Discussing Energy Economics on the Internet

But How Does It Affect Us?

Posted in California,Nuclear,Renewables by Cheryl Morgan on the September 30th, 2008

That has to be the question that everyone is asking right now. OK, so the banking sector is in meltdown, but what about me? Or, in our case, what about energy?

Despite the regular panics about price spikes, market failure, environmental regulations and so on, it appears that the energy industry is weathering the storm. Last week Platts reported that the US energy sector was still seen as a good investment. Of course that was last week, but it does help to be producing a product that just about everyone needs. The demand for energy may tighten, but it will never go away.

On the other hand, the nature of investment in energy may change. Today the California PUC has warned that lack of investment capital may put the brakes on the state’s green agenda. Platt’s reports that Commission member John Bohn has been voicing concern about the ability to finance development projects. Even major utilities are likely to be hit, but smaller companies will feel the pain much more deeply.

That, I suspect, will be a major problem for the burgeoning renewables industry. Right when it was about to take off in a big way, investment is going to come to a grinding halt. Instead new investment will have to come from other sources, and there will probably be government involvement in many cases. We can’t afford to let the lights go out, so government will feel the need to Do Something. And, as is the way of government, they will eschew multiple small and innovative projects, and go instead for something big and flashy that will appear to solve all of their problems in one go. Building nuclear power stations may prove to be a lucrative career over the next few years.

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