Now I want to warn you about the dangers of the Alternative Energy Boom, which has just begun with intensity equal to that of the dot-boom from a decade ago.
That's not to say there aren't fortunes to be made in alternative energy. That isn't to say there isn't real value there, a lot of it.
But unless you're a rank speculator, with legitimate inside information, and unless you're playing with "mad money" you can afford to lose, now is not the time. This is a place for pros only.
First, there's going to be a lot of phony-baloney here. I consider ethanol to be phony-baloney. Archer Daniels Midland has been pushing this corn ethanol story for a long, long time, and the numbers don't add up. The raw material has other uses, its energy output isn't that great. When politicians pander to this constituency, put your hand on your wallet.
Second, there remains enormous political momentum behind carbon energy. Take this bit of malarkey from James "Dow 36,000" Glassman's TCS Daily. (I've been told that Glassman sold the site to National Review writer Nick Schultz, above, but they're two peas in a pod.)
Glassman's Arnold Kling, a notorious shill for the carbon industry (whom I should add I worked with at Corante), calls all government support for carbon-free energy "pork." This is partly because any support for non-carbon energy will have an offset -- the elimination of tax breaks for carbon energy.
And there are enormous subsidies for carbon in our current tax law. A 2005 energy bill provided $8.1 billion in direct subsidies and $80 billion in new spending -- that's just one bill. Politicians like Montana Governor Brian Schweitzer consider oil shale to be alternative energy. It's not. Forbes calls coal "the best bet" for alternative energy. It's not. It's carbon.
People like Glassman will also use ideological, even theological arguments to defend this status quo, claiming either their subsidies don't exist or non-carbon subsidies are illegitimate. It will take several years to clear the brush of these creeps, and the industry's many other Astroturf peddlers.
Whether or not we're really running out of oil is not the question here. The argument of pure nationalism is what will win the day. And there our ample supplies of carbon in the form of oil shale and coal provide a barrier to real progress.
So this will take time.
The most important thing we can do right now is set a floor price for energy, at $50/barrel or barrel equivalent. This will assure alternative suppliers of a market, and provide an incentive to reduce present inefficiencies.
The second thing we have to do is increase support for basic research. Take this guy for instance, Mu Hyun-Baik of the University of Indiana. He just got $550,000 to study something called a "ruthenium complex", which he claims can act as a catalyst in converting inert water directly into energy. This could be a dead end. There will be many dead ends. But we're 30 years behind on this effort, and the risk of failure is something we need to be engaged upon, with our research dollars.
Failure to act will kill your grandchildren.