Jerry Taylor, a senior fellow at the Cato Institute, has taken the time to produce a detailed and well-referenced rebuttal to my post titled Jerry Taylor, a Fellow at the Cato Institute, founded by a Koch, Focuses Libertarian Rhetoric Against Nuclear But Ignores Natural Gas Subsidies. Here is the comment that I posted in response:
Mr. Taylor – Thank you for taking the time to produce an interesting and well referenced rebuttal to my smoking gun post. It deserves an additional response, and I promise to produce that response by Wednesday, April 14. I would work on it more quickly, but I happen to have a completely booked weekend.
I am attending the American Nuclear Society Student Conference 2010, being held in Ann Arbor MI. Last night, we had the welcoming dinner – there were more than 500 eager students in the room to share conversation and hear companies like Entergy and Westinghouse tell them about the growth in the industry, including the number of people that they were hiring.
However, please understand that I am no defender of the established “nuclear” industry. I put the word nuclear in quotes because there are few companies in the industry that are actually focused on developing nuclear fission energy as a true competitor to burning coal, oil and gas.
The people who lead and invest in the energy industry (no invisible hands here, I have met a number of the decision making individuals over the years) know quite well that the price of energy is driven by the balance between supply and demand.
The smart ones who paid attention in economics classes and who watch the behavior of prices on a frequent basis also know that higher energy prices generally lead to higher profits since the cost of production does not vary as much with the balance between supply and demand. (It may be stating the blindingly obvious, but profit goes up if the price increases substantially, the demand does not fall too much, and the cost of production remains flat.)
As you mentioned, direct subsidies for either gas or nuclear have not resulted in much in the way of increased supply, but they have resulted in a rather substantial increase in the wealth produced by selling energy by moving even a bit more of customer money into the hands of the producers. (All taxpayers are also energy consumers.)
I happen to agree with you that subsidies are a dumb way to spend taxpayer money. However, markets dominated by people whose only motive is making more money are not the best decision makers – the people making the decisions in that situation will often decide to influence the law of supply and demand by keeping their hands on the levers that they can use to keep supply restrained.
If their hands are “invisible” it is because they work at keeping them hidden or because observers and academic study producers do not work very hard to find them. That is sometimes due to a behavior I have noticed in my professional career as a naval officer assigned to a major Washington DC staff – if you want a study to back up whatever action your decision makers have already decided to take, all it takes is a few hundred thousand dollars and the right kind of study request paperwork and you can get a very nicely produced and selectively argued document.
Finally, before I go and spend a few more days talking with students who are brilliant engineers, but have little practical understanding of how humans make decisions, I will take issue with your comparison between those who promote nuclear energy and those who promote solar. (I am not strongly affiliated with either political party, so I will avoid your characterization of the politics.)
Unlike the solar advocates, who often ignore physical realities like night, clouds, latitude, and the difficulty of collecting weak and diffuse energy sent from a heat source that is 93 million miles away, nuclear advocates are excited about an extremely energy dense group of metals that can release 2-4 MILLION times as much energy per unit mass as burning oil.
Nuclear advocates KNOW that our heat source is readily available, is clean enough to operate inside sealed submarines, and can be made safe enough so human beings can spend entire careers in power plants with little risk of injury and essentially zero risk of death. We KNOW that our favored heat source does not threaten its neighbors with either slow or fast death and we KNOW that our grandchildren and our grandchildren’s great grandchildren can still be living abundant, productive lives if they are depending on fission rather than trying to eek the last remaining hydrocarbons out of the earth’s crust.
There is a good reason why companies like BP, Chevron, and Shell promote their investments in solar energy – often spending more on advertising than they do on the actual research and development. Solar does not threaten their market dominance and cannot ever be made abundant enough to reduce the price of energy. In contrast, nuclear energy has proven to be very capable of replacing the use of oil, gas and coal in many applications including powering aircraft carriers, icebreakers and submarines, powering entire countries, and even heating cities with direct district heat.
Oil/gas companies (those commodity heat sources are generally produced by exactly the same companies using very similar technology, often in the same wells) do not invest in nuclear because they recognize that abundant, emission-free, affordable energy is the only real threat that they have if they want to retain their wealth and power.