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Politics : Formerly About Advanced Micro Devices
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To: tejek who wrote (145518)4/22/2002 10:30:56 AM
From: TimF  Read Replies (1) of 1575329
 
Tim, sorry, if anything your latest explanation confuses me more. Let me make it simple. Normally, you spend 1k on gas per year, However, this year you conserve and only use half, you save $500 per year.

Yes in your example you save money. I didn't say that you couldn't save money from conservation, or even that you would not save money more often then not, only that you would not always save money. I gave the general case with variables (you save X money ect.) but if that confuses you I can use specific dollar amounts.

Conserving energy is sometimes done simply by doing less, for example driving less miles; but it can also be done in ways that require you to spend money. Imagine that you had recently bought an efficient heating and cooling system for $5k. You spend $300 for heating and cooling a month. Now a new more efficient system comes out and its also cheaper then the one you bought. It only costs $4k and it will reduce you heating and cooling cost to $280 a month saving you $240 a year. But the $5k for your current system is sunk cost. You don't consider that when evaluating if the new system can save you money, so the fact that the new system costs less is irrelevant. So you save $20 a month, but have to spend $4k. It would take you 200 months or over 16 years to pay back the investment. The system might not last 16 years and in any case even more efficient systems might be created over that 16 years. Also you might move and not get the cost savings (and not get a complete return of the investment in terms of higher house prices). And all of this is not even considering the time value of money. Chance are you will never break even on this investment. It will save energy but it will cost you money not save money.

Tim
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