I want to write a little thread about the future.

Not the immediate future because that's quite bleak but it does afford us a glimpse into what's going to happen over the next ten to thirty years.

Keen followers of my ramblings know of my obsession with the marginal cost ...... https://twitter.com/eric_donovan60/status/1246787405069377537

...of energy. That energy prices are falling, and quite rapidly now, and that the increase in the amount of renewable energy coming online means they aren't going back up.

At all. At anytime.

The marginal cost of energy is going to trend towards zero.

There was a time, when the 1st generation of nuclear power stations were being built, that people thought electricity would be too cheap to meter.

Lots of previously off-grid farms and communities were connected with that promise.

It never happened because nuclear didn't ......

deliver its promise and fossil fuel prices continued to rise with demand.

Then renewables started to make an impact. And energy prices started to fall.

Every year, the IEA forecast a linear growth in renewables and every year (so far) that growth has been exponential.

We are now rather now familiar with exponential growth curves that we'd rather be.

But understanding them shows what happens when a technology with both cost and environmental drivers get to a size large enough to displace an incumbent.

Currently, energy prices are dropping ...

....because lots of cars are currently doing three weeks to the gallon.

But this year is the year in the USA (next year in Europe) where electric cars start to cause a structural drop in oil demand.

The electricity they use will increasingly come from renewable sources not ....

.....fossil fuels.

When 1% of buyers leave a market you don't drop your prices by 1% to get them back. You drop them by the price required to get 1% of them back. And that can be quite big.

And, if there's a structural change in the marketplace, you might never get them back.

It was 2007 (I think) when the chief economist of BP did the keynote speech at the conference of oil economists and noted the challenges of for oil companies whose value could never be realised because the commodity on which it was based would never leave the ground.

But, what happens when energy cost tends towards zero?

Lots of interesting things happen.

In terms of direct effect, travel and heating become less of a cost burden.

And, they disproportionately benefit poor people.

So, that's good.

But something else happens as well.

There's an effect economists call transference.

Because energy is now essentially free, you use it instead of using other things.

That slows down the price falls, as demand increases, but it doesn't stop the fall because the demand causes extra supply to be provided.

And one of the things it most effects is manufacturing.

Things which weren't automated before, because it wasn't cost effective, become cost effective because energy is free.

Asparagus harvesting, as far as I know, isn't automated. But, if the cost of making an asparagus ......

...harvester is low because the energy required to make it is free and the energy required to make the bits to make it is free and it doesn't cost anything to harvest the asparagus because the energy to run the harvester is free, then asparagus harvesting gets automated.

And that happens everywhere.

To everything.

Which has lots of effects on society.

Where people are employed changes.

How governments raise taxes changes.

One of the big changes is going to be a decoupling between people and units of economy.

If machines make everything.....

including the machines, the link between people and economic units gets broken.

Governments will no longer be able to appeal to hard working families because the hard work will be done elsewhere.

There will be more leisure time.

But there will also need to be a new economic ..

...settlement because the link between making things and people will have been broken.

One of the nervousnesses around universal basic income is that people will just sit around, doing nothing.

Poor people will be able to be as idle as rich people and that's not a desirable ...

...outcome for rich people because they won't be able to exploit the labour of poor people for their benefit.

But, lots of people won't be idle. Optimists think uncoupling people from the yoke of work and debt will lead to a new dawning of community spirit and creativity.

And, you can see glimpses of it here, on twitter, in the lockdown.

Who would have thought that somebody with a bald head, three eggs, four egg cups and a Queen song, could have produced something so imaginative and funny?

We need to prepare for a future of creativity and ......

...community.

Thanks for reading.