The inconvenient truth behind the rise in energy prices

From Brian Robins:

“The inconvenient truth is that the increasingly high prices for increasingly unreliable electricity are a direct consequence of the increasingly high utilisation of renewable energy required by government regulation,” Gary Banks, a former head of the Productivity Commission, said in a speech to Infrastructure Partnership Australia on Thursday night.

…”Energy markets are admittedly complicated things. However the logic is unassailable that if a cheap and reliable product is penalised, while expensive and less reliable substitutes are subsidised, the latter will inevitably displace the former. No amount of sophistry, wishful thinking or political denial can change that basic economic reality.”

“Changing the mix of energy use away from low-cost but emissions-heavy fossil fuels has of course been the whole point,” he said. “The resulting costs and difficulties have been greatly compounded, however, by governments choosing a policy path that is essentially anti-market, one violating basic principles of demand and supply.”

Source: The inconvenient truth behind the rise in energy prices

7 thoughts on “The inconvenient truth behind the rise in energy prices

  1. Vic Russo says:

    Seems tome that the basic problem here is the short term thinking of politicians. They have no interest in solutions in 30-40 years. They want solutions immediately to help win the next election. Only have to look at the debacles in Spain in wind, Germany with solar and the U.S. with fuel economy standards. In the U.S., these standards have necessitated selling (low cost) small cars that few want to achieve fleet averages. to make money on this small cars cars, they have to be made in Mexico. Huge hollowing out of manufacturing jobs. Reading recently that companies in Germany are considering leaving to gain access to low energy costs. There is a future for renewables but destroying the competitiveness of companies to achieve it immediately seems very shortsighted.

    • ColinTwiggs says:

      “Seems tome that the basic problem here is the short term thinking of politicians. They have no interest in solutions in 30-40 years. They want solutions immediately to help win the next election.”

      That is probably the biggest problem that most democratic countries face. All attention is focused on the election cycle. Only Switzerland seems to be immune to this.

    • ColinTwiggs says:

      …Also the reason why we should use the direct cost of coal & gas as the benchmark. Indirect costs are irrelevant to the user (in your example, German companies considering leaving to access lower energy costs) if they are borne by someone else.

  2. Hayden says:

    What price the planet ?

  3. evansdavid says:

    I’ll take these comments seriously when (1) they are a consensus view by all maths-informed commentators, and (2) when the total costs of burning coal are accounted for.

    • ColinTwiggs says:

      We should take energy prices seriously as they affect the international competitiveness of domestic industry.

      We are competing against countries that generate electricity using mainly coal while ignoring the cost to the environment. Not suggesting that we should do the same, but that we use the direct cost of coal and gas as a benchmark for evaluating the viability of alternatives. If Moore’s Law still applies to solar, we should soon reach the point where solar is cheaper than coal, especially if we consider that 50% of current infrastructure cost is in lines and poles while solar can be run on site. But the same can not be said of many other renewables, which are not viable without cross-subsidy.

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