The Associated Press reported the other day that the price of coal has gone through the roof from $40 to $90 per ton in just the last year. The causes of this increase are many, from short term problems (like floods in major Australian mines), emerging competition for the resource from China and India, and long term problems having to do with increased demand. The take home message is that coal is getting more expensive, and that is causing the electricty providers to raise rates.
Therefore, it should come as no surprise that the states and utilities that rely most heavily on coal are being the hardest hit by this growing energy boondoggle. States like West Virginia that get more than 90% of their energy from coal saw their electricity rates rise twice as fast as the national average in 2007 (4.6% vs. 2.3%). Rate increases like these impact the already stressed poor communities the most, the ones that are barely able to pay their utility bills in the first place.
To many of us that
understand basic economics, the price increases that we are currently seeing with coal, gas and oil are not entirely surprising. All fossil fuels are fininte resources that are used and not replaced. As the world uses more and more of these resources, the scarcer and more valuable they become, and therefore the price goes up accordingly.
This is not wholly a bad thing if the economy is allowed to work its magic. Other forms of (renewable) energy will become more competitive, our reliance on fossil fuels will go down as we use more alternative energies to meet our needs, and as demand for fossil fuels drops so will the price. Pure magic.
But our utilities are not listening to the market and apparently are not big fans of Adam Smith.
In spite of fact that we are running out of coal and prices are skyrocketing, Dominion Power still wants to build a new coal plant to lock Virginians into 50 more years of dirty, inefficient, and expensive technology. The last time I checked, the price of solar and wind energy were coming down — they also provide the benefit of utilizing power sources (the sun and wind) that is not subject to price shocks. So it wouldn’t matter how much of the sun China is using, we will still get our fair share as well.
Dominion is not thinking like a rational consumer, they are mortgaging our future for short term gains (for why that is bad, see: the current housing foreclosure crisis). Wind and solar are predictable investments, coal is not.
Our Commonwealth would be better served by renewable energy, if only we had the leadership to help bring it here.