As I covered in a previous entry, coal plants are being retired quickly and before the time they should normally have. The Demise of Coal
This early retirement system is of course an application of the broken window fallacy where we instead of using the coal plants for as long as possible until they are indeed “broken” we keep breaking them ourselves by forcing the cost of coal plants to ““necessarily skyrocket” and to artificially game the markets in other words to excel those sources of power which the president likes. This form of cronyism is going to have a huge impact on American’s especially those who are poor or in the middle class. In other words, everyone is going to pay for the policies enacted by our current president.
But never just take my word for it…..The costs can be seen here in the first report on “future prices of electricity” in the US and in certain regions especially.
The market-clearing price for new 2015 capacity – almost all natural gas – was $136 per megawatt. That’s eight times higher than the price for 2012, which was just $16 per megawatt. In the mid-Atlantic area covering New Jersey, Delaware, Pennsylvania, and DC the new price is $167 per megawatt. For the northern Ohio territory served by FirstEnergy, the price is a shocking $357 per megawatt.
As we can see, the price of electricity is going to sky-rocket and as I showed in my previous post, is also something Obama promised here.
Obviously, the cost of bankrupting the dominant source of the electricity in the US will have a cost, and now that cost is seen. Eight times more for electricity is the cost seen across most of the US. Is it worth that much money to rapidly switch to Natural Gas? I would hazzard to guess that if someone wanted to do this slowly, the costs to the consumer would be less. But don’t forget the recent report from NERC (the North American Electric Reliability Corporation); which shows how these closings done so quickly will also lead to possible black-outs and other issues in the power grid:
It seems every way we turn we are getting inferior sources of power and we are doing it for much more money. Not only is this an application of the “broken window fallacy” writ large, but its a very terrible application thereof that is going to be rather bad in the days coming ahead as not enough natural gas plants come online to replace those retirements in the coal industry. That means that the economy will hit a snag when this all takes effect starting in 2015. But who cares by then? Obama will be on his way out regardless and if he ruins the country in the process it does not matter.
As another famous president from Missouri once said: “The buck stops here” and in this case we must blame someone for the problems that THEIR policies cause. So lets blame those who are responsible and remember that the cost of closing coal plants down is going to be felt by everyone. The coal companies and the utilities are not going to take a loss. They will pass these costs onto the consumers who are stuck with no choices in the matter.
This is the energy policy advocated by our president. A worse system that costs much more. It seems that the lunatics have indeed converged and taken over our Government. As I always say, watch where the money flies when you are not looking. Because as this case shows, closing down coal will benefit some people, but the people who pay for these crony pork projects is you and me like it always has been. GE gains another benefit as being a crony corporation. And everyone else pays for this decision.
Is it worth paying 8 times more for electricity just to get rid of coal? I would highly doubt that the health costs associated from CO2 (a harmless trace gas) and from other things would ever be worth that cost which will have a human cost when people can not afford to heat their homes. That is the true cost that will come to us all in the days ahead when we get to choose whether to power our homes or to eat. But perhaps we all deserve this for electing such a man to the presidency who indeed promised us this very thing. We all cheered and we went on about how “hope and dreams” will defeat all. But will we have the courage to stand up and tell the president that hope and dreams does not power our homes or give us the money to pay outregous electrical bills?