The Cost of Energy

Businesses typically pay more for long-term, guaranteed supplies. Price "shocks" have real cost for businesses. The current dependence on oil has lead to price shocks that have caused recessions. Unfortunately even with optimal policies recessionary consequences of oil shock are unavoidable. However, reducing reliance on oil may help offset this shock.

Common business practices suggests that there is at least some extra cost to transitioning to a better alternative. Renewables and nuclear power typically have high construction costs but pay off in the end with low operating costs compared to fossil fuels that are currently used. Once renewable energy sources are built, the price of power from renewables tends to be more predictable than from oil. The fluctuations of fossil fuels are larger, while renewables offer stability and predictability for a growing business.

Even The US Pentagon has increased its use of renewables and attention to conservation efforts to protect from energy price fluctuations that occur with oil. So making the switch to a more sustainable energy is worth the switch in the long run.

U.S. Department of Defense, 2010, Quadrennial Defense Review Report(link is external), p. 87,