Zero Hedge’s Tyler Durden: US Should Invest in Alternative Energy Infrastructures

What are your views on Peak Oil? Assuming you think its arrival is relevant to people alive today, when do you forecast the market will recognize its significance? If we have to cut our use of oil, will we also have to cut our addiction to economic growth in conjunction?

The rate of global consumption of oil is certainly rising. While the debate over Peak Oil has numerous proponents and opponents on both sides, we tend to not have so much a view on Peak Oil per se, as much as marginal consumption and production at any given moment. What is without doubt is that like any natural resource, the accelerating extraction of oil will deplete the resource, once again based on increasing marginal rates of utilization. While we certainly would wish that the G20 countries were investing capital in alternative energy infrastructures, this will come sooner or later, voluntarily or otherwise. The longer the delay, the greater the ultimate incurred cost. In the meantime, should oil and other commodity prices surge, well-known higher priced alternatives (solar, geothermal, wind) will suddenly become equitable, and as more and more energy production shifts to less efficient modes of energy creation, increasingly more R&D spending will occur in those alternative fields, which in turn will result in a decline of the energy equivalent costs as efficiencies improve. Ultimately, and probably after a violent cyclical shift, there will be a new pricing equilibrium, but one which will nonetheless see an increasing need to shift away to renewable energy sources. We can only hope that in addition to the trillions of dollars spent to fund bank-sector capital deficiencies, the government will find it in its heart to invest a few hundred billion in this venture earlier rather than later. Of course, as we know far too well how the game is played, we are very skeptical than anything like that will happen until it is far too late.

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