econogineer

Wednesday, September 06, 2006

Black Gold

An oil discovery has made a big splash in the news (2). It's odd because oil is discovered all the time. This one is rather large but it's in deep water, 30,000 feet deep. That's over five miles.

People get excited because we're told that the US is too dependent on foreign oil and this will move us toward independency. If we had all our own oil, terrorism would just dry up. Nothing could be further from the truth.

The United States economy is global and is so inter-connected with other economies that words like dependency don't have any meaning. We are dependent on the rest of the world and they are dependent on us. You don't grow your own vegetables because it's cheaper for you to work at what you do best and buy them at the store. It's called specialization of labor. It affords everyone a better standard of living through Ricardo's theory of comparative advantage.

The luxury we afford ourselves today comes from the specialization of our economy away from labor intensive, low yield jobs. The US specializes in high tech services. This puts us at the top of the food chain. Adding oil into the market will certainly help us but it will also help other countries. Oil is a global market, after all. We will do better to concentrate on education and development rather than finding oil, that is, staying on top of the food chain.

Monday, September 04, 2006

A Single Step


For some, I seem like all gloom and doom when I talk about solutions to our energy and environmental problems. This is because many of the "alternative" energy sources or "sustainable" solutions aren't really viable. Those solutions which do present some relief are not really saviors of mankind. Any improvement is likely to come through small measures.

Case in point: The Compact Fluorescent Bulb. I attended an advisory meeting where a speaker spoke at great length about the great benefits of compact fluorescent (CFL) bulbs. These are fluorescent bulbs which can replace incandescent bulbs. The benefits are rather obvious. A typical CFL produces the same light that an incandescent produces for 1/3 the energy. Here's the often overlooked detail. An incandescent produces heat with its waste energy that will produce a higher energy bill due to cooling (this is assuming that you have the air conditioning running). On various sites I've seen, lighting accounts for about 25% of residential energy consumption. An additional 5 to 10% is consumed to cool those lights!

Since CFLs are more expensive than Incandescents, our question becomes at what point do CFLs make sense. Hours=(Price of CFL - Price of Inc)/((0.075 $/KWhour)*(Watt of Inc*1.2-Watt of CFL)). This assumes an average of cooling needs across the US of 20% or 1/3 of the heat produced by an incandescent. For a 60 watt equivalent (20 watt CFL), the price difference today is about $1.20. The CFL reaches the break even point at about 320 hours. When we consider that the average life of a incandescent is about about a fifth of a CFL, the savings are substantial. Should you have a light that you use on average 5 hours a day, you're looking at about 5$ on your first year and over 7$ every year after. The net present value of your decision to go with a CFL over an incandescent is well over $20/bulb. So CFL's are an obvious way to go. They do the same job for less energy which means less polution due to burning coal.

Inevitably, proponents rarely talk about the mitigating factors. Here's the rub... or rubs.

1) CFLs have mercury in them. Throwing the spent ones in the trash to go to the local landfill could cause a lot of expensive problems.

2) CFLs don't really produce high quality light. They are not for every application. Dimmable and 3-ways have come on the market but their advantages are not as obvious as standard CFLs.
3) Lastly and most importantly, we must ask ourselves what is done with the savings we realize? People generally consume something else when they experience savings. No matter what we do, we're still tied to the world economy which inevitably grows and inevitably produces pollution.

This last point gets back to my standard point on environmentalism. Essentially, pro-environment means anti-people. That tradeoff is very unsavory but essentially the gist of the matter.

Still, little steps is how the world progresses.

More info on CFLs.

Dispose of CFLs properly.