The Burning! It's Stupid!

One of my least favourite words in all of business writing is "energy". This is peculiar because I write about the sector extensively. I don't mind the way it sounds, and I quite agree that it has a reasonable definition ("the capacity of matter to perform work", says wikipedia).

To you and me, it's what makes electric toothbrushes, cars, dogs and other contraptions operate without our input. It therefore covers not only electricity, but also the internal combustion engine, or powerin' devices and drivin' places, respectively.

It would probably be best for any sensible discussion of these to be split into two. But both industries have too much at stake in the warm and fuzzy-sounding "energy". Calpine Corporation, presently in Chapter 11 bankruptcy protection, is of the habit of referring to its electricity generating stations, or power plants, if you will, as "energy centers".

But the questions of how we power our generating plants, and how we power our cars are still separate. Take a look at the chart below from the EPA. From it we learn that power generation is a bigger factor in climate change than transport, and that we produce very little of our power through oil (the proportion gets smaller if one remembers that a decent chunk of US electricity also comes from hydroelectricity).



Some of this is a matter of economics - we could burn oil in quite a few of the US' power stations, but gas is - still - just - cheaper. But by and large you can't really change around fuels willy-nilly because the available infrastructure isn't suitable.

Now deep down the consumer broadly understands this, or chooses to be blind to this. Which is why we're much more cross about the carbon emissions from coal-burning power stations than those from cars. With cars we're much more worried about the cost.

Then, along comes a proposal to increase the subsidies for turning coal into motor fuel. This is going to do a few things. It will probably jack up the price of coal a bit, maybe slightly dent the price of oil, and increase hugely the emissions from the nation's transport fleet. But, where oil is concerned, crowing about energy independence and keeping the cars running is much more important than worrying about the CO2 emissions we've been accustomed to associate with industry and utilities.

Thus, we have ethanol, which consumes decent quantities of natural gas as fertiliser and in the process of turning corn into fuel, and we have the Canadian oil sands, which burn huge quantities of natural gas to melt the bitumen from the wilderness' oil deposits, which is then burned as synthetic fuel. But the Canadians, see, aren't Arabs.

I wish I could say that the cleaner forms of energy were somehow more admirable. But the US wind industry is a gang of gnomes subsisting on tax subsidies, well, what's left after dubious structured financing fees are factored in. It's weird world when a man can get more sense from an oil company tearing up bits of the Colombian interior searching for oil than a guy developing wind farms in Texas. But that's been the size of my afternoon.