Wednesday, June 1, 2005

Short-sighted EXXON

The argument has been made before that "economics" must drive the decision to use one energy technology over another. This argument is being made again by Exxon.

Solar, wind energy fail Exxon profit test

Economics, in this case, being the end cost of producing energy. This gets measured in two ways. One is the cost in building the infrastructure or production plant, and the other is the cost you charge customers for the electricity.

Exxon estimates solar and wind energy demand will grow at a 10 percent rate annually over the next 25 years, but only on the back of government subsidies and tax breaks to spur investment in cleaner, environment-friendly energy sources.

Strip out the handouts, and investing in wind and solar energy would be nonstarters, the manager of Exxon's energy demand and supply forecasting division told Reuters last week.

"It's an uneconomic niche and our business is not built around the expectation of a bunch of subsidies to make a profit," said Scott Nauman, manager of the economics and energy division at Exxon. "We want a business that is robust on its own merits."

Wind energy, for example, is constrained by several factors — wind farms can be located only in windy areas and backup coal or gas facilities must be used when it isn't windy enough, he said.

Well, hmm....

There's a problem here in their reasoning. See, when "infinite growth" meets an "finite resource" what results is that the finite resource ultimately is depleted.

We see that beginning to happen with Oil now. The oil peak scenario is upon us, and sooner or later it will happen.

What Exxon is saying is they're ignoring the finiteness of the resource, and continuing to rely on that finite resource for their business. They could wake up and smell the reality and say, "gosh, we need to move to other energy resources if we want to stay in business", but they're just showing how short-sighted they are.