Re: Mook's quote about nuclear being a "low grade heat". Is it true?

From: LongmuirG (longmuirg_at_aol.com)
Date: 07/07/04 

Date: 07 Jul 2004 05:24:20 GMT

daestrom wrote:
<snip>
>As with many economic/social changes, I feel the key factor is time/rate of
>change. If the price of gasoline is allowed to rise slowly as supplies
>dwindle, the price escalation will make more and more alternatives
>economically viable.
<snip>

Economists love to project smooth changes in prices, but that is not how
markets react. If we want the price of gasoline to rise slowly, it is not a
question of "allowing" it to happen -- we would have to make signficant
interventions in the market for the price to rise slowly, and the chances of
making those interventions successfully are not great.

One example is the North American "gas bubble" of the 1980s and early 1990s.
Gas prices were low because short-term deliverability exceeded demand -- even
though many people warned that the underlying gas reserves position was
deteriorating. When demand finally exceeded deliverability, gas prices became
high and volatile, causing a surprising amount of demand destruction (aka job
losses) in the chemical industry along the Gulf Coast.

An all-knowing government could perhaps have smoothed the effects of the gas
price rise by steadily increasing taxes from an earlier date and then reducing
them as necessary to maintain a smooth price profile. But where can we find an
all-knowing government able to respond quickly? And doing this successfully
would demand a much higher degree of financial self-discipline from politicians
than we can realistically expect.

It would probably be (slightly) more practicable for government to work on the
supply side -- eliminating unnecessary barriers to things like domestic
exploration, LNG imports, and nuclear power.

It is also worth considering that the impacts of future higher energy prices
are going to be much more far-reaching than simply switching to smaller
automobiles. In lower per-capita energy use times, before World War II, people
lived in small houses or tenements, took public transport or walked, shopped at
the corner store, mainly ate locally-grown foods in season, and vacationed
close to home. The very different world we see today is based on low real
energy prices. A future world with higher real energy prices may not look like
Pre-WWII America, but nor is it going to look like a slightly trimer version of
USA 2004.

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