Energy

It seems to me that people are always freaking out over the topic of energy consumption. The government, it is widely believed, should provide funding for alternative energy sources. I've never understood this. If gas (oil) is cheap, why should we look for an alternative? If a kilowatt of energy from coal costs $1 and wind power costs $2, why use wind? And if supply begins to dwindle then prices will go up which will act as a signal to the market to seek out other energy sources without the need for interference from the public sector. One example is oil shale in Canada, which has become profitable to exploit as energy prices have risen.

Now, from an environmental perspective I can understand the desire for alternative sources. Sometimes prices do not reflect true costs. If we all use coal and everyone dies of lung cancer, plainly the cost to society is not reflected in its nominal price. The solution to that, however, is to place a tax on coal that reflects its environmental costs.

And yes, someday we will run out of oil. I don't think it will happen anytime soon, but it probably will happen. But big deal. Once upon a time people used to burn wood for energy. Then they used whale oil. Then oil oil. The progress of technology means that we are always finding new sources. And if this is to be believed (see #3) the next mainstream energy source is right around the corner.