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Monday, September 5, 2011

We Seem to Have Misplaced Your Green Jobs, Mr. President.

There is no Green economy - not today, not tomorrow, not ever. 

Of course, we don't have a carbon economy, either.  The truth is that we just have an economy.  Energy isn't the end all be all of our economy, it's simply the means to an end.

For our widget makers, the greatest consideration on energy is the relationship of cost, efficiency, safety and dependability.  Throughout mankind's development, as we moved from using our natural environment (sun, wind, water) for energy to wood to coal to oil to natural gas to nuclear power, that relationship has been the driver.  Depending on the application, location, the given industrial environment, resource availability, etc., whichever energy source will be used will naturally vary.  At my place of employment, we use charcoal briquettes to light a natural gas-fired lime kiln and natural gas to light a coal-fired lime kiln.

Any attempt to force everyone into using the same energy source no matter the external issues, would be as wrongheaded as telling me to use steam to power my handheld calculator.  I'm quite happy with the solar chip in my calculator and even in my patio lights.  But if cellphones were required to use the same energy source, smartphones would never have been developed.

Solar & Wind - paying more & receiving less
Later this week, President Obama will make a speech to outline his new jobs program.  I expect that we will hear much about Green jobs and the Green economy.  As I said earlier, they don't exist.  What he really means is that we will either a) reorganize the economy to make green energy cheaper by artificially raising the price of using oil and coal or b) spend tax dollars to further subsidize Green businesses that can't compete in the marketplace.

Under the first scenario, it's hard to see job creation when we raise the costs of production and in the second, Obama fails to see that cost is only one part of the consideration on energy use.  Making solar and wind power cheaper will not make it more efficient and dependable which are two very big drawbacks.  Of course when we check the above chart, we see that if you account for the subsidies, solar and wind are over 20 times more expensive than oil and coal.

This past week, Solyndra, a solar energy company closed its doors.  Obama gave them half a billion dollars in loan guarantees from the stimulus package in 2009 to prop up Solyndra as it sought investors.  The president had touted Solyndra as part of the future of the coming Green Economy.  Rich Lowry writes at National Review,
The stakes in the battle to manufacture solar panels are exceedingly small. Solar power accounts for less than 1 percent of the electricity generated in the United States. The Obama administration’s fervency for it has more to do with the romance of its clean, postindustrial image than with economics. Obama said last year, “The true engine of economic growth will always be companies like Solyndra.” If that were so, it never would have needed half a billion of our dollars in the first place.
How did it fail, even with that amount of money?  The real problem was that Solyndra was not a profitable business.  As analyst Peter Lynch told ABC news,
"Here's the bottom line," Lynch said. "It costs them $6 to make a unit. They're selling it for $3. In order to be competitive today, they have to sell it for between $1.5 and $2. That is not a viable business plan."
As the President imagines it, the move to Green Energy is not about cost, efficiency, safety and dependability, it is about fundamentally changing our economy.  He will try to entice us to make the change, but if people must be forced into changing, well, then so be it. 

Why the need for change?  I'm still waiting for someone to explain what pot of gold is waiting for us at the end of the Green Energy rainbow.  The President claims that jobs await us if we make the change, but ask Spain how that worked out for them.  Heck, ask the 1,100 employees who no longer have a job at Solyndra.

We can never forget that what we really have is a $$-based economy.  When the economy ceases to be about the almighty dollar, we cannot expect to see job creation.  On Thursday night, if President Obama's new plans are not about lowering the costs of doing business, but are instead about fundamental change to our economy, we will have a long wait for those new jobs.

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