Why alternative energy is not alternative
From Charles Gave of Gavekal
The older I get, the more I am convinced that the economy is nothing but energy transformed. Since the beginning of the industrial revolution, the story of the economy has been one of constant movement from not very efficient sources of energy, such as wood and then coal, to more “dense” and efficient sources, such as oil and nuclear fission, with the aim having been to arrive eventually at nuclear fusion.
However, in the last couple of decades we have decided to go backwards, to less efficient sources of energy such as wind and sunlight.
My take:
1.Alternative energy is not alternative because humans have used sun, water, wind and geothermal forever and were poor because of that.
2.Technology has improved and wind, solar can be more effective but far away from fossil or nuclear
3.If despite rules incentives and government meddling Alternatives never become 1/3 of world demand and since there is no investment in oil oil is going to overshoot. Alternatives is not an alternative.
4.If alternatives is a real alternative and become 50% of demand since de Saudis, Iran , etc will fight for a small pie (only 50%) oil will gravitate to USD 15 that is their marginal cost.
My take is that we will have scenario 3 first .
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