But this can be (and is) manipulated by government policy and social dynamics. The externalities of the fossil fuel energy binge are becoming increasingly impossible to ignore, which is depressing demand.

Do you think Africa, China, India all think like that? Most of whom are living on or below the poverty line? They'll be driving old put-puts and crappy desel trucks, tractors and cars for tens of years to come. How long before second/third hand electric cars are being exported in tens or hundreds of thousands to these countries? 50 years?

No one I know drives a NEW car, and I live in the UK. We all wait for 2nd/3rd hand cars to get to us.

Well India has very large kerosene subsidies for the poor, which they are managing to cut because prices have fallen. Replacing these with solar subsidies would make a huge difference, and cut fossil fuel use. And e-rickshaws took off quite fast.

The UK had new car sales of almost 2.5 million last year, ridiculously high, the highest in Europe, thats almost 10% of households bought a new car/

10% of households bought a new car, and that means that the average lifespan of a car with its FIRST owner must be on average 10 years. Cars might last 20-30 years in the UK as the previous poster pointed out, and longer in the rest of Europe which is already "rich" relative to India. I think you're proving his point exactly.

> 10% of households bought a new car, and that means that the average lifespan of a car with its FIRST owner must be on average 10 years.

Maybe I need more coffee, but wouldn't that only be true if every household only bought new cars?

In any case, we don't have to guess these things. Simple search found that in 2011 the mean car age on UK roads was 7.44 years. Even accounting for the long tail, that's actually pretty good.

Ah, excellent point. Yup, I got that one wrong!

Yes. Dirt cheap (new) solar panels have been sprouting all over Africa, India and China in the last couple of years. It's quite a sight to behold, sometimes.

These panels became such a 'threat' that Obama slapped tariffs on them.

I think you're being a bit pessimistic. People in third world countries love status symbols and want to do their part too. In the eighties, when Datsuns were all the rage in Pakistan, my grandfather was one of the very few to track down an imported used Australian Ford Laser sedan, which was surprisingly cheap (probably smuggled through Dubai).

Until recently, Pakistan had one of the highest adoption rates in the world of CNG in cars as an alternative to petrol, you could just flip a switch when you were cruising on a flat. We modified our Laser (may it rest in peace) accordingly.

The problem is that the market price of oil an coal don't reflect the long term costs of their use.

Renewable energy has all of its costs right up front. Fossil fuels have major deferred costs which allow the market to act without concern for the consequences.

Which is yet another reason that the market is dumb and should not be trusted with important decisions.

Another way to look at it is that the market is smart, but like any other information processing system, can only make the right decisions if given the right inputs. For the market to make the right decisions about energy policy, the real costs of oil and coal need to be priced in, by applying pollution taxes.

All other alternatives are more economical when oil's externalities are priced in. Oil has been cheating, so can we fix that?

It can be fixed by highlighting politicians' use of the oil industry's money to fund their campaigns and calling them rude names when they do it (and equally, by saying nice things about politicians who don't...).

If it becomes politically unpalatable they will stop taking oil industry money. If the oil industry loses its seat at the policy table they will lose power, followed by money, followed by influence. It's a vicious (or virtuous) circle, depending upon how you look at it.

But that could happen by taxing the externalities of oil, ie. a carbon tax.

fossil fuels are economical only because the environment does not ever sue for damages.

Hm, sounds like a great argument for taxing and regulation.