Not that I have any financial interest in this at all, oh no

\”I think there can be no growth unless there is green growth,\” he said, stressing that population growth would put increasing pressure on finite resources such as gas, while renewable energy was a natural limitless resource. \”If we want to grow in this world, we can only grow in a green way,\” said Gummer, a Tory environment secretary in the 1990s.

The thing is, that\’s something you have to prove, not something you can assume.

Further, we have a system that warns us about resource scarcity. It\’s called \”a market\”. As any particular resource becomes more scarce the price rises and thus we quite naturally use less of it.

So, have one of these \”market\” things in energy and see which way it goes.

Reliance on gas would also leave the UK dependent on foreign imports to run the nation\’s power stations and mean that the renewable energy industry, including wave and tidal generation, would contribute less to the economy as demand fell, it has been argued.

Err, hello? Heard about that hole in Blackpool?

6 thoughts on “Not that I have any financial interest in this at all, oh no”

  1. Like most ‘greens’ he’s determined to pretend it doesn’t exist because it buggers up his cost/independence argument. Without that, most of the case for renewable energy vanishes. Deben stands to lose a considerable amount of money if we don’t cover the land in wind turbines. Still, perhaps he’ll be able to recoup some on the enforced installation of water meters…

  2. I agree about the market being a regulator for resource use.

    However does the market price sufficiently anticipate the forthcoming shortages (if they ever do arise) or does prices only really start to increase once the shortage has occurred.

    There may be other reasons why the price should rise sooner – such as some “moral obligation” to leave some oil for our grandkids. But maybe arguments about innovation and growth cancel this one out. There is also the question of government taxation which may indirectly do this.

    Interested to know what you think.

  3. However does the market price sufficiently anticipate the forthcoming shortages (if they ever do arise) or does prices only really start to increase once the shortage has occurred.

    The oil price looks far into the future. Remaining reserves and extraction rates for the next 15-20 years are all considered.

  4. I have another question – when the price of a barrel of oil goes up by say $5, how is that increase shared between the state that has the oil reserves and the oil company that pumps it out. Anyone know ?

  5. Fred,

    It depends on the contract in place between the operator and the government. In the developed world, the operator will pay royalties expressed as a percentage of the gross value of the oil, so in these cases the government will get its percentage of the $5.

    In some cases, the operator is a joint venture between the government oil company and other international oil companies, with the former often having a 51% stake. The government will then get 51% of the $5, assuming no additional taxes are levied on the operating company.

    If they do, they’ll get their percentage as well. If there is a Production Sharing Agreement (PSA) in place, the operator gets a share of the production in return for paying for the facility. In this case, the operator gets its share of the $5 and the government gets theirs, depending on what the agreement is.

    This is why oil producing countries like it when the oil price goes up: it fills the government coffers.

  6. Fred: Whether markets see far enough into the future depends on two things:
    1. What you think “far enough” means and how close or distant your definition is to the average person in financial markets.
    2. How much speculators are allowed to operate.

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