Why call this political uncertainty as opposed to economic uncertainty? The future is intrinsically uncertain. The only thing that has changed is new entrants to the market. If gas plants can be replaced by something cheaper then they will be. If gas plants make economic sense, they will be built. The fact that gas developers have to model additional players in their markets to prove their economic viability seems fine to me. The fact that they are riskier investments means higher capital costs also seems fine (they are riskier!). Would you rather the politicians say no batteries because that would make financing gas plants harder?
> "If gas plants can be replaced by something cheaper then they will be"
This is a simplification of what is a highly complex, interdependent, path dependent and regulated system, with long lead times, and more priorities than just least-cost. The energy system's development isn't the unfolding of an endogenous economic rationality - it's very messy! For all those reasons, it's usually best understood through the lens of political economy.
Also, I don't know why you think there's an anti-green sentiment implicit in my comment. My own views are precisely the opposite.
>Why call this political uncertainty as opposed to economic uncertainty?
I'm assuming this is because so much of the energy market is directed through political mechanisms like subsidies, research funding etc. It's the political uncertainty that undergirds the economic uncertainty.
Sure, but why is that special for gas plants? CTs are expensive to run so if they run less that is generally good for people using electricity. I am not saying political uncertainty doesn’t exist or that the grid systems are apolitical or that building plants is easy. I don’t know much about the UK grid or rules which is why I was asking for specifics on what makes this specific case political.
Just speculation, but I imagine there is much less volatility in terms of fossil fuel policies. Fossil fuels (regretfully) have large and entrenched lobbyists who seem to get continued political support regardless of the office party. Contrast that to policies for/against renewables which have become a signaling mechanism.
What? Gas prices in Europe are extremely volatile [0]. Neither lobbyists nor politicians control prices and even if they did it isn’t obvious the lobbyists would prefer smooth prices.
Volatility in terms of policies, not prices. E.g., the it's fairly certain the subsidies for gas that are in place this year will continue next year. Price volatility has a lot more market dynamics at play.
I have lost the thread. The og parent said that political uncertainties were responsible for gas plant economic issues. You are now saying that gas plant lobbyists create more political certainty. I don’t know if that is true but it is beside the point.
I don’t think it is. If we agree that lobbyists affect political outcomes, and we can agree that some industries have entrenched lobbyists, then we can connect the two to say that lobbyists create more political certainty. That’s not to conflate “more certainty about policy” with “good policy.” It’s only beside the point if you think policy doesn’t impact energy prices, which is fairly easy to disprove.
In other words, if you think it's hard to implement a new energy policy in part because of monied interests, those monied interests are providing certainty in policy. To ground it in more real terms, I may not want to bet on new energy tech if the have an economic advantage based on who's in the White House. By contrast, betting on fossil fuels has more certainty because those interests are protected almost regardless of who's in the White House.
From the parent: “Political uncertainty about the future energy system is jacking up the rate of return investors are demanding of gas plant projects without contracted revenues.”
Your argument about lobbyists creating certainty doesn’t follow. Not all people in an industry have the same interests (gas generators and gas producers both like gas but price impacting regulation will create divergences). Lobbyists may reduce certainty because, for example, a super convincing lobbyist might instigate changes to an staid regime. The cumulative impact of different, less effective lobbyists over time may wash out or it may cause branches.
Ok, I'll try to be more explicit with the caveat that it's possible I'm reading too much between the OP's lines.
"future energy systems" means, in this case, battery and EV tech. Had it said "legacy energy systems" I agree that it does not follow. However, as stated, they are saying "we just don't know what's going to be on the political horizon. Maybe a ultra-conservative will be in the white house and all of these subsidies that help foster future energy systems will go out the window." Again, it's about the volatility of less-entrenched, prospective industries that are more reliant on policies to make them viable.
Entrenched lobbyists, almost by definition, want to keep the status quo. So I don't think we can agree that they are likely to institute massive changes. Put differently, do you think it's more likely that fossil fuel subsidies or that renewable subsidies will be dramatically reduced if the WH changes parties in the next election?
It's pretty interesting question actually. I think for an honest accounting you would have to take into account the positive externalities as well.
One way to start thinking about the question is to benchmark society before gasoline.
Mass use of gasoline kicked off around 1900, with the popularization of the automobile.
You can compare life now versus 1900 to get one estimate. The world definitely had problems and Wars before 1900.
What the world would look like today had gasoline never been discovered is a lot more tricky, but my gut feeling is that we would be worse off than today.
I suspect you're right. That's why I think it's important to get a transition right, because it would be a shame to squander the type of bootstrapping that oil afforded us as a society.
>You can compare life now versus 1900 to get one estimate.
I think this is probably too broad because it assumes a causal connection between gasoline and all of those differences. The industrial revolution had been decades underway before cheap oil, and would have continued if oil was never found in Pennslyvania. But cheap oil definitely helped speed it along faster.
>The industrial revolution had been decades underway before cheap oil, and would have continued if oil was never found in Pennslyvania. But cheap oil definitely helped speed it along faster.
That is certainly true. I meant using it a benchmark to extrapolate from. In many ways it seems to me that the industrialization at that time had a pretty negative trajectory, with a heavy basis in coal and brutal industrial towns. It is quite possible that we are living one of the best possible timelines from 1900.
I don't think the fuel type, but rather the labor and regulatory environment, was the driver of those conditions. We can't know for sure, obviously, but had oil been used before coal, I have a feeling those towns would still exist.
I agree that's probably a big part of it. Another interesting thought is that if we never moved off of coal we would probably have a lot more electrification and mass transit because call makes more sense in terms of centralized power generation. Sounds like the makings of a steampunk novella
> If gas plants can be replaced by something cheaper then they will be. If gas plants make economic sense, they will be built.
Eventually, the system will land in a semi-stable equilibrium. Getting there may be quite painful, though.
Capitalism is NOT an inherently stable system when the time scales of production and consumption have a mismatch. Look at farming and the feast/famine cycles it goes through. Practically all "developed" countries stabilize their agricultural sector, somehow, precisely for this reason.
Capitalism will happily take plants offline faster than new investment can replace. The grid needs a certain amount of base production or it becomes unreliable--which defeats the whole point of a "grid" in the first place.
Batteries are not enough by themselves. You need a combination of batteries, solar, HVDC links over larger areas (to give you diversity to ride out weather), gas plants, and nuclear plants. Many of these will be unprofitable to build but are necessary.
Rivian made scalping extra valuable by freezing the price for early reservation holders and raising the price for later reservation holders. Further, vehicles purchased in 2022 may qualify for a tax break while most ‘23 Rivian purchased will be priced out (even if their buyers are not). These are stacked on whatever scalping premium exists.
If a buyer’s agent gets any percentage of a sale, the buyer’s agent and the buyer have misaligned interests. They might ‘represent’ the buyer, but the buyer’s agent has the same economic incentives as the seller (higher price, faster sale, fewer contingencies).
Fundamentally you’re correct, but the much bigger incentive on BOTH sides is to close the deal quickly. If they spend twice the amount of time on the transaction, their earnings per hour get cut in half. That’s a much bigger impact then a few percentage points in price swings.
The point about speed would be true under pretty much any incentive model except an hourly rate for the buy side.
My point is when you are buying, your agent wants you to pay more. This is not what you want generally. It is fundamentally flawed.
I agree, on the sell side it creates an incentive for an agent to not push for marginal price improvements. The incentives are misaligned on both sides of the transaction.
On net you get round-tripped on misaligned incentives with the percentage model.
Zoning plays a key role in building because it derisks investing in building capital. If I know that all the parcels around me are residentially zoned then I can build a house with confidence knowing that someone isn’t going to put a fertilizer plant next door.
The growth rate of this installed capacity is just astounding. Lots to say about timing, land use, tax incentives, stranded costs, etc but it is truly remarkable just how much steel/silicon has been put in the ground over the last decade.
And institutions often have multiple goals for which they are more or less capable/flawed. And not all goals are equal: some things are intrinsically hard and we should expect failures that don’t undermine either the goal or the institution.
Institutions are in many cases just names for necessary functions: if you got rid of the institution then you would need to recreate something like it with a different name (i.e., if you abolish the police/irs you still need people to enforce laws, collect taxes).
Abolish is a stronger claim than reform therefore it requires much more evidence, however, reform is apparently less sexy in our current cultural context. It seems the default view for any problem (and there will be problems) is abolish.
This says that the average private highschool tuition is $15,645.
In 2003, the average private highschool tuition was $8,412 (Snyder, Dillow, & Hoffman, 2008), or $14,079 (in today's dollars).
Please correct me if I've made some mistake, but plugging those numbers in shows that the annualized real increase in price is 0.5% per year over 20 years.
There is a chart at the bottom. Costs doubled over twenty years since 1999, directly comparable to the college rate over the same period and well above inflation.
I was talking about the "average cost of private school" data. Which part is a slam dunk on "neoclassical" econ? Or even the original article. I'm not disagreeing just curious how you came to that conclusion.
The data linked above suggests Catholic schools are the most affordable. Priors confirmed - theocracy is the only way forward.
I was responding to an author in the thread, not to the author of the article.
Catholic schools are financially structured in rather unique ways. They're controlled by clerical orders which are technically financially independent from the Vatican, kind of like a franchise.
Together, the institutions under a specific clerical order operate collectively kind of like a cooperative so money flows around differently than most schools.
Weirdly, schools that used to be but no longer are religious seem to now be some of the most expensive. For instance, Tufts, USC and Yale.
The rise in tuition is because college has been increasingly seen as a personal, private transaction and not as a social good.
This reframing of the institution as a market based services purchase is the rationale for the policies that have caused all the other problems
Catholic schools might also be cheaper because these clerical orders are ostensibly tasked with social welfare so they are still partially operating under the old model before the Milton Friedman mind virus.
This said nothing about the number of seats in private schools versus public ones. If there are very few then we should expect private costs to increase dramatically as public costs increase. Not every student gets public loans, some students come from wealthy families that have other means of financing. If public is $100k, then these families would still likely choose the $120k private school for better outcomes. There is no reason for private to stay cheap.
This says that the average private highschool tuition is $15,645.
In 2003, the average private highschool tuition was $8,412 (Snyder, Dillow, & Hoffman, 2008), or $14,079 (in today's dollars).
Please correct me if I've made some mistake, but plugging those numbers in shows that the annualized real increase in price is 0.5% per year over 20 years. Looks like doing the same thing for public 4 year college over the same timespan results in an annual real increase in 2.1%
The first bullet says: “$23,839 is the average annual tuition among the nation’s private K-12 schools.”
Edit: it looks like there is an error on this page. The bar chart the numbers are much higher. Anecdotally, private high school is always more expensive than private elementary. That is what the bar chart shows but not the bullets.
Btw private school looks quite affordable. I used to think my neighbor was rich, they were, but for only $20k/yr you can send 2 kids to private school? That is cheaper than daycare.
The link says the average for HS is $15.6k; if that's a mathematical mean, that's going to be driven up by a handful of very expensive schools.
> and there's a free option (public school)
Most public schools in the US are garbage.
> - you obviously have a healthy amount of disposable income.
Or make frugal choices elsewhere, or receive scholarships/ financial aid, likely both.
Yes, that's right, parents can drive an older car and skip buying a bigger TV and cook at home and save money in all kinds of ways, and private schools offer scholarships and financial aid to advance missions of service.
But once you've become sensitized to the impact of paying for daycare on your budget, it's easy to logically just continue the same budget and funnel the same money to a different school.
This. I put my kid into daycare because it didn't cost more than daycare and I'd been paying it this long, what was paying it forever when I'm financially stable. My kid is special needs and the public school would have never accommodated her like this private school has.
Depends on the city… in Los Angeles private schools can push $70k/yr/student easily; In the Bay Area I would imagine even higher. In Dallas, where I grew up and went to the same school for much less, tuition is now around $40k/student/year for top private schools.
The highest I've found in the bay area are a small handful of residential private schools (e.g. Athenian is $82k for boarding students). Most of the top private day schools are still <$50k/yr, but I strongly suspect they top that once fees & "discretionary" expenses are added.
There is a chart at the bottom. Costs doubled over twenty years since 1999, directly comparable to the college rate over the same period and well above inflation.
According to that chart, by "well above inflation" you mean "<20% above inflation" and by "comparable to the college rates" you mean ">100% above inflation".
Your use of generalizations seems radically inconsistent.
Daycare is considered by many to be very expensive and a lot of parents would prefer not to (or can't!) pay daycare prices until their kids leave the house.
The study also does average and median prices and increases.
Of course there is variability. What does you living in a higher cost of living area have to do with the points in this thread. Are you distributing?
Or just wanted to note that there are outliers that factor into the average? Maybe there’s something noteworthy about your private schools, but please add more info.
There is a chart at the bottom. Costs doubled over twenty years since 1999, directly comparable to the college rate over the same period and well above inflation.
