When calculations are performed it is important to make sure that you obtain ALL the relevant numbers in order to arrive at the correct answer.

By The Numbers

Peter Lynch

By The Numbers Numbers and the E
When calculations are performed it is important to make sure that you obtain ALL the relevant numbers in order to arrive at the correct answer.
by Peter Lynch

Numbers and the Energy Problem

In today's accelerating digital world there is more and more information than ever available at the touch of a button.

This has a good and a bad side to it. When so much information becomes available, it is difficult to determine which information is relevant and which is not. Sometimes I think the shear volume of information just overwhelms many people.

Amongst this increased volume of information, there is also an increase volume of NUMBERS and statistics. Numbers and statistics can be misleading and more often than not, they are ignored. Most people don't like to look at numbers, they don't want to "do the math" to make sense of what the numbers are telling us.

However, numbers play an invaluable role in enabling us to see trends and determine which way something is moving. In this article and subsequent articles I will highlight some numbers that I think are VERY important and that understanding these numbers and what they mean can help us to more clearly see the path that we must take to deal with our energy problem.

Energy Use

Here are some macro numbers regarding the United States and energy use:

  • The U.S has approximately 5% of the world's population
  • It uses 25% of the world's energy
  • It imports roughly 50% of the oil it consumes

These are "just numbers" but when you look closely at them, you will see that these proportions will have to change.

This is true because a very large number of people in other countries (China and India for two examples) have a desire to increase their standard of living. In order to accomplish this they are going to have to dramatically increase their consumption of energy.

If everyone in the world used as much energy as the average American that would mean that either:

  1. 20% of the world population gets to use ALL the world's energy and the other 80% get ZERO, or
  2. The average energy use in the U.S has to drop dramatically; or
  3. A vast new source of boundless energy will be discovered.

In addition, the fact that we do not produce the majority of our energy makes me think that #2 is the more likely scenario. The sooner the average American understands this situation, the faster we can move to address this serious imbalance. The longer we wait the more painful the transition will be.

These are NOT just "numbers" they cannot just be dismissed, we have to pay attention to them and we need to generate the political courage to act on them.

Global Warming and Hurricanes

The main topic of the news media for the past weeks is Hurricane Katrina and the havoc and misery it has inflicted upon New Orleans and its residents. It was the worst storm to ever hit the crescent city. Last year it was Florida, this year it was New Orleans, it certainly seems as though there are more hurricanes than normal recently.

What do the numbers say?

According to a soon to be published article in Science the number of hurricanes has NOT increased that significantly. However, the number of category 4 and 5 hurricanes has almost doubled in the past 35 years and this rate of increase has accelerated in the late 1990's.

These are very scary numbers and we need to pay attention to them.

Hurricanes are "fueled" by warm water, the warmer the water the more "fuel" that is pumped into the hurricane.

Could they be related to Global Warming? Some people want to "wait and see". I personally don't think that is a wise course of action.

These are NOT, "just numbers".

Use all the Numbers

When calculations are performed it is important to make sure that you obtain ALL the relevant numbers in order to arrive at the correct answer. Sounds simple, doesn't it?

I think that many governments and other groups are doing very complicated calculations and coming to some very significant conclusions that are incorrect, because they are not using all of the numbers in their calculations.

For example: What form of generating electricity is "cheaper" - Coal or Renewable Energy?

When this calculation is performed utilizing "standard" variables coal comes out "cheaper" every time. However, what if you decided to add one or more variables that had not been used in the past? Even if these variables are somewhat "intangible" or difficult to quantify.

Well, Ontario, the richest province in Canada decided to add in the health related "costs" of using coal, since it pays for the health costs of all its citizens. These costs related to: children's asthma, heart and lung disease, various cancers related to airborne particulates and mercury poisoning.

What were the results of these "new" calculations utilizing "all the numbers"?

Ontario decided that coal was too expensive and that they should phase out all of their coal plants and switch to renewable energy sources - biomass, solar and wind.

It just goes to show you, that when you use "all the numbers" that you just may come to a totally different conclusion.

You have to go "by the numbers", ALL the numbers.

Peter Lynch has worked, for 28 years as a Wall Street analyst, an independent equity analyst and private investor, and a merchant banker in small emerging technology companies. He has been actively involved in following developments in the renewable energy sector since 1977. He is currently a financial and technology consultant to a number of companies. He can be reached via e-mail at Solarjpl@aol.com.


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