Monday, October 21, 2013

The economy is driven by demand, supply responds.

In North America, and spreading around the world, is a cancer: sprawl. Sprawl is not economic, which means it costs more to live in sprawl than people can afford. Sprawl survives based on massive subsidy.

This subsidy is direct and indirect, through tax deductions for home mortgage in the U.S., direct price subsidy for motor fuel in other countries, and mainly the deferral of ecological costs resulting from the extraction, transport, protection, and burning of fossil fuel.

Sprawl is very wasteful of energy as buildings are spread out and must be heated and cooled separately and much transport is needed from one to the other. This waste generates artificial demand for energy.

It doesn't matter what kind of energy. As long as this wasteful system continues, energy demand will be high. It will consume all solar and wind energy and keep right on growing.

Currently fossil fuels provide most of the energy. Because of the large existing infrastructure, of pipelines, tankers, roads, and gas stations, it is still the highest in net-energy.

Trying to block fossil-fuels, or create alternative fuels, are supply-side solutions. Think for a moment about how supply-side solutions work for stopping illegal drug trade. As long as demand is high, suppliers always find a way. In addition, they are so profitable, that they have little trouble getting political support.

What we need to do is address demand. First, we have to expose sprawl as uneconomic and subsidized. The best way is to provide an alternative. People want sprawl to get away from the unpleasant aspects of the city. Why not make cities carfree. This will provide something that will be better and more economic.