# Economic consequences of a new, cheap, safe, 'infinitely available', energy source **URL:** \ **Category:** Great Debates\ **Created:** [August 22, 2009, 6:55pm UTC](https://boards.straightdope.com/t/economic-consequences-of-a-new-cheap-safe-infinitely-available-energy-source/507335 "2009-08-22T18:55:54Z")\ **Posts on this page:** 9\ **Page:** 5
**Author:** ![Sam\_Stone](https://avatars.discourse-cdn.com/v4/letter/s/ecccb3/32.png) [@Sam\_Stone](https://boards.straightdope.com/u/Sam_Stone)\ **Post date:** [August 24, 2009, 6:13am UTC](https://boards.straightdope.com/t/economic-consequences-of-a-new-cheap-safe-infinitely-available-energy-source/507335/81 "2009-08-24T06:13:01Z")
Which brings up a good point - if we suddenly all had 8% of our GDP cost erased, we could afford a hell of a lot more foreign aid. So if countries like Saudi Arabia became destitute and under risk of massive civil unrest, we could simply shower them with development aid to help them to diversify into new income sources. ---
**Author:** ![The\_Tao\_s\_Revenge](https://avatars.discourse-cdn.com/v4/letter/t/73ab20/32.png) [@The\_Tao\_s\_Revenge](https://boards.straightdope.com/u/The_Tao_s_Revenge)\ **Post date:** [August 24, 2009, 6:17am UTC](https://boards.straightdope.com/t/economic-consequences-of-a-new-cheap-safe-infinitely-available-energy-source/507335/82 "2009-08-24T06:17:53Z")
> [@Sam\_Stone](#): > > Which brings up a good point - if we suddenly all had 8% of our GDP cost erased, we could afford a hell of a lot more foreign aid. So if countries like Saudi Arabia became destitute and under risk of massive civil unrest, we could simply shower them with development aid to help them to diversify into new income sources. Exactly. With the massive desalinization irrigation plant they’ll only need help till they get the hang of farming. ---
**Author:** ![mswas](https://avatars.discourse-cdn.com/v4/letter/m/e99b99/32.png) [@mswas](https://boards.straightdope.com/u/mswas)\ **Post date:** [August 24, 2009, 6:22am UTC](https://boards.straightdope.com/t/economic-consequences-of-a-new-cheap-safe-infinitely-available-energy-source/507335/83 "2009-08-24T06:22:31Z")
> [@Sam\_Stone](#): > > You keep asserting that. You also say I’ve only mentioned things that disrupted one industry. But the collapse in cost of computing power impacted almost every industry. But it didn’t completely supplant any industry, and not any industry that was the ONLY industry for a whole region. What will Dubai do if oil wealth becomes irrelevant? > [@](#): > > You also claim that this is different because it would happen ‘instantly’. Only it wouldn’t. There’s huge inertia in the world economy. Before new goods can be created that take advantage of all this free energy, the factories with new processes have to be built. Before everyone can take advantage of it, it has to be distributed across the world economy. Before we can switch to new free-energy vehicles, we have to justify the cost against the residual value of the vehicles we already have (are you going to scrap your $40,000 Lexus to save $5,000 in gas?) Right, but the premise of this thread is that it comes on suddenly. We’ll have cheap and abundant energy within 50 years the technology already exists it just needs to be perfected. > [@](#): > > In addition, as industries switched away from petroleum fuels, the price would come down for the industries still using it. This would slow the rate of transfer to the new energy sources. Yes, and the lower prices would bankrupt countries that depend on oil income namely all of western Asia. > [@](#): > > The U.S. spends about 8% of its GDP on energy. That’s a lot, but it’s not so much that the country would rapidly scrap its entire manufacturing base to take advantage of an 8% savings. The change would still be relatively gradual. Right, but that’s not the premise of this thread. > [@](#): > > Again - the price of oil dropped in half in one year between 1985 and 1986. It did not have a negative effect on employment. You want to claim that if it happened even faster it would have, but since all the evidence we have suggests that the economy adapts to price shocks without this taking place, I think the burden of proof is on you to provide evidence other than what you think is a logical outcome. A price drop and obsolescence are two different things, which is why your example is irrelevant. You’re not talking about price shocks here, you are talking about the bankruptcy of every petro state on the planet. ---
**Author:** ![Sam\_Stone](https://avatars.discourse-cdn.com/v4/letter/s/ecccb3/32.png) [@Sam\_Stone](https://boards.straightdope.com/u/Sam_Stone)\ **Post date:** [August 24, 2009, 6:34am UTC](https://boards.straightdope.com/t/economic-consequences-of-a-new-cheap-safe-infinitely-available-energy-source/507335/84 "2009-08-24T06:34:39Z")
The OP did not say instant. He said that the energy source replaced all other energy sources within a year or so. That’s the premise I was operating under. That doesn’t mean all industry is replaced in a year or so. There’s inertia. If a factory has access to free energy and it didn’t before, that doesn’t mean its own products will suddenly displace all the others. Even if free energy was widely available, people would still fuel their Lexuses with gas for a while, because the gas cost isn’t worth as much as the residual cost of the vehicle. So oil would still find a market for some time to come, even though there was a free alternative. In addition, oil has many uses other than as fuel. In fact, gasoline was once considered a waste product of oil production. So there would still be a market for oil. At a much lower cost for sure, but it wouldn’t vanish. Don’t forget that free energy would be a huge benefit to the oil producing nations as well - they are also oil consuming nations. Many of them are in areas that could be turned into breadbaskets or vacation paradises with enough energy applied to them. And their costs of living would decline as well. The planet as a whole would be much wealthier, and more able to help lift up those countries disproportionately hurt. In any event, I would agree that the likeliest outcome would be civil unrest in some of the gulf nations, but I don’t see how this translates into the kind of widespread unemployment you were talking about. And I don’t see that the unrest couldn’t be solved given the massive new wealth we’d all have. ---
**Author:** ![mswas](https://avatars.discourse-cdn.com/v4/letter/m/e99b99/32.png) [@mswas](https://boards.straightdope.com/u/mswas)\ **Post date:** [August 24, 2009, 6:38am UTC](https://boards.straightdope.com/t/economic-consequences-of-a-new-cheap-safe-infinitely-available-energy-source/507335/85 "2009-08-24T06:38:17Z")
> [@Sam\_Stone](#): > > The OP did not say instant. He said that the energy source replaced all other energy sources within a year or so. That’s the premise I was operating under. That doesn’t mean all industry is replaced in a year or so. There’s inertia. If a factory has access to free energy and it didn’t before, that doesn’t mean its own products will suddenly displace all the others. Even if free energy was widely available, people would still fuel their Lexuses with gas for a while, because the gas cost isn’t worth as much as the residual cost of the vehicle. So oil would still find a market for some time to come, even though there was a free alternative. An engine in a car is an energy source. So all Lexuses would be powered by this energy source. Sure people would still own their Lexuses for a few years but what about five years later? What are those petro states going to do? > [@](#): > > In addition, oil has many uses other than as fuel. In fact, gasoline was once considered a waste product of oil production. So there would still be a market for oil. At a much lower cost for sure, but it wouldn’t vanish. All of oils other uses are a drop in the bucket next to its use as fuel. I look forward to plastic that is cheap as dirt though. Can you imagine plastic being even cheaper than it is now? > [@](#): > > Don’t forget that free energy would be a huge benefit to the oil producing nations as well - they are also oil consuming nations. Many of them are in areas that could be turned into breadbaskets or vacation paradises with enough energy applied to them. And their costs of living would decline as well. The planet as a whole would be much wealthier, and more able to help lift up those countries disproportionately hurt. Perhaps. > [@](#): > > In any event, I would agree that the likeliest outcome would be civil unrest in some of the gulf nations, but I don’t see how this translates into the kind of widespread unemployment you were talking about. And I don’t see that the unrest couldn’t be solved given the massive new wealth we’d all have. Well all of those gulf states are consumers and so they wouldn’t be able to buy other products. ---
**Author:** ![The\_Tao\_s\_Revenge](https://avatars.discourse-cdn.com/v4/letter/t/73ab20/32.png) [@The\_Tao\_s\_Revenge](https://boards.straightdope.com/u/The_Tao_s_Revenge)\ **Post date:** [August 24, 2009, 6:44am UTC](https://boards.straightdope.com/t/economic-consequences-of-a-new-cheap-safe-infinitely-available-energy-source/507335/86 "2009-08-24T06:44:42Z")
> [@mswas](#): > > An engine in a car is an energy source. So all Lexuses would be powered by this energy source. Sure people would still own their Lexuses for a few years but what about five years later? What are those petro states going to do? Use the cheap energy to start some new industries, if they can read the writing on the wall. ---
**Author:** ![Sam\_Stone](https://avatars.discourse-cdn.com/v4/letter/s/ecccb3/32.png) [@Sam\_Stone](https://boards.straightdope.com/u/Sam_Stone)\ **Post date:** [August 24, 2009, 6:57am UTC](https://boards.straightdope.com/t/economic-consequences-of-a-new-cheap-safe-infinitely-available-energy-source/507335/87 "2009-08-24T06:57:47Z")
> [@mswas](#): > > An engine in a car is an energy source. So all Lexuses would be powered by this energy source. Sure people would still own their Lexuses for a few years but what about five years later? What are those petro states going to do? Five years down the road is not ‘instant’, is it? And that’s about the time it took for oil to drop to 1/5 of its previous value. The Gulf states survived. > [@](#): > > All of oils other uses are a drop in the bucket next to its use as fuel. I look forward to plastic that is cheap as dirt though. Can you imagine plastic being even cheaper than it is now? It’s not a drop in the bucket. Out of every barrel of oil, about 10 gallons goes to non-fuel uses out of about 44 gallons of overall product. Road/asphalt oil, feedstocks, lubricants, etc. So even if oil lost all its use as a fuel tomorrow, it would still have a significant market. In fact, because the price would drop, the demand for other byproducts would increase somewhat. Maybe even quite a lot. How much road oil would we need if we could build roads with free energy? For all I know, we could wind up needing just as much oil, but we’d just use it for other things. ---
**Author:** ![KarlGauss](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/karlgauss/32/3713_2.png) [@KarlGauss](https://boards.straightdope.com/u/KarlGauss)\ **Post date:** [August 24, 2009, 1:02pm UTC](https://boards.straightdope.com/t/economic-consequences-of-a-new-cheap-safe-infinitely-available-energy-source/507335/88 "2009-08-24T13:02:20Z")
> [@Sam\_Stone](#): > > The U.S. spends about 8% of its GDP on energy. That is the figure for the direct costs. But, hidden in the price of everything else is the cost of the energy used to produce it, transport it, etc. Moreover, with a readily available supply of virtually limitless, cheap energy, there would be no need to maintain the military at its cuurent size, i.e. more savings would accrue as a result of shrinking the defence budget. Bottom line is that “8%” is clearly an underestimate if you’re talking about the percent of the GDP spent on energy and energy related costs. ---
**Author:** ![Chronos](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/chronos/32/134_2.png) [@Chronos](https://boards.straightdope.com/u/Chronos)\ **Post date:** [August 24, 2009, 5:50pm UTC](https://boards.straightdope.com/t/economic-consequences-of-a-new-cheap-safe-infinitely-available-energy-source/507335/89 "2009-08-24T17:50:56Z")
> [@](#): > > What will Dubai do if oil wealth becomes irrelevant? Bad example, since Dubai is anticipating and planning for just such an eventuality. Except they’re planning based on the assumption that the oil will run low eventually; if it instead gets replaced by something even better, so much the better for Dubai. Things like indoor ski slopes get a lot more practical when energy gets cheaper. [Previous page](https://boards.straightdope.com/t/economic-consequences-of-a-new-cheap-safe-infinitely-available-energy-source/507335.md?page=4)