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The Economics of Energy
Kenneth E. Boulding
The Annals of the American Academy of Political and Social Science
Vol. 410, The Energy Crisis: Reality or Myth (Nov., 1973), pp. 120-126
Published by: Sage Publications, Inc. in association with the American Academy of Political and Social Science
Stable URL: http://www.jstor.org/stable/1041943
Page Count: 7
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The economics of energy refers to its aspect as a commodity. It is usually significant as an intermediate good. It becomes a commodity because energy is an essential input of processes of production which increase goods or diminish bads, such as pollution, since goods tend to be improbable material structures. The input of energy is necessary to overcome material entropy. Economic development has gone hand in hand with increased energy input per capita, beginning with solar energy embodied in plants and animals and continuing through draft animals, wind energy and fossil fuels. Energy input always involves pollution, simply because bads are jointly produced with goods. Exhaustion is a critical problem if the source of energy is exhaustible, as it is in the case of fossil fuels. However, the availability of energy depends on society's level of knowledge: energy input has risen as a result of increased knowledge. There are interesting problems in the economics of energy transportation: we do not simply want energy; we want it at certain times and places. The question of economic organization of energy supplies-whether they should be public or private-is part of the larger question of the evaluation of public versus private enterprise. There are no simple answers to this problem.
The Annals of the American Academy of Political and Social Science © 1973 American Academy of Political and Social Science