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The Single Most Boneheaded Investment of 2014

Everyone wants the air to be cleaner – and energy to be cheaper, renewable and abundant. I’m sure we’re all concerned about lowering carbon emissions, as well.

However, when we plug our toaster into the wall or switch on the big screen to watch the Super Bowl, we have faith that the utility bill at the end of the month won’t bankrupt us.

And no one wants that to change…

Sure, switching over to wind energy sounds like a great idea. After all, massive wind turbines (measuring as tall as 270 feet) can produce a lot of energy. And the power source is absolutely free.

But the reason there isn’t a windmill on every street corner is simply related to cost.

Wind energy just isn’t competitive with conventional sources when it comes to the amount of energy produced for each dollar spent.

Most consumers don’t know this.

What they do know, however, is how much they pay each month for power. As long as it’s cheap, consumers couldn’t care less where their power comes from.

Well, based on the chart below, that means both wind and solar are out!

As you can see, compared to conventional coal or natural gas, the true costs per megawatt hour for solar and wind are at least double.

Not to mention that subsidy dollars allocated to wind and solar production are astronomical compared to the conventional fossil sources – and even nuclear energy.

Indeed, without subsidies – huge subsidies – there would be no wind turbines dotting the landscape (except maybe for experimental purposes).

Of course, the argument is that, as technology improves, the future costs will be much lower.

I don’t doubt the validity of such an argument, either. But the new discoveries of shale gas and oil – paired with the continued use of cheap coal – make that argument a very long-term proposition when it comes to profits.

Bottom line: Betting on wind or even solar is a bet on continued, massive government subsidies per megawatt hour of electricity. Those subsidies will continue, as special interests aren’t going to let them end. (Much like fossil fuel lobbies continue to win subsidies for their constituents.)

But, if you’re looking for businesses that will succeed based on economic fundamentals, then wind generation opportunities will probably turn out to be nothing more than hot air.

And “the chase” continues,

Karim Rahemtulla

PS – I’ve joined Twitter! Follow me @KRahemtulla.