The War Against Oil is a War for the Economy

Make something. Make something new, something valuable, something real, something with a ready market. 

Despite what critics felt there was something real about the Internet, which defined the 1990s. The Internet accelerates the transfer of knowledge, and of any knowledge-based value store. It's the most powerful economic accelerant since the creation of the telegraph.

By contrast there was nothing ever real about the economic drivers of this decade, financial services and homes. Not that homes aren't real. But the value of a home has nothing to do with its cost or even its location. It is a measure of the economic value left out there to buy homes. A home sucks money, it only creates money for those who build, assuming someone buys. Thus homes became a natural sinkhole for the confederate money of this decade, soaking up as much as the banksters could create from thin air.

Now that the economy has stopped falling this question becomes vital. On what will we base the next boom? 

The answer is obvious. Energy. 

But not just any energy. New supplies of oil or coal or natural gas go into direct competition with supplies from rival sources. They assure those supplies a market. Any downward pressure on its price is temporary. The equity value of those resources remains high.

The War Against Oil is the right way to rebuild the economy, because there is enormous economic potential at every stage of the process. Not just solar panels, not just windmills, not just geothermal set-ups. But a new infrastructure that can adapt to these new supplies.

In an electrical system based on gas or coal, you turn off the supply when demand goes down. It's pretty easy to do. You cut the inputs to the furnace, you slow the turbines. 

In an electrical system based on wind and solar, it's not so simple. You can't turn off the Sun. You can't stop the wind. What's happening now is that, when demand does not meet supply, utilities don't buy and all this power is lost.

The answer to that problem lies in hydrogen. Not just a smarter grid that can buy as well as sell, but hydrogen to bleed off excess supply, and deliver a little extra when needed. You run your excess power to a hydrolysis system, you split water into hydrogen and oxygen, vent (and perhaps someday re-sell) the oxygen, and transfer the hydrogen using pipelines or tanks to provide back-up power, using fuel cells, when demand gets excessive again. 

You drive the costs of these systems down through mass production, and eventually you can do this on a neighborhood level, even an individual level. A school whose kids are home can still gain value from an array of solar panels on its roof if it has a way to turn that excess energy into something useful. Hydrolysis is an answer. 

A fuel cell is a generator that makes the whole electrical system more robust. When demand rises, or when central power is cut off, you turn on the fuel cells and you keep running. The more fuel cells there are, the more local the hydrolysis units, the more reliable your power system becomes. They're a lot quieter than conventional generators, too.

Eventually you reach the Edison level. Thomas A. Edison's vision was that every home would eventually have its own electrical generator. That's why he installed one in the basement of J.P. Morgan's home in the 1880s. It was a demonstration of the future — only it turns out to be our future.

A smart grid, with hydrogen back-up, is the infrastructure that not only we need, but the rest of the world needs. It's technology we can export, technology that sells more solar systems, more wind systems, more geothermal systems.

This should be the heart of the next boom. Build not just a smart grid infrastructure, but a hydrogen infrastructure, one that can take all the alternative energy we can create. Then, once that system is loaded, you have hydrogen you can sell from anywhere that can power cars and other vehicles, which will also use fuel cells. 

It's rebuilding the energy economy from the ground up. 

The only policy change we need to get started is cap and trade. Cap and trade puts a price on carbon's pollution, so both its pollution and potential are paid for. It levels the playing field, because right now that pollution is free. So make a market in it.

Oil companies and coal companies and electrical companies are going to scream bloody murder and fight this every step of the way. Until it passes. At which point they will have an enormous incentive to get into the new energy market. And they have a lot of the technology needed to transport and deliver hydrogen — it's the same system they've used for natural gas over a century.

If you want to buy real estate, buy it in Houston.