Illiterate and Innumerate, Energy and the Citizen

re: America’s lack of numeracy, printing money using log10 numbers.

Re: printing money using power of 10 notation (scientific notation)

Is a great idea. Our lack of ability to reason easily and comparatively about large numbers today is having a much greater impact than, say, English v. metric units (note that even Airbus is still, indeed must use English units lest a metric part wander into the maintenance bin and be responsible for a disaster). People tend to think all very large numbers are equal (ditto for very small). Discussions about energy (and environment, and pollution, and risk) are nothing but exponentials – where solving the equation often settles the postulate immediately (as in “gee, that doesn’t make any sense at all.”)

Richard should do one of those online poll embeds (Google docs has some) – and have people report their monthly power bill and KWH used – be wonderful to collect KWH equivalents as well, natural gas and gasoline).

What we’ll see is the average monthly use is closer to 2 KW per hour – electricity only (and much higher during the working day). Systems have to be built for peak.

Consider that the average "light office work" 10 story building consumes 1 MW per hour (during the working day). School buildings tend not to be built to commercial code and are even less efficient. Don’t forget to add this (the fact that most people have two places they occupy) into the home numbers.

What’s amazing about today’s nuke price is France built their plants for roughly $200M each in the 70s. Amazing price inflation (really regulatory / insurance costs we’re willing to bear for something much safer than coal or oil – similar to the gasoline engine v. the horse). (note that France’s EDF still has their “Los Alamos” mission (or v. v.) – at least their weapons folks have something to do, unlike the U.S. labs for all our investment. Consider where we’d be today if we took off the regulatory shackles and told them the target was < 2 cents per kwh delivered in 2010, and .2 cents per kwh in 2020, and by the way, let’s start using nuclear-explosives like conventional shaped-charges for large-scale engineering challenges and dealing with disasters).

Consider that combined-cycle next-generation natural-gas plants are now over 60% efficient(!) – which means the cost of NG is >50% of price at demarc (could be as low as 2cents a KWH given full exploitation of proven NG fields). fyi, the reason GE is so excited about wind is because they know that any alternative power installation has to buy one of their NG power-sets for every equivalent amount of transient power installed (can’t have folks freezing in the dark).

Also missing in the analysis is the only reason prices are high is regulation that reduces, if not removes, competition and more rapid exploitation. As soon as there is competition to fossil fuels, the price they charge will fall (along with their currently phenomenal revenues and profits) to the marginal cost (similar to what price an airline is willing to settle for of the last empty airplane seat a minute before the plane leaves). Which is well under 1cent a KWH – or $2 per barrel at the wellhead. In the case of the airline the minimum price is (just) regulation – they have to charge enough to pay the government per-head fees (else it pays to leave it empty).

It’s interesting to note that these per-head fees on international travel are around a third of a discount ticket. Which is much less than the fees currently imposed on energy (explicit and regulatory). This brings back the arguments of the 1930s – where who owned and controlled the generators meant money and political power. Which led to the TVA disasters – slowing innovation and deployment of power throughout the south, and taking of property without market-based compensation.

(The cost of) energy is a special commodity – the economists seldom get it right – it’s the missing denominator in their equations. The more it costs, the more we sweat. The less it costs, the farther our reach (distance and time). And we’re never wealthier than when a Boolean order of magnitude more producers are competing for our pocketbook (network effects), and we have the opportunity to compete ourselves for a power of two more customers. Consider that there is no poorer individual that the yeoman farmer, dependent on only what he (and family) can produce. 2×2, 4×4, 8×8, etc. are what determine our quality of life, and are what makes us free-to-choose of an abundance of options and opportunities. "Sorry son, you’re going to be a (subsistence) farmer like I and my dad and granddad, because we can only market what we can carry on our backs." (without an energy multiplier). The bit world changes this a bit, but not by much. Perhaps half of today’s energy use can be virtualized (though the “singularity” folks believe that we become bits in that era – but it’ll be some time before Moore’s law or its replacement takes the world-wide computing and communications power budget (which has yet to exhibit “singularity” behavior) and reduce it to our current (total energy consumption per U.S. person) of the equivalent of 10-20KW per hour (depending on what distribution losses are assumed).

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