An economic riddle (warning contains political debate)



  • Hey all,

    There is a puzzle within economics which I have been thinking on for some time and as we have many intelligent people within this community from a large variety of political orientations, I thought I would throw it out there, to see what people suggest and how people would resolve this puzzle.

    I would say despite my obvious conservative leanings, there is room in any overall picture, to incorporate lots of different elements, of lots of different learnings. For instance the central state is the best way to run an army, that elected sheriffs the best way to run a police force and (in my eyes) a market method the best way to provide for health care.

    The problem is thus: What is the cheapest possible way to provide energy to society?

    The background to my question is that in the UK, when energy was nationalised this caused problems, although now energy has been privatised this also brings its own problems, especially with energy taking up an ever increasing proportion of the income of the poorest.

    Now in the answer to this question, while I would follow with great interest technical energy innovations (energy science is a deep fascination to me) and physical ways of generating power, the problem that I am really trying to get to grips with is more the organisational side of the problem.

    There is the supply part of the problem, the actual production of energy and there is the demand side of the problem the best way possible to get energy to consumers.

    Precisely how should energy provision be organised so as to benefit consumers the most.

    Here are my starting points, which I welcome anyone to disagree with or argue against, if they see a flaw in my logic, or alternatively resolve, if they can work out an answer to this riddle.

    The State Organises Energy Provision

    This assumes that the state both produces energy and distributes energy. Or that the state is largely responsible in either the production and distribution of energy.

    The advantage of nationalised energy production, was that it enabled the UK to be largely energy self sufficient. We used mostly coal and were less dependent on other nations for energy. This strategically is a good hand to have, as it harder for foreign nations to influence domestic policy and reduces the possibilities of economic blackmail. Furthermore in the case of a serious domestic emergency (like war), it means that supply lines cannot be cut.

    This brings some nasty disadvantages also. When the UK had nationalised energy provision, it was relatively expensive in its total costs.

    Total costs meaning precisely the overall price the consumer pays for energy. This does not only include the price a consumer pays for energy directly, such as the price for a bag of coal, but also indirect (and less visible costs) such the taxation required, in order for the state to produce this bag of coal. The indirect costs include the price of a pit being sunk into the ground and of course the price of workers.

    Not only was this model expensive in total costs, due to large increases in wages (which I would agree were actually fair pay increases up to a point), but militant strike action led to the nation being at times economically paralysed. The problem of this model is that if the state provides for energy and state workers, remove their labour, it means factories and so forth do not have energy and a nation can be brought to its kness. (this actually happened in the UK in the 1970's)

    (Just for the record my dad as were most uncles were actually miners, so I don't look at privatisation of energy coldly)

    The Privatisation of Energy

    While the privatisation of energy lead to the removal of militant unions, and their threat to both the national economy and the government, the consumer is I would argue still losing out, and energy is still relatively expensive.

    The reason why this is the case is that despite there being several companies on the market, they are operating effectively as a giant monopoly or to give it its technical name a cartel. This means they are not competing with one another and they are all increasing their prices and the consumer is losing out.

    So to return to the original question: What is the cheapest way to provide for energy, when I would argue both the major methods have failed.

    Spartan



  • The first thing I noticed about your post was your horrible use of comma's. To be honest, your point was lost to me because of that.



  • @Leaders:

    The first thing I noticed about your post was your horrible use of comma's. To be honest, your point was lost to me because of that.

    How about a horrible usage of an apostrophe?

    comma's should be commas

    ~ I'm sorry, LaF, but if you're going to nag someone about grammar and usage, you have to set the example.

    As to the topic, I'm afraid I have little input on it. I'm for a free-market economy, with moderate regulation, in most all matters.



  • @LittleMissBadass:

    @Leaders:

    The first thing I noticed about your post was your horrible use of comma's. To be honest, your point was lost to me because of that.

    How about a horrible usage of an apostrophe?

    comma's should be commas

    ~ I'm sorry, LaF, but if you're going to nag someone about grammar and usage, you have to set the example.

    I don't usually get involved with posts like this, and I won't from now on. However, I had to quote that phrase while pointing at LaF and saying "lol wtfpwnd."

    So, if you'll excuse me.

    Points at LaF Lol wtfpwnd!



  • Due to the economy of scale factors involved in open pit and underground mining of coal, this will likely remain in the domain of very large corporations and governments.

    Much of the recent price increases are due to Crippling new taxes to subsidise green energy. That and a decline in currency values due to debt. http://www.telegraph.co.uk/journalists/ ... -wind.html

    All the energy company's in your "Cartel" have to pay these taxes. For example the Rio Tinto Plant will pay an additional 40 million pounds due to these taxes wiping out all profit.

    Using better methods of coal production could reap huge benifits both in emissions and profitability. http://www.contrafedpublishing.co.nz/En ... uture.html

    The coal refining process starts off with crushed coal that is dumped into a bath of HF. The process works best with coal with an ash content of at least 10 percent. The HF dissolves the silica (that is given off as a gas and recovered) and other impurities. Subsequent processes recover alumina, sulphur, titania, water, rare earths and metal fluorides and the value of these byproducts is likely to exceed the cost of mining the coal.

    The recovered by products are then not burned. Less harmfull emissions are produced.

    A similar win win in power production and emissions was made in the Remote Oil Sands.

    Benefits of Cogeneration
    The benefits of cogeneration are well known. Cogeneration produces electricity and thermal energy with much less fuel than when they are produced separately, thus reducing fuel consumption and emissions significantly. Single purpose thermal electric power plants reject between 50% and 65% of the fuel heat to rivers, lakes, the ocean or the atmosphere. Cogeneration systems can use this rejected heat for purposes such as paper drying, chemical processing, food processing, space heating or cooling. Some cogeneration units can increase fuel conservation, resulting in a 10 to 20 percent savings in fuel when compared to a stand-alone unit.

    Cogeneration enables oil sands operations to become self-sufficient, thereby eliminating the need for operations to rely on the grid. Both surface mining and in situ methods are sensitive to unscheduled electrical outages, and the primary concern of producers is a reliable supply of electricity. In particular, cogeneration systems and selected loads can be kept running during grid failures, which minimizes the risk of a plant shutdown and avoids costs resulting from power interruptions.

    Shale Gas can be produced by smaller more competitive companys than large scale coal mining. The natural gas distrabution system already exists. Simple matter to tie in. http://www.telegraph.co.uk/finance/news ... y-ENA.html

    Ditching the failed Renewables would be a start. http://www.theregister.co.uk/2011/09/04/renewable_fail/



  • @spartan2011:

    Hey all,

    Loads of crap and no pony pictures.

    Spartan

    0/10



  • Politic's is, gay.



  • In the past decade, American carbon emissions have declined by 1.7 per cent, (largely because of a heavy American transition from coal to shale-derived natural gas), while Chinese carbon emissions have risen by 123 per cent.

    http://www.huffingtonpost.ca/conrad-bla ... 07166.html

    Europe gives up on global warming.

    http://blogs.dailymail.com/donsurber/archives/44325

    "It just so happens that the three renewable energy celebrities Germany, Spain, and Italy have accumulated a 90 billion euro รขโ‚ฌโ€œ$126 billion- debt in subsidies. To put that into context, that is around 35 percent of the total bailout fund that the EU created to rescue its insolvent economies."

    http://www.energytribune.com/articles.c ... wable-Lies



  • all energy problems are solved folks. in the future we will get all our energy out of the explosions of Supernovas

    http://www.supernovae-energy.com/

    http://www.youtube.com/watch?feature=player_embedded&v=bHOPQxD0VHQ

    ๐Ÿ˜ƒ



  • If those Super Nova look like Sonic Rainbooms my head will explode!



  • Politic's is, gay.

    Not as Ghey as this! ๐Ÿ˜› http://www.youtube.com/watch?v=FhF5Qjm- ... re=related



  • tl;dr. Answer is 42.



  • Needs more Communism, swamp women, starting gold and ponies.



  • Moar lewtz plz and XP



  • getting away from the production methods (e.g. renewable vs traditional) argument and back to the original question

    I believe the best method is one that is common in the US:

    private producers selling to a open market
    private distribution suppliers handling the distribution, with profit ceilings set by government, and mandated performance levels
    consumers choosing which producers, and which type of energy their suppliers buy.

    Currently the transmission and distribution networks are usually owned by the companies. I can see how them Infrastructure being publicly owned and privately run -might- be a advantage. Theres both pros and cons.

    disclaimer: I work for a large transmission/distribution company, my views may be muddled.



  • Venieth for Prime Minister!



  • @The:

    Kreswell for Prime Minister of the Universe!

    kthxbai



  • I stopped reading when you said you like profit based healthcare. I hate people having to pay if they get stabbed by someone who's poor because they had to pay to get a bullet taken out of their leg



  • @Gimpatronic:

    I stopped reading when you said you like profit based healthcare. I hate people having to pay if they get stabbed by someone who's poor because they had to pay to get a bullet taken out of their leg

    If you don't want to contribute to the debate better you didn't post at all. Don't post shit on other peoples threads.

    Spartan



  • @Caek:

    Needs more Communism, swamp women, starting gold and ponies.

    We need more people who have enough bare common decency to not make light of a political system which led to the death of 100 million people, as this is well within the realms of the utterly depraved and sick.

    Spartan


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