What Is Up With Our Energy and Resources?

To begin let’s establish some definitions of key words that occupy the foundations of our knowledge in energy and resource allocation.

Entropy- a thermodynamic quantity representing the unavailability of a system's thermal energy for conversion into mechanical work, often interpreted as the degree of disorder or randomness in the system.

Stock-flow Resource- Resources materially transformed into what they produce (material cause); are used up rather than worn out.

Fund-service Resource- Resources not materially transformed into what they produce (efficient cause), which can be used only at a given rate, and their productivity is measured as output per unit of time; cannot be stockpiled; are worn out, rather than used up.

Excludable Resource- Is one whose ownership allows the owner to use it while simultaneously denying others the privilege.

Non-rival Resource- Is one whose use by one person precludes its use by another person.

Now that we have established some defining terms, what is the purpose? When we are talking about energy use and resource allocation, we are talking about the economy, the biosphere, our own standards of living, and everything in between. The economic wealth of societies affects the environment, because as wealth and affluence increases the population’s demands for more goods and services grows exponentially. In a free market economy this trend goes unchecked and becomes imbalanced, only until the environment enacts its own limits, which can result in collapses of market economies. So as the economic wealth of our world’s societies increases exponentially, the destruction of the environment follows unchecked and grows exponentially causing unforeseen consequences. With this steady increase in wealth and affluence, the environment of the U.S. over the past 200 years has changed drastically. We have seen the entire country, coast to coast settled and developed; we have witnessed an industrial revolution causing development of urban areas to spike, leading to social inequality due to the scarcity of resources in these centralized locations. We have also seen the natural resources stripped, mined, extracted, and absorbed, into an economy that has not changed fundamentals in the past 200 years. In the past 200 years we have seen the environment pass through many drastic changes in the many different ecosystems, but at the same time our fundamentals in economics and our energy consumption and resource allocation have stayed the same leading to the global predicaments we face today.

So in the energy sector our consumption patterns have led to the biosphere enacting its own limits towards our resources, this has led to investments in alternative energy practices. Now you must not deny that we have had the technology for clean, free, abundant, and renewable energy since Nicola Tesla’s era. There are many devices out there that have proven to power more than our current systems could ever complete, and these devices do not require finite resources, or dirty energy. So what are we talking about when we, “calculate payback” on alternative energy investments? Well look at this way, when the oil and coal industries were being developed the technology was expensive (just like the other forms of clean free energy) so the economists of the time developed a system of calculating the payback periods of the investments into the oil and coal energy infrastructures. This system took the amount it would cost for investment and divided it by the annual cash inflows from privatizing the energy market. With these payback calculations the economists and businessmen found it to be economically sound to invest in the oil and coal energy markets, leaving the clean, free, renewable energy by the way side. So why not invest in this clean alternative energy? The reason behind this is the businessmen found the payback period for the alternative energy to be far too long, meaning it would not profit them in the short-term, but it would profit the majority of the population in the long-term. This concept did, and still does not fit into our economic model we use today. For myself, a reasonable payback period for investments in renewable, clean, possibly free alternative energy would be 50-75 years. This being said, because I use different forms of energy all day every day, so if I may use the energy that comes from a source that will benefit me not only economically, but physically, and socially, I am willing to make my payback period 50-75 years, even if it means I do not receive full compensation, but instead goes to the future generations of my family. I based my time frame of payback on the concept that, the investment I would be making would not only make economic sense in my economic theories, but it would make logical sense as well.

I hope anyone who reads this blogpost thought a little differently about our economic system, and the reactions to our actions we make in investing in our future.

Onward,

Hayden van Andel