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How to "solve" the "energy crisis"?
We could appoint experts, give them our collective blessing and lots of our tax dollars, and set them to work on finding a solution. Or we could keep the process decentralized, letting the current high profits earned by many oil and gas producers attract entrepreneurs into the energy industry, each creatively exploring (both figuratively and literally) for new and less-expensive sources of fuel.
The latter process is certainly at work. This story [2] ran yesterday on NPR’s Morning Edition. It reports on Andrew Perlman, a young entrepreneur in Illinois who is working feverishly to find ways to convert coal into clean natural gas.
Will Perlman succeed? He certainly thinks so. But no one really knows. He might fail utterly. Some other entrepreneur or company, pursuing hunches or visions or brand-spanking-new scientific insights might devise some entirely different means of making clean and abundant fuels.
My favorite line in this story is the one in which Perlman says that just a few years ago there were only three venture-capital firms focused on energy companies; today there are 76 such VC firms. So much money seeking ways to find new sources of energy!
Those entrepreneurs and investors who succeed will become fabulously rich; those who fail will be poorer than they would have been had they not entered the quest.
And those of us who do nothing but freely choose which fuels to purchase will benefit enormously.
I love this market process. People such as me — people who lack even a whiff of creativity, people who are terribly risk-averse, people who lazily prefer to read novels and work at secure jobs and spend our evenings at home dining and drinking with family and friends — just sit back and wait for profit-hungry hard-working anxiety-ridden creative entrepreneurs, each in competition with others, to find new ways to improve our lives. And we don’t even have to accept what they devise. If we like it, we buy it. If not, we don’t buy it.
I almost feel like a free-rider, a lazy bum, a poacher. I do nothing entrepreneurial, and yet my daily life is filled with the marvelous fruits of entrepreneurial creativity and effort. It’s an incredibly good deal [3].