Us Government Control and Subsidy of Energy vs. Private Sector Investment and Development

Topics: Fossil fuel, Wind power, Renewable energy Pages: 2 (774 words) Published: February 6, 2013
A subsidy is a payment from the government to a business to encourage the continual use or development of a technology or product that is considered to be useful or beneficial to the society. Most often, the money (or subsidies) is coming directly from taxpayers. This is where Milton Friedman’s signature phrase, “there’s no such thing as a free lunch” comes in to play. A unit of a product or service may be free for one person, someone or something is enduring an opportunity cost. Currently, renewable energy sources such as wind and solar power are being subsidized by roughly $24 billion a year because of the perceived environmental benefits that go along with “green” technologies. However, renewable energy companies such as Solyndra have gone bankrupt and the government has supported them to keep them running via subsidies. The argument for continuing these subsidies is that wind and solar are still in the start-up phase in the industrial world and have not yet reached large scale markets. Unfortunately, it is highly unlikely that these companies will ever be largely profitable because renewable energy, with a few exclusions, are unable to reach the profitable market margin that generating plants fueled by coal, natural gas or nuclear can. While the government tries to focus their support on said renewable energies, only providing limited tax breaks for the private oil companies, the US private sector has produced a substantial increase in oil. 2011 was the third consecutive year of higher domestic oil production and, at the same time, natural gas output reached an all-time high. Over the past five years, about two thousand new jobs have been created in the oil and gas industry while employment growth for renewable energies has been limited at best. With many of the recent failures of several renewable energy companies, employment has declined in this area during several periods. The renewable industry will also struggle to prosper because they rely too heavily...
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