Gresham’s Green Law

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Lesser writes in an analysis in Regulation, a journal, published by the Cato Foundation, that some politicians “carry on much like the Spanish conquistadors who searched for the Seven Cities of Cibola (the legendary cities supposedly overflowing with gold). Ignoring economists “does not invalidate basic economic principles. Forcing consumers to buy high-cost electricity from subsidized renewable energy producers will not and cannot improve overall economic well-being.”

According to Lesser, “Renewable energy might reduce air pollution (although no actual evidence of this exists). It will certainly create a few construction jobs.” And government subsidies for renewable energy “will benefit renewable energy developers. But when the entire economic ledger is tallied, the net impact of renewable energy subsidies will be reduced economic growth and fewer jobs overall.”

Subsidized renewable resources “will drive out competitive generators, lead to higher electric prices and reduce economic growth.”

The Cape Wind project to be constructed off the Coast of Nantucket Island, Lesser calls one of the “most egregious examples of the green energy fallacy.” Some 130 turbines are to be installed.

Lesser maintains, for example, some proponents misrepresent wealth transfers and wealth benefits. “Taking money from Peter and giving it to Paul hardly creates wealth.” Proponents also ignore the “adverse economic effects of the resulting higher electric prices that high-cost renewable generation brings.” Such analyses ignore the “cost part. No wonder the results are so encouraging.”

Lesser in his article goes into a complex explanation of how electric utilities work, including something called “price suppression.”  Lesser says politicians have sought to take advantage of markets with lower prices. “As a result, a number of states introduced ‘price suppression’ as a goal especially in New England.” Connecticut, for example, in 2007 enacted legislation requiring the state’s Energy Advisory Board  to issue request for proposals that would reduce capacity market prices in the state. In Massachusetts, in 2008, an act forced renewable resource generation into the New England capacity market.

Renewable resource advocacy studies “always ignore the economic effects caused by higher electricity prices. Households whose electric bills increase because of renewable energy mandates have less money to spend on everything else” and “goods and services whose production requires electricity increase in cost. So, consumers have less money to spend on goods and services that cost more to produce….This is why subsidizing industry—green, red, or tutu-frutti—reduces economic well-being.”

Lesser concludes: “[I]ndustries that require never-ending subsidies simply cannot increase overall economic welfare. To believe otherwise is to believe in ‘free lunch” of the worst kind. Yet, free-lunch economics are driving the push for renewable energy. Subsidies will destroy competitive wholesale electric markets and drive out existing competitors. This “will cost jobs because businesses, forced to pay higher electric prices, will either relocate, contract, or disappear altogether. It will reduce the income of consumers, who will forever be forced to subsidize resources…all in the name of ‘green energy.’”

The wild-eyed plan to install wind farms hundreds of miles at sea instead of letting experienced energy producers drill for essential oil and gas off shore is a topsy-turvy scheme with no hope of solving America’s energy needs. It’s a futile “grasping at the wind.”

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  • Reason_For_Life

    The article is clear, concise and accurate. It misses only one point. It assumes that the goal of "alternate" energy advocates is merely to line their own pockets with other people's money. I wish this were the case, the truth is much, much worse.

    Energy is the capacity to do work. Energy amplifies an individual's efficacy in the real world. With energy an individual can do much more than he can with just his own muscles. For transportation it's steam locomotives versus stage coaches, automobiles vs trains. For production its motorized factories versus hand labor.

    When you decrease the amount of energy available you decrease the actions possible to human beings and thereby limit their capacity to act in their own interests. You literally limit their capacity to live.

    During Obama's 2008 campaign he said that his energy policy would necessarily cause energy prices to "skyrocket". No sane person would deliberately set out to do this unless limiting people was his goal. Limiting a person's actions is a war on human life itself.

    The actual intended goal is to reduce Americans to helplessness because helpless people readily accept a dictator. There aren't enough "poor and downtrodden" in America to achieve dictatorship now, so politicians seek to create more. Taking energy away from people is the means, tyranny is the goal.

    • sflbib

      As governor of Arkansas, Bill Clinton tried limiting peoples' access to energy [namely gasoline] and learned a bitter lesson as a result.

  • JosephWiess

    It might be easier to put the turbines under water and allow tidal action to create electricity. That would put the power source out of sight and let the earth actually produce energy.

    • Rifleman

      That makes a lot more sense, but I think the problem with using wind and tide for energy generation is still mostly bearings, blades, and to some extent, power transmission.

  • Rifleman

    The picture looks like a huge navigation hazard to me, and setting them "Hundreds of miles out to sea," creates a huge maintenance problem. It also looks like a huge security problem. What do they think those ships cruising out hundreds of miles to set and maintain them run on?

    What’s going to happen when a “Liberian freighter” cruises through and wrecks a bunch of them, or a hurricane cruises through and wrecks them all?

    On top of that, even if they just had to walk out the back door to get to them they still never generate more energy than it takes to build and maintain them.

    I wonder what the rate is to lease the surface of open ocean? What a racket.

    • Reason_For_Life

      Hundreds of miles out to sea? An just how expensive do you think the transmission lines will be? The power losses over hundreds of miles of electrical conductors would eat up most of the power that's generated. These people are engineering and science illiterates.

      You can find better science that this in 1950's sci-fi movies.

      • Rifleman

        As you said so well above, the object of 'green energy' isn't energy, it's to divert capital from its' most efficient use or even economically beneficial purposes. I would go further and say it's to destroy US wealth and industrial capacity so we can't interfere again in the world socialist revolution. Dp politicians like hussein want to preside over our decline so much, they'll 'engineer' that decline themselves, if they have to. You'll notice everything they do lowers our standard of living.

  • joe

    Hundreds of miles is stupid. If you put them right off of the beach, where the water goes really deep, the tides will turn the blades. Imagine it as a turbine lime those used on dams. The Norwegian use it in the fjords and produce energy.