Energy Reform Ideas

It's pretty obvious that we need to reduce our dependency on imported fossil fuels and figure out a way to have a supply of safe, clean, and affordable energy. Not only would it be a good environmental idea to switch away from oil dependency, but also a pretty good economic decision. And, probably a decent defensive foreign policy move.

So, I would suggest that the United States Government allocate some funds to this effort. The Pentagon's Defense Advanced Research Projects Agency (DARPA) is apparently using its growing budget to shift its focus back to long-term, high-risk projects. DARPA was established in 1958 after the Soviet Union launched the Sputnik spacecraft and now has an annual R&D budget of nearly $3 billion.

Why not allocate some (or a large part) of that to energy independence? Funds could:

1. Build a hydrogen eco-system: Support the development of affordable fuel cells and finance the build-out of infrastructure for production, delivery, & storage. Incentivise the auto industry and support our largest industry.
2. Adopt safe nuclear power: License a nuclear power plant and continue to develop safe & effective ways to store spent fuel. This has been used elsewhere successfully and it's only gotten safer.
3. Develop cleaner coal infrastructure: Clean up our most common fossil fuel and figure out how to reduce emissions & waste.
4. Invest in ethanol: Certain emerging markets have leaped ahead of us in this category and funds could accelerate our investment in research, infrastructure, production, delivery, & storage of this very viable alternative-energy option.
5. Educate: Create campaigns and tax incentives to get consumers & the private sector to adopt more energy conservant policies such as green architecture, transportation alternatives, recycling, etc, etc.

I, personally, think that these efforts could yield far better results over the long term for our economy, growth, defense, safety, & health than other "Star Wars" like projects that might be in the making.

Tired of Government Regulations

I know that the whole discussion of net neutrality is a tired conversation, but my good friend Bret Swanson recently published a commentary in the Wall Street Journal that is worth reading.

I suggest you read the article here. He states:

Today's networks are not remotely prepared to handle this exaflood. Wall Street will finance new telco and cable fiber optic projects, but only with some reasonable hope of a profit. And that is what net neutrality could squelch.

Bret comments that the amount of bandwidth that will be consumed on the Internet during the next several years will outstrip the availability of bandwidth (therefore the term exaflood). I couldn't agree more. Just think about how much more data you personally use on the Internet today than you did two years ago. Then, tack on more and more rich media content sharing & distribution (more MP3's, full movies, televsion shows) and then increase the quality (full screen resolution, high definition, etc) and then start to think about all the business applications for rich media (video conferencing, healthcare imaging, etc). That's a lot of bits & bytes.

But, that's not really Bret's point. He argues that government regulation can (and will) stifile investment on behalf of the physical network service providers. I couldn't agree more. As is, these guys are having a hard time making a go of it. Let them recoup some of their investment however they see fit. Two of the largest back-bone network providers in the US, Cogent and Level 3, aren't doing too well on the profit front - so why make it even more difficult. If it weren't for traditional voice services our old Ma Bell babies would be hurting too. These telecoms firms have spent billions of dollars in capital expenditures and their shareholders deserve the right to recoup this capital and (ideally) generate a return.

Unfortunately, the mere discussion of this topic has already caused pause in investors minds. Let our capital markets work freely -- that strategy seems to have worked well in the past.