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The Answer to My Alternative Energy Question

It is undeniable that oil is a finite resource which means that some day it will run out.  There are many estimations about when this will happen, but nobody knows for sure when that day will come.  This fact alone makes the case for the need for alternative energy sources in the future.  Add to that the world’s ever-growing demand for energy due to increases in energy consuming technologies and a constantly increasing world population and you are looking at a problem that needs to be addressed.  The question is, is now the time to make the push for alternative energy?   Should the Obama administration allocate large amounts of money in this time of economic crisis to alternative energy sources?

In their agenda, the administration lays out their plan in detail about what role they believe alternative energy sources should play in addressing major issues facing the American people as well as the rest of the world.  They believe that investing $150 billion dollars over the next ten years in alternative energy will help to strengthen our national security by reducing our dependance on foreign oil from hostile countries, help the environment by cutting down on greenhouse gases and carbon emissions while stimulating the economy through the creation of green jobs.  This makes research and understanding of alternative energy a crucial element in steering America back towards prosperity.  We must understand the argument from all sides in order to see whether it can truly deliver with regards to these issues.

The alternative energy debate first came to the forefront in the 1970s which was the first time that there was a supposed oil shortage causing gas prices to rise dramatically.  Since then, the government has put it on the back burner until gas prices rose again to over $4.00 a gallon in the summer of 2008.  Although this has hurt many consumers and businesses who rely on oil to fuel their transportation needs, it was a much needed wake-up call for the average American to show that something needs to be done to combat this problem.  This new-found awareness gave the Obama administration a platform to push their agenda to build towards a more energy efficient future.  Still the question remains, is government investment the right way to promote the use of alternative energy or should we let the free market decide which energy source is the most economically viable?  Also, if government investment is the answer, this money must be spent wisely.   In this time of bank collapses, bailouts and bancruptcy we must find the most cost effective solution to our constantly-growing energy needs. 

First I must define what I mean by alternative energy, when I say this I am refering to any form of energy other than oil and gasoline so this includes natural gas and nuclear energy as well as renewable energy sources.  In doing research about the topic of alternative energy, my main focus was from the economic perspective because, while the environment and national security are important issues, they become less important if helping these causes weakens an already fragile economic infrastructure.  In the end, the green that people care most about is the green in their wallets.

My research on the topic of alternative energy lead me to see that this is not a cut and dry issue.  There are many obstacles that must be addressed in order for alternative energy to thrive such as the high initial costs that come from parts and installation of alternative energy technologies and the storage and intigration of these forms of energy into the existing power grid.  Alternative energy also comes in many different forms from renewable sources such as solar, wind and geo-thermal to coal, natural gas and nuclear.  Of these sources I will focus on the three that I feel are the most efficient and abundant options to promote job growth as well as keep up with the world’s energy needs.  I will make an argument for the promotion of solar, wind and natural gas as well as address the obstacles that are currently keeping them from being able to compete directly with oil and gasoline in an open-market. 

One of the priorities outlined in the Obama administration’s energy agenda is the creation of the Alaska natural gas pipeline.  While natural gas is a finite resource, it is a much more clean and efficiet form of energy according to academic studies and government officials.  This makes it a viable option for short-term use in order to cut back on oil imports while waiting for sources such as solar and wind to become more stable and cost effective.  The Alaska pipeline could also be a very effective tool for economic growth.  According to the Alaska Department of Revenue, the pipeline could provide between $400 million and $1 billion in revenue per year for the next 60 years while oiljobs411.com estimates it will create approximately 50,000 long-term jobs.  The estimated cost is $20 billion dollars, but major oil companies such as ConocoPhillips and Exxon Mobile are footing most of the bill.  This project would increase natural gas production by almost 1,000 times which may drive the price down and make it economically competitive with electric energy generated by oil as a way to supply homes and businesses with all their energy needs .  However, there are some who question the demand for the natural gas that will be provided by the pipeline.  An article from The Anchorage Daily News quotes an investigation done by Fairbanks residents that concludes that the lower 48 states already have an abundant supply of  “unconventional” gas sources.  Even with this in mind, some utility companies are investing in credits that allow people to convert their homes to natural gas which would increase demand.  Another benefit is that the gas resevior is on American soil so it is ours.  We can take advantage of it in the short term in order to keep money in America that would have otherwise been spent on foreign oil.     

The pipeline is only the first step in saving the economy and moving towards energy independance.  We have to keep in mind that it is a finite resource and not allow ourselves to become too dependant upon it.  We must only use it in the short term as a way to keep oil  prices down as we wean ourselves off of foreign oil and move towards innovations in solar and wind technologies.  These technologies are the future, but we must be realistic about them.  There are still some issues that need to be addressed.  Wind farms take up a lot of space, they are noisy and people don’t want them in their backyards.  There is an infinite supply, but there are only certain areas that have enough wind to be effective.  We must create new technologies to store and transmit the energy created by these farms because they are most effective when built in rural locations, yet they are most needed in urban areas.  This is where the government must invest in order to promote wind power, but I would argue that government incentives and tax credits for wind power should be mostly catered to the urban midwest and rural farming in the rest of the country.  Utility companies could also promote individual farmers to convert to wind power by buying the excess electricity generated by these urban farmers and selling it to their customers.  This has already been proven to be effective in Germany, one of the leaders in wind power.

What I believe to be the most cost effective and efficient power source for future energy needs is solar power.  The promotion and production of solar energy technologies should be made a priority.  Through my research I have found that there are huge leaps being made in solar technology.  These innovations have been made with very little government funding.  Also, I have found that many large corporations are investing in solar energy technologies including many utility companies and even many oil companies.  This shows that these companies see that there is a future profit to be made from solar technologies.  Bright Source Energy is just one example of an innovative company that is moving solar technology forward.  Among its investor are Google, Chevron and BP.  These are all companies that have an eye toward the future and  have a history of making smart business decisions.  The investment in companies such as these could create a whole new manufacturing industry in America.  A senior research associate from the largest solar energy research lab in America told me about a law that he helped get passed in Oregon that requires all buildings that are built in Oregon to put 1.5% of their overall building budget toward solar technology.  This has created a solar manufacturing market in Oregon that is growing.  It also has forced contractors to explore the benefits of solar technology.  Laws such as this could be used throughout the country as a first step toward making solar technology competitive with fossil fuels in homes and businesses.  However, the technology is not yet where it needs to be.  Further investment is needed in order to store and transmit solar energy more efficiently so that it does not have to rely on conventional electricity to back it up at night and on cloudy and overcast days.  If this problem is solved, solar power could make huge gains in demand creating a market for solar manufacturing goods and installers. With government incentives to keep these factories in America, we could have an energy source with an infinite supply that will meet domestic energy needs as well as give us a much needed export that has a constantly increasing demand.

Investing in companies that are creating solar and wind technologies now could make us a world leader in energy production.  Instead of getting most of our energy from overseas we can keep that money in America and avoid doing business with hostile countries while helping the environment and strengthening our economic infrastructure.  However, there are still some issues that will need to be addressed as we move into the future.  One of these issues is, the possibility that oil prices may skyrocket when faced with decreased demand.  This will anger consumers, but it is a neccessary step in order to move toward a renewable energy future.  Another issue is the transmission of energy over state lines that may arise from solar and wind farms.  The federal government will need to address this problem soon or it may hinder growth and make investment decline.

Some critics argue that the government should not get involved in the promotion of alternative energy.  They believe that government involvement could increase energy prices over what they would have otherwise been in a free market.  This is a legitimate argument, but oil is a finite resource which could lead to huge problems in the future if it ran out and there was no alternatives available.  In almost all cases, in economic terms, competition is good for the consumer.  It keeps prices down and allows the consumer to have a choice.  In the current market there is not much choice giving organizations like OPEC the ability to dicitate their own price. 

In conclusion, the answer to the above question is yes, now is the time to invest in alternative energy, but we must do it wisely.  We must invest in technologies that allow us to harness and transmit the power created from our most abundant resources; the sun and wind.  Investing big now could be a huge tool for future growth.  If we become a leader in these types of technologies, other countries will come to us to help satisfy their energy needs boosting our economy and making us a leader in innovation once again which is the foundation of a healthy economy.   

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March 13, 2009 Posted by | Uncategorized | Leave a Comment

   

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