Economic fallacies

With regards to Erik Smith’s letter “Spin and distortion”, would Mr Smith feel so sure of the facts to personally guarantee, as he states, “that the 45 per cent community share of this windfarm will bring in more money than the vast Sullom Voe Oil Terminal ever did”?

The Viking Energy project hangs on economic fallacies and fantasies, and I’d like to share a few of them for clarity’s sake.

A primary principle of energy generation is to produce as close to consumption as possible. This is why Whitelee windfarm is appropriate, given its proximity to Glasgow. Producing energy in Shetland to export to the Scottish mainland is simply bad economics, given the increased overheads the interconnector cable will create.

Secondly, wind power generation is not the same as oil. It requires a different type of economy – a different way of thinking about resources. Renewable energy is not a scarce resource (in the classical sense), and does not adhere to traditional “supply and demand” economics.

The appropriate use of renewable energy schemes, particularly at this early stage in their development, must be gradualist; small schemes of varying types with the aim to bring down other living costs such as food production and heating, weaning us off oil-based resources at a speed that allows us to maximise the potential of renewable energy.

Wind power is a poor substitute for oil, and if we treat it as such, we’re no better than those who feel a polluted world is a fair substitute for a high standard of living.

Finally, to turn to Mr Smith’s fantasy noted at the beginning, the profit margins projected by Viking Energy are wholly dependent on two things: government subsidies and the interest rates on the debt to be incurred remaining stable.

Of course what Mr Smith fails to mention (being a member of the dedicated and fundamentalist AGW party), is that many EU countries, including Denmark, are reducing windfarm subsidies in recognition of the high-energy tariffs they create for the consumer, and that there is now a strong momentum for interest rate increases to offset rising inflation. Spin and distortion indeed, Mr Smith.

Christopher Thomson
3 Gladstone Terrace,
Lerwick.