There have been many claims as to what the future holds for the E-Cat. Economists point out that market forces will determine both the rate and the extent of this process.
Paul Bennett, PhD Student in Economics at George Mason University in Fairfax County, Virginia cites the replacement of canals by the railways in England in the 1830’s. Around 4,000 miles of canals were built in 80 years and the economic impact was dramatic: the price of coal in one town dropping by more than 50% when the canal was built; the price of coal at the canal wharf was 20% of what it was 5 miles away.
The canal companies were chartered by act of parliament and their tariffs were specified by law. They were both legal and natural monopolies until the railways came along. In the following 20 years, Britain built a railway system that not only matched the canal system, but expanded it. To overcome the monopoly status of the canal companies, the railway companies frequently bought up the canal companies to build on their land and assume their monopoly rights.
The interesting and relevant thing is what happened to the canals and their tariffs. Firstly, the canals did not go out of business straight away. They dropped their tariffs by as much as 90%. The railway operators were able to compete with the established canal system even though they were forced to invest in new infrastructure.
Bennett concludes that “if the cost-effectiveness of the E-Cat is sufficiently large, the producers of energy (oil, coal, fission) will either reduce their prices to match the new energy source or go out of business.”
His own view is that fission will disappear, coal will drop to a small fraction of its current size and oil will continue to be a major source of power.
The costs of producing power by fission are largely operating costs and it will simply not be possible to reduce these sufficiently to compete with the E-Cat.
The costs of coal derived power are mainly those of extraction and conforming to environmental rules. Again, these cannot be easily reduced.
Oil is a different story. The owners of the world’s most easily accessible oil reserves are currently taking about 80% of the price paid for each barrel of oil as pure profit. In the face of competition, the price of oil will be forced down. The lowest this price can be driven to is the cost of extraction, excluding any investment in further exploration for new oil reserves.
In summary, Bennett argues that “If the cost of energy production from oil at this minimum price is still higher than the cost from the E-Cat, the world will very rapidly transition all energy production to E-Cats. If the cost of energy production from E-Cats is higher than this, the two technologies will exist side by side.”
- coal refinery
- oil factories
- Turkmenbashi oil processing plant