivial it is to provide 24 hour electricity. Only government can fuck it up.
Energy as the food for capital and technology.
“Energy is the master resource, because energy enables us to convert one material into another. As natural scientists continue to learn more about the transformation of materials from one form to another with the aid of energy, energy will be even more important. . . . For example, low energy costs would enable people to create enormous quantities of useful land. . . . Reduction in energy cost would make water desalination feasible, and irrigated farming would follow in many areas that are now deserts. . . . Another example: If energy costs were low enough, all kinds of raw materials could be mined from the sea.”
*The Austrians might have underestimated how critical modern mass energy production is to the modern capitalist extended market order. Global trade and modern capital accumulation depend on high power energy sources. With time, as we have better statistics to see the impact of introducing energy, we get a better picture.-