The Relation of Energy to Money

Table of Contents

 

Experiment 1a

Experiment 1b

Experiment 1c

Experiment 2

Experiment 1a

For an entire economy, for a median transaction within that economy, or for a transaction of such great scope that such concentrations within particular energy consuming sectors as may exist in one phase or another of the transaction tend to get smoothed out, the energy consumed is approximately equal to the dollar amount of the total cost of the transaction times the Total National Energy Budget (E) over Gross Domestic Product (GDP) ratio (E/GDP) that is tabulated in the DOE database for every country and for every year Ė within limits. The purchase and operation of a custom-built nuclear power plant is just such a transaction of extremely broad scope to which this type of analysis might apply.

In this study, the product of E/GDP with investments of 1 XD distributed in various ways over the commodities is compared to the actual increase in the total energy budget.  The investment is imagined to be made by the energy sector the expenses of which exceed salaries by a small amount.  This is compensated for by increases in salaries in the other sectors which are imagined to reimburse the energy sector to account for their fair share of the investment expenses.

In the first experiment, we would like to show that, if an investment is distributed among the commodities in the same proportion as consumer spending is distributed, the increase in the Total Energy Budget, ΔE, will be precisely the increase in the GDP resulting from the investment times (E/GDP)o.  The reader should understand that the fraction of the investment that is made in commodity i is mi, which is equal to the cash spent by consumers on commodity i divided by the total cash spent by consumers.  The fractions of consumer spending for the four sectors appear in DU31:DU34 where they can be compared to the comparable figures for the US economy in DV31:DV34.  (The energy fractions in DX31:DX34, with agriculture, manufacturing, and energy lumped into industrial, can be compared to the figures for the US economy in DY31:34.)  The values in DP31:DP34 are these commodity fractions multiplied by 1.0 XD and divided by the price of the ith commodity, which will be cancelled out when that number of units is purchased.  Copy the values from DP31:DP34 into DO31:DO34 with the Paste Special Values command and read in DO30 the ratio ΔE computed by the spreadsheet to ΔE estimated by multiplying the change in GDP due to the expenditure of 1.0 XD by (E/GDP)o.  If this ratio is 1.0, the experiment has succeeded.  Therefore, ΔE/ΔGDP = E/GDP.  Donít forget to zero out DO31:DO34 by copying DR31:DR34 into DO31:DO34 before you do the next experiment.

It is so easy to change from one case to the next that I would do the experiment for all four cases now and then restore the zeroes in DO31:DO34 if there is any reason to doubt the claim.  To get to the Base Case press <CS>A: to get to the No-Managers Case press <CS>B; to get to the No-Commerce Case Press <CS>C; to get to the No-Commerce-No-Managers Case press <CS>D.

Experiment 1b

In this exercise, I wish to discover what happens if an investment is distributed among RUs, MUs, and TUs, but not AUs, in the same proportion as they are distributed by consumers in the economy at large.  These fractions divided by the relevant commodity price are computed in DZ31:DZ34.  The ratio of the ΔEcalc to ΔEest is stored in DZ27.  Although the estimate is a little low in the Base Case, the agreement is good.  Try the experiment in  the other three case.  Store the results in DZ28:DZ30.  Do not forget to zero out the values in DO31 to DO34 before you change case.  And, donít forget to press <CS>V after you change case.  The estimate is low in every case and gets worse as the political economy progresses; however, it is within 11% in all cases and within 6% for a US American-style economy, which is the economy where the technique is most likely to be employed.  The inclusion of RUs is appropriate as the installation will require a physical plant.

In ďOn the Conservation-within-Capitalism ScenarioĒ, using cost data from the Shultz et al. study [http://web.gat.com/pubs-ext/MISCONF03/A24265.pdf], the University of Chicago Study [http://www.nuclear.gov/reports/NuclIndustryStudy.pdf], and the MIT study [http://web.mit.edu/nuclearpower/], I computed an ER/EI ratio of 4.63.   See http://tinyurl.com/f8bs7.  However, it is not clear that all ancillary costs have been included, e.g., desalination of sea water, remediation of environmental change, etc.  A pro-rata share of the costs of providing and maintaining railways to carry heavy equipment, fuel, and waste, highways to transport workers, conduits to transmit electric current, pipelines to transport hydrogen, and easements through which electrical power lines and hydrogen pipelines can be run should be charged to the plant.

Experiment 1c

Let us see what happens if the investment is distributed over manufacturing and transportation only.  The cash fractions divided by price will be computed in DZ41:DZ44 and the results for the four cases in DZ37:DZ40.  The results are considerable worse in this case with an estimate nearly 41% high in the No-Commerce Case; however, the agreement was still good enough for my purpose which was to prove a point by a wide margin.  An error of 41% or even 100% in my energy calculations for the conservation-within-capitalism scenario would not be sufficient to change the conclusion, namely, that an Apollo project for energy can succeed but not in a market economy.

Experiment 2

Let us invest in one commodity at a time.  Return to the Base Case with <CS>A.  Set the value in DO31 to 1 AU.  The ratio of ΔEcalc to ΔEest (= (E/GDP)o ∑ ΔGDP) is again in DO30.  Paste its value into DS31.  Notice that, for 1AU, the estimated value is too high; but, it has the right order of magnitude.  Repeat the exercise for 1 RU, 1 MU, and 1 TU moving down one row each time.  Notice that the sum of the products of these values with the fractions in DT31:DT34 will equal one in Mark-II-Economy.xls and be close to one in Mark-II-Economy-CSP.xls as shown by the final number in DU35.  Donít forget to restore the zeroes in DO31:DO34.  The Base Case is converged with <CS>O on both spreadsheets.

Repeat this exercise for the NM Case, the NC Case, and the NCNM Case all of which should be converged with <CS>O in Mark-II-Economy.xls; but, in Mark-II-Economy-CPS.xls, with <CS>Z.

Thomas L Wayburn

Houston, Texas

October 16, 2006