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Ross Gittens' economics confuses energy with material with commodities

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Ross Gittens, an economist, discusses the state of the recession in Australia in today's Business Age, 13-7-09. He made a comment about China needing lots of 'steel and energy' - the very 'commodities' that Australia supplies.

This common use of misleading terminology fosters misunderstanding of what is really happening.

Energy is not a commodity. Gittens was implicitly referring to the coal we export. Coal has the inherent potential to supply energy when ignited. It is this type of flow of energy when activated that is used to do work or some other useful purpose for society. This inherent potential has to converted to actual potential. A system has to be installed to mine the coal, transport it to the power station installed to generate the electricity. The inherent potential energy in the coal can then be realized. These activities entail the use of raw materials, including those providing the energy needed, for the construction, operation and maintenance of the system.

Thermodynamics is often mentioned in discussions about what is happening in industrialized society and what is possible in the future. Conventional thermodynamics deals with energy flows when the existing potential is activated. That is only part of the issue. It covers the functioning (operation) of the installed system. It does not cover the development of the system throughout its life that enables the potential in that coal field to be realized. 'net energy' does cover only some aspects of the development and operating costs.

"Fossil fuels resemble capital in the bank. A prudent and responsible parent will use his capital sparingly in order to pass on to his children as much as possible of his inheritance. A selfish and irresponsible parent will squander it in riotous living and care not one whit how his offspring will fare."

This quote sums up one side of what current society is doing to its inheritance. The other side is what the wastes from its operations do, including causing climate change. It is lamentable that this is not widespread understanding in today's society.

Admiral Rickover spoke these words in 1957. Many prominent people have espoused this wisdom over many decades. However, the community at large and the elite who run the economy are deaf to this stark reality, even though the message on what the wastes are doing is starting to seep out.

It is intriguing to wonder how long it will be before there is widespread awareness of what civilization has done to its life support system. They have to learn that money does not really control what is happening. Dollars will not be a good fuel as oil runs out. They cannot be used for food and do not make a good drink.

It is to be hoped, however, that smart people power will utilize modern communication measures to cope with the irreversible developing challenges.

Denis Frith