We’ll never run out of energy

Converging in August 2007 were a feisty mood, controversial book, and blank screen where a column needed to be, with this result:

How’s that for provocative? Peter W. Huber and Mark P. Mills are pleased to tell you why they think so in “The Bottomless Well: The Twilight of Fuel, The Virtue of Waste, and Why We Will Never Run Out of Energy.” It’s a book that even large-scale thinker Bill Gates said is the only one “…I’ve ever seen that really explains energy.” In it, Huber and Mills demolish a catalog of shibboleths with “…seven great energy heresies we propound in this book.” They are:

• The cost of energy as we use it has less and less to do with the cost of fuel.

• “Waste” is virtuous.

• The more efficient our technology, the more energy we consume.

• The competitive advantage in manufacturing is now swinging decisively back toward the United States.

• Human demand for energy is insatiable.

• The raw fuels are not running out.

  • America’s relentless pursuit of high-grade energy does not add chaos to the global environment, it restores order.

They’re pretty hard on most of the energy literature generated since the landmark crises of 1973 (the first oil embargo) and 1979 (Three Mile Island). “They are all wrong, except where they are not even good enough to be wrong, which many of them aren’t, most of the time,” the authors say. “The best that can be said in their defense is that it is easy to be wrong when writing about energy.” They cite Richard Feynman, who observed, “Energy is a very subtle concept. It is very, very difficult to get right. What I mean by that is it is not easy to understand energy well enough to use it right, so that you can deduce something correctly, using the energy idea.” The authors pile on: “Most of what most people think they know about energy is so very wrong that their convictions, heartfelt though they may be, lie beyond logical contradiction or refutation.”

It’s a safe bet that few people with any knowledge of the subject would have said to the great physicist directly, “Feynman, you’re a nitwit,” so maybe there’s something in what he and the authors are on to.

“What most of us think about energy supply is wrong,” the authors say. “Energy supplies are unlimited; it is energetic order that’s scarce, and the order in energy that’s expensive. Energy supplies are determined mainly by how cleverly we’re able to impose logic and order on the mountains and catacombs of energy that surround and envelop us.”

You can guess their opinions of efforts to regulate energy consumption. They call proponents of such efforts “Lethargists” and quote professional doomsayer Paul Ehrlich, who once said, “Giving society cheap abundant energy at this point would be equivalent to giving an idiot child a machine gun.”

An opposing camp, the “Cornucopians,” proposes energy efficiency as a path to less energy use. Although the authors cheerfully support energy efficiency, they say the Cornucopians are wrong in a “spectacularly self-defeating way — energy efficiency leads to more consumption, not less…”

Huber and Mills have much more to say (and numerous statistics to present) in an interesting and entertaining read that will make you think hard about your arguments no matter what side of the debate you are on.

Do you know how much your car cost?

Of course I do, you knucklehead, I hear you muttering under your breath. But before you jab your finger at the sales contract, let me stop you: that number in the lower right hand corner is not the correct answer.

As a car enthusiast since junior high school—with an oeuvre of study hall sketches to prove it—who has owned forty-plus cars (I lost count), I’m sometimes asked by friends for guidance on car buying. This has happened often enough for me to observe repeating notions about the car-buying process. For many, a big chunk of the process has to do with emotion, expertly pandered to by the car makers. I offer no advice there. But it has to be paid for, and that’s where the rubber meets the road, as it were.

Ink meeting the sales contract is more to the (ball)point, and here is where the wheels often come off, as you travel the road to acquisition (to flog the metaphor).

But let’s say that road was successfully navigated, and you arm-twisted the dealer to get what you consider a great deal. That’s what the car costs, right? Actually, no. Consider this: Why are you buying the car, anyway? The answer: You’re buying it for transportation. There are peripheral, soft-dollar benefits a specific car conveys to the buyer, such as status or pleasure, but only you know the value you choose assign to such things. What we are addressing here is the hard-dollar side.

This conversation doesn’t include such people as collectors, who buy cars for other reasons. If you bought your car to decorate your driveway, that’s one thing, but for the rest of us, cars are used to go places. And going to these places adds up to a national average of ~13,500 miles per year for each of us, according to the U.S. Department of Transportation.

If the car (or anything else) you buy, lease, rent, or steal is used for transportation, then the metric is simple. What you are paying for is… drum roll… cost per mile. Period. That’s it.

So… how is cost-per-mile calculated? Easy. Add every direct cost you paid out: acquisition, insurance, fuel, maintenance, repairs—everything. Subtract from this total the amount you received upon selling (or trading) it. Divide into this result the total number of miles driven. Voila! That’s what your car cost you.

In case you’re wondering, this figure, for most cars driven by most people, is in a range of $0.25 to $0.75 per mile. A question I hear you asking: What good does it do me to know cost per mile if I can only figure it in hindsight? Well, for one thing, knowing the true cost of anything as expensive as a car, which is the second most expensive thing most people ever buy, is always useful data for whatever purposes you choose to put it.

On the know-it-before-you-buy-it side, sources such as edmunds.com can help. Edmunds is an excellent source of this kind of information. Edmunds doesn’t pay me to endorse them—they don’t even know who I am—but as one who studies car sites at practically the Talmudic level, I have found them to be authoritative.

By the way, other questions people often have about car buying, e.g., lease or buy, new or used, have to do with cash flow, not the true cost of the car. This will always be how much you paid minus how much you sold it for divided by how far you drove it.

That’s the real number in the lower right-hand corner.