Policy vs. Technology

You know that old saw, “What’s that got to do with the price of rice in China?” I think that the new one is “How is this affected by the price of a barrel of oil?”

Lots of talk these days about whether you can truly legislate energy policy. And we’re bombarded with examples of failure, even in our own state. Turns out that it’s difficult to get past the old law of supply and demand, especially when it comes to technological innovation.

Of course, a lot of times energy policy attempts to shift supply and demand. I mean, what is a mandated minimum levels of alternative energy generation and use but literally creating additional markets. So, why doesn’t it work? Business and science people will tell you that some of it is reliability, that even when government says it will commit to purchasing a set amount over a set period of time, the market can’t trust that enough because of the changing political winds. And some people might say that rushing technology just doesn’t always work; innovation is a messy process of trial and error and just saying that something will be ready to go in 2020, for example, doesn’t make it true.

The reason that the price of oil trumps alternative energy innovation, though, is really that the government commitment isn’t enough. I mean, it’s nice to mandate 20% of Washington Ferry fuel from alternative energy, but that’s a drop in the barrel of world fuel consumption. I’m not sure even the U.S. government is willing to commit the resources that it would truly take to purchase enough alternative fuels. Which is why we start getting into “artificial” ways of ensuring higher gas prices, like cap and trade or carbon tax or (my personal favorite) price floors. That’s where policy seems to maybe have a shot of working, and it looks like we’re getting closer to finding out one way or the other.

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One Response to Policy vs. Technology

  1. Frank says:

    Or, relatedly, “How is this affected by the price of a ton of coal?”

    Agreed. Nothing focuses the mind (or the wallet) like expensive energy. All the mandates and minimums in the world can’t compare.

    On the other hand, we’re about to break ground in Seattle on what may be the only multi-billion-dollar transportation project constructed in the 21st-century that’s designed exclusively for single-occupancy vehicles. So policy does, indeed, play a role in our energy consumption.

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