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We Must Pay Attention to the Numbers, All the Numbers

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Numbers and the Energy Problem

In today’s accelerating crazy digital world there is more and more information than ever available at the touch of a button.

This has a good and a bad side to it. When so much information becomes available, it is difficult to determine which information is relevant and which is not. Sometimes I think the shear volume of information just overwhelms many people. One has to remember that more information does not mean more useful knowledge and certainly does not mean more wisdom.

Along with this increased volume of information, there is also an increase volume of numbers and statistics. Numbers and statistics can be misleading and more often than not, they are ignored. Most people don’t like to look at numbers, they don’t want to “do the math” to make sense of what the numbers are telling us.

However, numbers play an invaluable role in enabling us to see trends and determine which way something is moving. It is important to not just look at the numbers, but to look at the trend or rate of change of the numbers, many times this tells a very different story.

In this article and subsequent articles I will highlight some numbers that I think are VERY important and that understanding these numbers and what they mean can help us to more clearly see the path that we must take to deal with our energy problem.

Disproportionate Worldwide Energy Use

Here are some macro numbers regarding the United States and its energy use:

  • The U.S has approximately 5% of the world’s population
  • It uses approximately 25% of the world’s energy
  • It imports roughly 60% to 65% of the oil it consumes, up from 25% in 1973 and 50% in 1980. This is certainly an alarming trend, especially considering that EVERY President since President Jimmy Carter pledged to lessen our dependence on foreign oil. Well, given this trend and the numbers, I guess the “words” mean very little.

These are “just numbers” but when you look closely at them, you will see that these proportions will have to change. Something will have to “give”; it cannot go on this way for much longer.

This is true because a very large number of people in other countries (China and India for example) have a desire to increase their standard of living. In order to accomplish this they are going to have to dramatically increase their consumption of energy, there is no other way.

How are they going to do that, if we use 500 % more than them per capita?

To illustrate - If everyone in the world used as much energy as the average American that would mean that one of the following scenarios will HAVE TO unfold. Which do you think is most likely?

  1. 20% of the world population gets to use ALL the world’s energy and the other 80% will be happy and grateful to settle for ZERO and live in poverty forever.
  2. The average energy use in the U.S will drop dramatically; or
  3. A vast new source of boundless pollution free energy will be miraculously be discovered and become instantly available.

Since the US does not produce the majority of its own energy it makes me think that #2, in some form, is the more likely scenario. The only people who believe that #1 is likely currently reside in the White House and the only person who believes #3 is a viable possibility is the tooth fairy.

The sooner the average American understands this situation, the faster we can move to address this serious imbalance. The longer we wait the more painful the transition will be.

These are NOT just “numbers” they cannot just be dismissed, we have to pay attention to them and we need to generate the political courage to act on them.

If we ignore the numbers, they will NOT go away, but the energy certainly will.

Global Warming and Hurricanes

The numbers and recent trends do not look promising. For example, the TEN hottest years in recorded history have all occurred in the last 15 years, with 2005 being the HOTTEST year on record. This is certainly an alarming trend.

With the beginning of the new hurricane season beginning on June 1, a topic of the news media for the coming weeks is certain to be last years hurricane season and the havoc and misery it has inflicted upon New Orleans and its residents. It was the worst storm to ever hit the crescent city. The year before it was Florida, last year it was New Orleans, it certainly seems as though there are more hurricanes than normal recently.

What do the numbers say?

According to a recently published article in Science the number of hurricanes has NOT increased that significantly. However, the number of category 4 and 5 hurricanes has almost doubled in the past 35 years and this rate of increase has accelerated in the late 1990’s.

These are very scary numbers and we need to pay attention to them. The future of our very planet may rest squarely in our hands.

Hurricanes are “fueled” by warm water, the warmer the water the more “fuel” that is pumped into the hurricane.

Could they be related to Global Warming? Some people want to “wait and see”, with President Bush and the tooth fairy being among them. I personally don’t think that is a wise course of action. That is similar to saying that you will wait until it looks like you are going to have a car accident before calling your insurance company for insurance. It just does not work that way in the real world.

These are NOT; “just numbers” and the consequences of not paying attention will NOT go away.

Very Important to Use all the Numbers (if you want the correct answer)

When calculations are performed it is important to make sure that you obtain ALL the relevant numbers in order to arrive at the correct answer. Sounds simple, doesn’t it?

Well evidently, it is not that simple.

I think that many governments and other groups are doing very complicated calculations and coming to some very significant conclusions that are incorrect, because they are not using all of the numbers in their calculations.

For example: What form of generating electricity is “cheaper” - Coal or Renewable Energy?

When this calculation is performed utilizing “standard” variables coal comes out “cheaper” every time. However, what if you decided to add one or more variables that had not been used in the past? Even if these variables are somewhat “intangible” or difficult to quantify.

Well, Ontario, the richest province in Canada decided to add in the health related “costs” of using coal, since it pays for the health costs of all its citizens. These costs related to: children’s asthma, heart and lung disease, various cancers related to airborne particulates and mercury poisoning.

What were the results of these “new” calculations utilizing “all the relevant numbers”?

Ontario decided that coal was too expensive and that they should phase out all of their coal plants and switch to a combination of renewable energy sources - biomass, solar thermal, solar electric (photovoltaics) and wind.

It just goes to show you, that when you use “all the numbers” that you just may come to a totally different conclusion.

You have pay attention to the numbers and what they are telling us, ALL the numbers.

Peter Lynch has worked, for 29 years as a Wall Street analyst, an independent equity analyst and private investor, and a merchant banker in small emerging technology companies. He has been actively involved in following developments in the renewable energy sector since 1977 and is considered an expert in this field. He is currently a financial and technology consultant to a number of companies. He can be reached via e-mail at Solarjpl@aol.com.

Disclaimer
Peter Lynch is an independent columnist for this web site and may hold long or short positions in any of the stocks mentioned in this article and those positions can change at any moment. InvestorIdeas.com Disclaimer: www.InvestorIdeas.com/About/Disclaimer.asp, InvestorIdeas is not directly affiliated or compensated by the companies mentioned in this article. Nothing in the articles should be construed as an offer or solicitation or recommendation to buy or sell any specific products or securities. Past performance does not guarantee future results.

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