Gas, maths and the birth rate - an economist's dream?
MIRROR mirror on the fields….
That’s obviously a misquote, but it refers to solar panels. My slightly odd brain sees them as mirrors and they DO reflect the state of the clouds and the sky itself.
Why am I talking about solar panels? As an economist I am always interested in effects created by random economic happenings and we have an absolute doozie coming down the line.
You are probably aware that it looks as if land-based wind turbines are going to get the green light (on steroids). Fair enough if somewhat invasive. But what is going to happen to the energy market in the next few years anyway, and what effects will that have?
The first thing to realise is that the energy mix is about to change dramatically. I’m referring to Liquid Natural Gas (LNG) which in the wake of Russia invading Ukraine suddenly became everyone’s favourite thing and led to dozens of mega LNG fields and processing plants being given the green light. The ships were already getting built and in any case have extraordinary delivery capability.
One ship (ok I know they vary in size, but say an average sized one) can supply 45,000 homes FOR A YEAR. I’m not going to bore you with the maths, but believe me when I say that over the next couple of years this alone is going to transform energy prices. Add in the fact that China and India (who don’t care about Ukraine) will happily buy the cheapest gas around (from Russia) which leaves their traditional suppliers (Australia, SE Asia) looking to sell and hey presto, there’s all the rest of the world ready to take up the slack (at slightly cheaper prices of course).
The other transformation is going to be solar panels. These are now so cheap to manufacture that they have fallen into the no-brainer category. Suffice to say that within a very short space of time virtually all electricity for daytime use will be produced from solar panels.
It has been suggested that ALL electricity could be supplied from solar as early as 2031. And we might even get to store some electricity in what I would describe as smart batteries for use at night. The drawback is that transmission has got and is getting more expensive (in the UK at any rate in part because of the lunatic way electricity tariffs are calculated – they have to charge whatever the lowest gas price is which makes it much more expensive at the moment, but SHOULD get lower as gas gets cheaper).
Oh, and just as aside, all those pesky online ads we keep getting actually use up something like 3.5% of world electricity. Better Internet Search does away with ads and as a result uses 35% less electricity)
So energy is going to be cheaper. And what of food production? Well a major in-cost is nitrogen fertilizer, made from (you guessed it) natural gas. Another potential drop in price, and potentially leading to cheaper food.
Now all this is pretty handy for the average man on the Clapham omnibus, but what might he do with his somewhat eased financial situation?
You are probably aware that the West in general is suffering from an underproduction of that essential product – humans.
Just one example – Italy – is currently only producing 1.2 babies per woman. To keep the population stable they need 2.1. My hypothesis is that with the easing of money worries, people in the West in general might start reproducing at a higher rate. You can argue whether that is good or bad for the planet, but you probably can’t prevent it.
Isn’t that an absolutely wonderful chain of consequences? Russia’s invasion of Ukraine leads to an increased birth rate in the West. Isn’t economics a wonderful thing?
