Four Stories, Two Worlds

Guest Post by Willis Eschenbach

To start the four tales of the title, I noticed a couple of stories in the news lately about how critical inexpensive energy is for the poor. The first story said:

Wall Street may be growing anxious about the negative impact of falling oil prices on energy producers, but the steep declines of recent weeks are delivering substantial benefits to U.S. working-class families and retirees who have largely missed out on the fruits of the economic recovery.

Just last week, the U.S. Energy Information Administration estimated that the typical U.S. household would save $750 because of lower gasoline prices this year, $200 more than government experts predicted a month ago. People who depend on home heating oil and propane to warm their homes, as millions do in the Northeast and Midwest, should enjoy an additional savings of about $750 this winter.

“It may not have a huge effect on the top 10 percent of households, but if you’re earning $30,000 or $40,000 a year and drive to work, this is a big deal,” said Guy Berger, U.S. economist at RBS. “Conceptually, this is the opposite of the stock market boom, which was concentrated at the top.”

Note that while the stock market boom has helped the top ten percent but not the poor, the drop in oil prices has helped the poor … I know which one I prefer.

The second story said:

Each winter in Kyrgyzstan the energy situation seems to worsen; blackouts last longer, and officials seem less able to do anything to improve conditions. This year is expected to be particularly difficult.

The winter heating season has not even begun and already lots of people are bracing for months of hardship. A video, posted October 12 on YouTube, depicting Kyrgyz doctors having to perform open-heart surgery amid a sudden blackout, is helping to heighten anxiety about the coming winter. In another alarming signal, Bishkek’s local energy-distribution company, Severelectro, sent out advisories with recent utility bills, describing the situation as “critical” and begging customers to conserve electricity and use alternatives to heat their homes.

Southern Kyrgyzstan has been without gas since April, when Russia’s Gazprom took over the country’s gas network, and neighboring Uzbekistan said it would not work with the Russians. That has forced residents in the south to use precious and expensive electricity to cook, or resort to burning dung and sometimes even furniture.

Burning dung and furniture for cooking and freezing in your living room … not my idea of a party. Even in developed countries, we have a new category of poverty that was unheard of in my youth—fuel poverty, where people (often the old or infirm) can’t afford to heat their homes.

Let me add a couple of other stories which I’ve mentioned before in comments, to set a context for a discussion of an ancient and extremely valuable injunction. This injunction, taught to doctors in medical school, is as follows:

First, Do No Harm

The injunction is a crucial part of decision-making in medicine, and deserves wider usage. To explain one place that we need to emphasize that injunction, let me go on with my tales.

Story the Third: Why Good Intentions Are Not Enough

Costa Rica is an interesting country. Among other curiosities, despite being only a fifth of the size of Great Britain, it has no less than 26 national parks, 11 forest reserves, 47 protected zones, 58 wildlife refuges, and 8 biological reserves. Now, it’s a developing country. And although it is not one of the poorest, still the per capita income is only a quarter that of the US. Most developing countries have either a few National Parks and reserves, or none. It is most unusual to find a poor country demonstrating concern about the environment, and it shows that they have good intentions. Nearly a quarter of their land is in one of those “protected” categories.

Arenal National Park, Costa Rica. Photo Source: Epoch Times 

One charming day in my early middle youth, as the consequence of certain unforeseen choices, chances, and circumstances, I found myself in a lovely town in the interior of Costa Rica. The town was near a National Park. Some friends and I were having a bite of food in the little restaurant attached to the one gas station in town … or more precisely, in the gas station/restaurant that comprised the entire town.

While we were sitting and eating, a totally clapped-out pickup truck came down the road that led from the National Park back to San José, the capital city. He pulled up to get some gas. His truck said “Leña” on the side, “Firewood”. The back of the truck was filled way over the brim with tree branches and trunks of all kinds, mostly of a smaller size, but lots of them. A single rope over the top gave the load a precarious air of semi-stability.

The driver came in to the restaurant. He had the global standard poor man’s uniform—the cheapest stuff, factory seconds and used clothing that are imported by the 100 kg bale in every poor country, and resold by some local merchant at usurious markups.  Poorly made jeans. Used t-shirts. Plus the usual sandals and sombrero.

Me, I’m eternally curious about what people do to earn their supper. So I started talking to him in Spanish about his load of firewood and the firewood business.

He said that many people in Costa Rica cooked with wood. He’d started his own business. He had an axe, no chain saw. The truck belonged to his father-in-law, paid for at so much per mile that he drove it. It wasn’t much of a living, but he got by.

Now, I grew up on a cattle ranch surrounded by forest and we heated with wood. Like most ranchers, we always cut our own firewood. And as a young man, I’d made money myself cutting firewood, putting a cord of it into a pickup truck, and selling it as five quarter-cords to the over-educated and under-experienced professors and professionals in Berkeley who couldn’t tell a loose stack from a tight stack. As a result, I know the ways of the axe and the wedge, of felling and cutting and splitting, limbing and barking, and hauling the final product to market and selling it. So I had plenty to talk to him about. We discussed the ins and outs of how firewood was priced in Costa Rica, who his customers were, and the like. We talked about the fact that firewood was getting harder to find, and how these days he had to drive too far, it was cutting into his income.

Then, after kind of a delicate dance around the subject, I asked him where he’d cut his load his wood.

Now, I knew that’s kind of like asking a fisherman where the good fishing holes are, or asking a hunter where the big bull elk hang out. It’s not a topic you open the conversation with, and most of the time you don’t touch on it at all. But I figured it was clear to him that I wanted to know in the spirit of knowledge and appreciation, and that I wasn’t a threat to his rice bowl. So when I asked where he cut his wood, “¿Donde corte la leña?”, he answered frankly.

“Oh”, he said, “lo corto en el Parque Nacionál.”

“In the National Park?”, I said.

“Si, señor”

“¿Porque?”, I asked, “Why?”

He explained that most other places there was little firewood to be found.

I asked politely whether he knew that cutting firewood in the National Park might  possibly be, well, you know … illegal and all … not to mention destructive to the environment …

“Oh, si,” he said, “no es legal”.

He thought about that for a minute, and said in essence “I feel very bad about that, I know it’s wrong, but when my children are hungry, what can I do?”

I had no answer for him. It merely confirmed what I’d seen in my travels to all of the continents. This is the ugly underside of environmentalism, the unpleasant truth, which is:

The biggest threat to the environment is poverty. 

This is not some theoretical future danger. As the firewood man showed, this is going on now. And remember that the woodcutter was not the poorest of the poor, far from it. About half the world lives on less than $2.50 per day, and an empty stomach cares nothing for the environment. For example, the larger primates are all greatly reduced in numbers, with some being heavily threatened. Is this because humans enjoy killing chimpanzees? Nope. The root cause is poverty. They are being killed for food, by people who have nothing to eat.

And when people do not have cheap energy to cook with, they burn up their forests, despite their good intentions.

Finally, since the biggest threat to the environment is poverty, that means that the biggest friend of the environment is development … strange, but true.

Story the Fourth: Winners and Losers

Togo is a country of thirds. The northern third is dry and dusty Sahel. The middle third is wetter, with farms. The green third is down south on the coast. About thirty years ago, work took me to a small Christian Animist village in the dry northern third.

The village was of the simplest kind. It slumbered and baked in the noonday sun. No store. A dirt road running through the middle. Women worked the sere fields. The buildings were made of woven sticks, some covered with mud. Onlookers in every window. Men in small groups around doorways.

And as I walked down the main street, regarded curiously by eyes all around, I had a thought that had never in my life crossed my mind. I thought,

I’ve won.

I realized in that instant that everything that those women in the fields wanted, I already had. Everything that the kids in the windows dreamed of was already mine. Everything that the men around the doorways talked of achieving was something that I’d achieved.

I already had a car. I had an education. I had a well-paying job. I had a house. I had a doctor that I could go to whenever I got sick. I had my gorgeous ex-fiancee. I had money in my pockets. I owned my own house … well, “house” was perhaps an exaggeration, but at least I owned my own shack and the land it sat on. I had credit cards. I had a refrigerator, and a gas stove. I had a pickup truck, and I could afford to pay for the gas to run it. I had running water and electricity. I had any number of pants and shirts. I had my health and my youth. I lived in a peaceful country without armed insurrections or military coups. I had a telephone. I was wealthy even in the things we never think of as part of our net worth, like footwear—unlike any of the people I was walking past, I had work boots, and regular shoes, and a pair of good shoes, and rubber boots for the winter, and sandals for the summer.

And that meant there was nothing in those villagers’ dreams that I didn’t already have. In short … I’d won.

And the crazy thing is, if you are reading this, then it’s highly likely that you’ve won too. I read the other day that if you make more than about $40,000, you are in the top 1% of the world by income. The dreaded 1% that takes so much abuse in the popular press. The awful, terrible people at the top, those of us who have won. Heck, even if you are at the US poverty line, you’re still in the top 13% … here’s a web site so you can figure out exactly where you stand in global terms.

Bringing It Home

Now, I’ve brought up the two newspaper articles and told those two stories for context, that of a world divided into very rich and very poor. In that context I want to talk about the cost of energy. The reason that I’ve won, the reason that all of us one-percenters have won, is inexpensive energy in the form of fossil fuels. Here’s an important comparison I’ve made before:

A human being doing hard physical labor can put out about a sustained hundred watts of energy on a constant basis over the course of a day. 

So if I had a hard-working slave, and he worked a ten-hour day doing my laundry and cutting my firewood and the like, that’s about one kilowatt-hour (kWh) of work. One hundred watts times ten hours is one thousand watt-hours, which is one kilowatt-hour.

Now by US terms, California is the land of expensive energy. Because of our insane “renewable energy standards”, electricity here costs about twice as much as in neighboring states, at about fifteen cents per kilowatt-hour. So let’s take ten cents per kWh as a representative cost of residential electricity in the US.

That means most folks can buy a ten-hour workday of an electrical slave for ten cents, one thin dime, one tenth of a dollar. And that’s why we’re in the top 1% of the globe. We can pay electricity and fossil fuels to do all of the hard work necessary to give us our good lives.

Here’s the economics. I charge my time out at forty-five dollars per hour. So one minute of my work is worth seventy-five cents … which means that one minute of my work buys seven ten-hour days of work from an electrical slave. That’s why you and I are in the top 1% of the globe—we have cheap workers in the form of electricity and fossil fuels.

Now that all sounds wonderful … until you realize that for half the people of this marvel-filled planet, energy is expensive and the people make a few bucks a day. When electricity costs sixty cents a kilowatt hour and you make a dollar a day, well … you’re out of luck.

So here’s the moral of the stories. If you care about the poor or the environment, cheap energy is the best friend of both. When people have inexpensive gas for cooking, the National Parks don’t get deforested, and people don’t cook by burning dung and furniture. When people have cheap energy, village clinics can have refrigeration for vaccines and medicines. Cheap energy is truly the friend of the poor housewife, of the poor farmer, and of poor people around the world.

And at present, cheap energy comes from one of three sources—hydropower, nuclear power, or fossil fuels. Despite decades of subsidies and renewable standards, sun and wind are still only a few percent of global energy, and they are very site-specific.

So what does this have to do with the idea of “First, Do No Harm“? Here is the connection. Some people claim that CO2 is the magic knob that controls the global temperature, and further, those people say that a slight warming of a couple of degrees will be catastrophic.

Now, I don’t believe that either of those claims is true. But if you believe those claims,  if you do think that CO2 is worth fighting, then the first rule of fighting CO2 has to be that you must not harm the poor by increasing the price of energy. Because the rule is, first do no harm.

So fight CO2 if you think you absolutely must, but don’t fight it on the backs of the poor. Any increase in energy prices penalizes, impoverishes, and even kills the poor. Increased energy costs are the most punitive of taxes, because they are regressive, the poorest are hit the hardest, and even at the very bottom of the pile there is no escape from the increased costs. So if you do believe CO2 is worth fighting … then you owe it to the poor to find some other way to fight it, some way that does NOT increase the cost of energy.

Four stories … two worlds.

My best wishes for everyone, the 1% and the 99% alike,

w.

PS—Oh, yeah, the final oddity. Not long after I realized that I’d won, I had another curious thought for the first time—what do you do after you realize you’ve won? Struggle for even more stuff? Not my style at all. Rest on my laurels? Too boring. Retire? I was too young … and too broke.

After much thought, my conclusion was bozo simple—give it away. Not give away the stuff, of course, that goes nowhere … but give freely in the way of assisting other people to win and to realize that they’ve won. Heck, this current meander through tales of the present and the past is just one more part of my giving it away—helping to encourage cheap energy is most definitely helping both poor people and the environment alike to come out winners.

FURTHER READING: I highly recommend The Moral Case for Fossil Fuels, by Alex Epstein, available from Amazon as an eBook, $11.99, send a copy to your friends.  From the description:

Drawing on original insights and cutting-edge research, Epstein argues that most of what we hear about fossil fuels is a myth. For instance . . .

Myth: Fossil fuels are dirty.

Truth: The environmental benefits of using fossil fuels far outweigh the risks. Fossil fuels don’t take a naturally clean environment and make it dirty; they take a naturally dirty environment and make it clean. They don’t take a naturally safe climate and make it dangerous; they take a naturally dangerous climate and make it ever safer.

Myth: Fossil fuels are unsustainable, so we should strive to use “renewable” solar and wind.

Truth: The sun and wind are intermittent, unreliable fuels that always need backup from a reliable source of energy—usually fossil fuels. There are huge amounts of fossil fuels left, and we have plenty of time to find something cheaper.

Myth: Fossil fuels are hurting the developing world.

Truth: Fossil fuels are the key to improving the quality of life for billions of people in the developing world. If we withhold them, access to clean water plummets, critical medical machines like incubators become impossible to operate, and life expectancy drops significantly. Calls to “get off fossil fuels” are calls to degrade the lives of innocent people who merely want the same opportunities we enjoy in the West.

Taking everything into account, including the facts about climate change, Epstein argues that “fossil fuels are easy to misunderstand and demonize, but they are absolutely good to use. And they absolutely need to be championed. . . . Mankind’s use of fossil fuels is supremely virtuous—because human life is the standard of value and because using fossil fuels transforms our environment to make it wonderful for human life.” 

FINALLY: If you disagree with someone please have the courtesy to QUOTE THE EXACT WORDS YOU DISAGREE WITH, so that all of us can understand exactly what you are objecting to.