Wednesday, June 16, 2010

Oil is THE Green Energy source we have been looking for all along....Say What?

Opportunity cost(s) is/are the most under-appreciated concept in economics, but is perhaps the most powerful when synthesized into critical thinking.  Broadly defined,  it means what you give up to get more of something else, but specifically it is the next best alternative forgone when one makes a choice.   Maybe because economists think in terms of opportunity cost is why people get so frustrated with economic analysis.  Laymen see it as not being able to make a decision ("analysis paralysis"). Economists see it as making sure you think of as many ramifications (positive and negative) when making a decision or fashioning a public/private policy.  As defined this way, you have to give weight to as many things you may have to do without as well as the things you may gain in the course of making a decision. Two examples are provided by Professor Mark Perry at Carpe Diem. You have to count the benefits as well as the costs, it is only honest to do so...
1. “Oil may be the single most flexible substance ever discovered. More than any other substance, oil helped to shrink the world. Indeed, thanks to its high energy density, oil is a nearly perfect fuel for use in all types of vehicles, from boats and planes to cars and motorcycles. Whether measured by weight or by volume, refined oil products provide more energy than practically any other commonly available substance, and they provide it in a form that’s easy to handle, relatively cheap, and relatively clean.’’

~Manhattan Institute’s Robert Bryce in “Power Hungry."

2. "Fossil fuels have been one of the great boons both to humanity and the environment, allowing forests to regrow (now that we don't use wood for heating fuel or grow fuel for horses anymore) and liberating billions from backbreaking toil. The great and permanent shortage is usable surface land and fresh water. The more land we use to produce energy, the less we have for vulnerable species, watersheds, agriculture, recreation, etc. As counterintuitive as it may be to say so, oil is a green fuel, while "green" fuels aren't. And this spill doesn't change that fact." 
~Jonah Goldberg, "Oil: The Real Green Fuel"
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