Every Economic Endeavor Burns Oil
Whether you are an accountant for a video store, a waiter, a process engineer for a plastics company or a preacher….your value consumes oil and coal at some stage. Food production, manufacturing, distribution, services, all consume fossil fuels at some juncture. Think of it this way: Every time someone consumes food, electricity, or products manufactured elsewhere, they consume coal or oil indirectly if not directly. This condition persists as long as fossil fuels remain the primary energy source.
Each consumer of upstream goods and services must consume, therefore, fossil fuels burned at those previous stages indirectly while simultaneously adding their own consumption metrics onto the top (Even if that only means keeping the lights, phones, and computers on for a service enterprise).
So there must be, then, a “multiplicative effect” to fossil fuel consumption. Consuming oil and coal at one place increases the likelihood that oil and gas was consumed at another place.
Multipliers are often used in economics to communicate reverberative knock-on effects. Think of unemployment insurance as economic stimulus, for example. Unemployed are more likely to spend money because they have to. And so the vast majority of economists with an adequate supply of gray matter consider unemployment insurance a generally productive form of economic stimulus. Economists tell us for each $1 spent on unemployment we get $1.63 in economic benefit. How is this possible? The $1 is spent immediately (because the recipient is unemployed) and then the $1 proceeds to turn through multiple pockets. The recently unemployed fellow buys food from the grocer who buys 1/3 gallon of gas for his mower from the gas jobber who rents a movie from Redbox and so on. A similar theory is applied to the expansion of the money supply based on borrowing. Oil consumption works much the same multiplicative way.
So what would be the real cost reduction if we were suddenly able to shift to renewable energy entirely as an economy. What if fossil fuels were trimmed out of the costs of every economic endeavor? Renewable energy costs are only high at this stage because they have to compete with oil and coal. What if we could flip the switch and move to renewable energy entirely tomorrow? What would that do to economic costs across the board? Every economic endeavor burns energy. Compressing energy costs as close as possible to zero, therefore, promises the greatest productivity increases for generations to come.
Just ask John Doer and Bill Gates (re: American Energy Innovation Council):
“Americans spend more on potato chips every year than energy investment”.
- John Doer, Kleiner Perkins
