It is electric power that will be driving the Energy Economy. The President's goal of reducing gasoline use by twenty percent will be achieved by electric cars powered by electricity, rather than by biofuels. Ethanol and other fuel alternatives like fuel cells will contribute, but the first company that delivers a rechargable electric vehicle at a reasonable price (under $15,000) is going to sell a bunch of them. This will have dramatic effects on many other sectors of the economy, and in unpredictable ways. New battery designs will accelerate the development and sale of rechargeable electric cars.
For example, the recent spike in fuel prices actually caused a reduction on fossil fuel use in the U.S., the first such reduction in many years. So we know now that when gas goes over $3 a gallon, people and businesses change their driving habits--so much so that the price of oil dropped in part because of reduced demand. As electric cars become popular, we will see more kinds of market dislocations.
One interesting challenge will be the ability of electric utilities to meet the demand to charge electric cars. In the short term, this is not likely to be an issue, as much of that charging will take place at night, when demand is low anyway. But it is not hard to think of some changes that may take place. For example, some utilities already at capacity may have to raise rates to meet demand. Other utilities with active power management via fiber to the home may be better positioned to manage the new demand to charge cars and may actually be able to lower electric rates or keep them level. And communities with reliable and resilient electric power may become magents for Knowledge Economy businesses that need that kind of power to run their servers--and to charge the cars of employees living there.
Note to economic developers: one of the oldest utilities is about to become very important again. How does your community and region measure up?