Energy Production and the Laws of Economics.
Solyndra adds to a list of crippled solar ventures. Evergreen Solar Inc. entered bankruptcy protection in August after closing a Massachusetts plant. SpectraWatt Inc., an Intel Corp. spinoff, also filed for bankruptcy protection in August, after closing a New York factory.
You can add to it Stirling Energy Systems and, I am sure others will follow the same path while spending tax payers “investments” and government loan guarantee. Read this if you need to slap your forehead!
The question remains why? why now?
The easy answer is: THESE GREEN COMPANIES WERE (ARE?) NOT VIABLE BUSINESS VENTURES. A government loan guarantee implies no private entity was crazy enough to take the risk. But why would “brilliant” men (click here and here) in government believe the risk to be worth it? And still do!
Call it the arrogance of the “Central Planner”. President Obama and bureaucrats around him believed that somehow the laws of economics would not apply. They thought prices could be controlled. They were sure that the “American Clean Energy and Security Act” (also known as the Cap and Trade bill) would become law and that the 2009 United Nations Climate Change Conference would be successful. (How ironic. Failure in the only area where politicians actually have control: legislation and treaty.)
Here is a summary of ‘THE PLAN” by then candidate Barack Obama:
Under my plan of a cap and trade system, electricity rates would necessarily skyrocket.
Here is the whole clip IN context . Hubris in full display!
There you have it:
- The price controls didn’t happen “as plan”
- Subsidizing the supply of green energy had the “unexpected” effect of increasing the number of producers and its production.
- Following massive new production (especially from China), the price of green energy production “unexpectedly” decreased.
- “Unexpectedly” many of these producers are now bankrupt.
To understand the Solyndra story and economic stupidity at it’s finest read this
And what about Oil?
Higher demand, higher prices, higher incentives to discover new oil field.
One reason for the renaissance has been OPEC’s erosion of market power. « For nearly 50 years in this country nobody looked for oil here and drilling was in steady decline. Every time the domestic industry picked itself up, the Saudis would open the taps and drown us with cheap oil, » he recalls. « They had unlimited production capacity, and company after company would go bust. »
Today OPEC’s market share is falling and no longer dictates the world price. This is huge, Mr. Hamm says. « Finally we have an opportunity to go out and explore for oil and drill without fear of price collapse. »
A small sample of recent oil discoveries:
Who knows? maybe one day Oil supply will substantially exceed demand. I guess prices will then “unexpectedly” fall.