The Efficiency Problem

February 11, 2009 | 1 Comment

It isn’t easy to get the mass of people to move to efficiency. Big consumption equals a bigger ego, a perception of higher status and raw emotional gratification. It could be connected to the sin of pride or some such, but the other side has attractions too.

Getting efficiency has a more reasoned gratification; a shift is coming pointing to status earned from self-sufficiency, and a value of ego centered in stewardship and responsible actions. The cost isn’t in sin, rather it’s a sense of rightness and for some, a sacrifice.

Parallel to the emotional mental sensations are the effects of intelligence, creativity, discovery and applied effort. Investing from the mind’s efforts from research into new devices to the choosing and using tools and equipment brings satisfactions that last, at least until the next big breakthrough.

The measure was, is and will be using money. Efficiency has a cost from investing to find, design and manufacture goods to spending for buying and maybe installing what will over time save money. The single greatest hold on an economy wide transition isn’t a lack of incentive for the intellect, or even a change of emotional drivers, it’s the real cost benefit analysis each user will make.

A classic example written by Rebecca Smith in the Wall Street Journal looks at utilities that recoil from efficiency because they see a drop in use as a way to lose money. Ms Smith’s story called “Less Demand, Same Great Revenue” looks into the paradox faced in the electricity generation and distribution industry. An answer is labeled “decoupling” a method to assure a return on investment in the power business. As Ms. Smith describes, the pressure is on with the answers that are less than ideal.

States are ahead with measures to compel forms of decoupling with the Feds proposing to withhold some grant money if decoupling efforts are not underway. Meanwhile consumers are cutting use, from homes to reduced business hours and simply business closings have reduced demand. This is already motivating the utilities to look more closely at their role in overall energy use. A part of that is the desire to use decoupling as a way to protect utilities in a slowdown, which isn’t the point.

The regulations for utilities have been to set rates high enough to cover costs as known from experience and what projections can teach. The economic conditions, weather and events have been usually eaten by utilities only to be factored in to future rates.

Ms Smith’s story looks into the main decoupling efforts that have some results and offers some information useful for consideration. Allowing or compelling utilities to have a role past the meter is something that may well be “on time” now.

The other major energy and fuel area is transport. From scooters to airliners and massive ships the past year’s grave oil price distortion has had a lasting effect for many, but not all. “Not all” is so many that markets for guzzling vehicles survive even as the economy experiences a downturn. The government has answered twice now with standards for fuel economy rates for consumer vehicles that had consumers answering with a resounding “avoid” the choices, choose something even larger and heavier. Where the market is now can be hard to ascertain as sales are off a third or more across the model spectrum.

What we’ve done isn’t gain efficiency, rather we’ve economized, cutting use, cutting jobs, overtime, closed businesses and shrank the economy.

What’s available is efficiency. Efficiency can mean a return to that previous level of powered work and pleasures for the economized expense. But we all have to invest. We have to do the cost benefit analysis. Discover the rate of savings to get the investment back. Then we know when and what the payoff is.

In the face of an intense political, press and media blitz to spend disguised as stimulus, we are still faced with the choices. I admit it’s a hard thing with economic fear in place of the confidence known so many short months ago. But today is a good day to learn what choices to make in the coming months and years. My suggestion is absolutely not to behave as irresponsibly as politicians with a great rush to spend. Instead, with economizing underway, reduced expenses at hand and perhaps improved learning, what choices can yield the best results is a research each of us can undertake.

The economy will not be bad forever; confidence will overcome uncertainty and our doubts. It’s a good day to start figuring out what to do to gain efficiency, how to invest in it and plan to time it for the lowest cost.

If your confidence in your income is high it’s a great time to invest in efficiency – you’ll be an economic stimulus of one – one that matters and is contagious to others.


1 Comment so far

  1. Loaner on October 13, 2009 7:29 AM

    I found your blog on google and read a few of your other posts. I just added you to my Google News Reader. Keep up the good work. Look forward to reading more from you in the future.

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