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The very premise that the value of a "fuel" is in its energy content alone is wrong. We'd be quick to lower the value of a "dirty Joule" (eg coal) compared to
by nwatson 14y ago
The very premise that the value of a "fuel" is in its energy content alone is wrong. We'd be quick to lower the value of a "dirty Joule" (eg coal) compared to a "clean Joule" (hydrogen). Also, some fuels are inherently much cheaper to extract than others (coal is so cheap, and hydrogen so expensive). These costs of extraction also change over time -- ten years ago some applications naturally called for liquid fossil fuels (heating oil, diesel, gasoline), but after the fracking revolution a new operation starting today would better and more cheaply use natural gas. Natural gas will continue to be cheaper for some industrial applications in some areas until deployed fuel-using industrial capital equipment and vehicles using natural gas increases to take advantage of the cheaper energy.
Other factors that affect the pricing of a "Joule": convenience of application (I can't burn coal in my car, I pay a premium for gasoline; gasoline won't get me to the moon, I pay a premium for rocket fuel); ease of refining the mined resource into finished product form; ease of transporting fuels from source to "refinery" to distribution to end user; we'll pay a premium for fuels with a reliable steady supply; outside risks, e.g., political unrest in the Middle East increasing production costs and risk.
The "joule" measure for the value of a fuel is flawed. We already have a great measure for the value of a fuel, it is the US$.
Also, as many point out, the energy required to create a bitcoin has little bearing on its value. Energy costs help determine the mining effort and technology put toward mining bitcoin, but the value of a BTC will fluctuate depending on other factors. The total energy required to manufacture, transport components of, and assemble a house, along with the "inherent" value of those materials, is less than the US$-denominated utility of that house. If I shock a turd with the same energy used to build the house, it doesn't have any value approaching that of the house unless I'm Andy Warhol.
- SonicSoul 14y agothose factors would be covered by the "utility" aspect. "The energy supply defines how much productive work can be done, while the efficiency with which we use energy defines how much utility can be created from that energy supply (widgets per kilowatt-hour)." the $ is driven by more factors such as FX, inflation, interest rates and therefore not a clean measure of energy value. possibly the purest current value of energy today would be in energies futures markets?
- nawitus 14y agoCan you clarify what that digets per kilowatt-hour means? If I own 1 million Joules, then how is efficiency specified? Since 1 million Joules in oil has a different worth/value than 1 million Joules in hydrogen, I don't understand how one can trade Joules. The point of currency should be interchangeability. If people don't actually own money as joules, but money as "widgets" or "joules of oil"+"joules of hydrogen".., then you can just abstract away the energy stuff. I'm not impressed by the energy as currency concept. Money should reflect all resources, including energy, human labour etc. Binding currency to something (like gold) doesn't seem to be useful.