Blockchain, a digital ledger in which transactions made in cryptocurrencies are recorded chronologically and publicly, is most closely associated in the public mind with BitCoin, a crytocurrency that is undergoing a mania like the 17th-century Dutch tulip crisis. I venture no predictions about the future of BitCoin, but I’m increasingly reading that blockchain has the potential to disrupt all kinds of industries.
One of those, according to this article in Oilprice.com, is the energy sector. By enabling peer-to-peer trading, blockchain is disrupting traditional markets and enabling decentralized networks. That’s particularly promising for renewable energy and distributed energy grids. Writes the author:
Blockchain has the potential to shake up the energy industry in countless ways, but perhaps the most disruptive would be a new, radical level of transparency. A wide-scale adoption of blockchain would create significantly more transparency at all levels. On a grand scale, every time a barrel of oil is bought or sold, it would be documented on a digital ledger, leaving an unprecedented “paper” trail. While the buyers and sellers themselves will remain anonymous, these transactions will be publicly visible like never before.
But before you break out the bubbly and toast the end to fossil fuels, consider this: The same article discusses how oil & gas companies are using data analytics to help drillers move faster, make better decisions, and recover more oil and gas at a fraction of the price.
(Hat tip: Rick Gechter)
Perhaps the bottom line is this: Blockchain, data analytics, the Internet of Things, and other technologies are enabling a new wave of innovation that will make energy — fossil fuels and renewables alike — cheaper. Does anyone remember the goal of achieving energy independence? Well, we’re almost there. The Persian Gulf can kiss my grits!
Some say the U.S. economy has entered a slow-growth era in which there are no transformative technologies to drive invention and productivity to new heights. Building another social media app won’t make a material improvement to our lives. The pessimists might be right about social media apps, but I suspect that’re missing a lot of action in the real world.
What does this mean for public policy in Virginia? When technology is scrambling the economics of the energy industry, we should be careful about making large, long-term investments that run the risk of becoming obsolete. Absent some technology breakthrough, nuclear is not looking like a good way to go. Speaking in broad generalities, the electricity future looks like renewables and natural gas.
I’d issue the same warning for investment in transportation infrastructure. The Uber revolution, driverless cars, and electric vehicles will upend the personal-mobility industry. There is no way to predict with any confidence how it will shake out. All I can say is that we should scrutinize any large public investment in highways and mass transit predicated on the assumption that the driving and commuting patterns of the next 50 years will look like the driving and commuting patterns of the past 50 years.
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