Solar Doesn't Make Sense in Dubai

Of all the places in the world for solar to work well, the U.A.E would come to mind. Gulf states have very little rain fall, uninhabited tracks of land, modern infrastructure and plenty of cash.

Dubai, the most well-known of the Emirates, has a "green" building code and is pushing ahead with environmentally friendly buildings.

However..., in a recent article in Arabianbusiness.com, Nakheel, the Dubai real estate development company found, "The use of solar power in construction is not economically justifiable right now..."

It turns out that the costs to store solar energy are just too expensive. Additionally, the technology is still too novel to make it profitable. From the article, ""We had a case recently where I wanted solar panels to be used in one of our projects, but after looking into it we discovered that this would have added US $3 million (AED11 million) to our project costs," he said. From a business perspective, we can't justify using solar power right now."

While I think or would have thought that solar would be a no-brainer for Dubai, it just isn't. Additionally, the technology won't make it economically efficient for some time. What bothers me more, however, is the following quote: "People are realising that economics isn't going to be the only driving force for green technology," he said. "The focus on sustainability will actually drive this market."

So, we are to substitute a nebulous concept known as "sustainability" for a known metric, economic efficiency. If anything makes people not buy in to the environmental agenda is that it just doesn't make sense. You may feel good about it, but it hurts you in the pocket. Yikes.

Gee, Ya' Think?

While not specifically questioning green technology, today's post is about oil prices and the crystal clear example of economic efficiency/supply and demand.

The AP, via Yahoo!, posted a story titled "Oil prices tumble again on US surprise supply jump." As you may or may not know, the price of a barrel of oil has fallen approximately $10 in the last two days. As you also may or may not know, oil is sold on the world market in US dollars. While the discussion of using oil as a hedge against a weakening dollar and inflation is legitimate, the story highlights the real cause, people just aren't consuming!

From the article:

"The Energy Information Administration reported that U.S. crude oil supplies rose by 3 million barrels, or 1 percent, last week. That is the opposite of the 3 million barrel draw analysts surveyed by energy research firm Platts expected. Gasoline supplies also leapt unexpectedly."

So, there you have it. People and businesses are just consuming less. Whether it is gas at $4.08 a gallon, or crude at $146, people and businesses have reached the point where they will no longer bear the price, and thus supply is increasing. Provided that consumption remains flat or continues to decrease (globally), prices will continue to fall.

And guess what, the US government and states still collect about $.26 a gallon. However, they are concerned that reduced consumption will cut into their revenue stream.