NEW YORK ( TheStreet) -- Some people think gold is money. But gold is, at best, only a way to represent money. It's not very useful, in and of itself. It makes great jewelry, and it makes a good conductor, but it's just a shorthand for value. The real reason people call gold money is because it's rare. It doesn't depreciate like other forms of money can, like paper, or whatever the Federal Reserve insists is money. Money, at its heart, is a store of value. Grain silos were the first vaults. Control over grain meant control over life and death. When the ancients learned salt was necessary to life, that became money. The word salary is derived from salt. Trouble is, grain is no longer rare. Neither is salt. Despite widespread drought there is plenty of grain, if we can just get it to where it's needed, to keep the whole world fed. Grain, as a store of value, has depreciated. I went to college in Texas, at Rice University, in the mid-1970s. The story was told then of a room in the Rice Hotel where the city's oil elite played poker in the mid-1950s. When one of those old boys got thirsty he would say, "Lyndon, pour me a drink." And Lyndon Johnson would. Oil is money. When the "Nixon Shock" of 1971 removed gold as the backing of our money, it was really putting us on an oil standard. Oil in the ground, gas in the ground, coal in the ground, potential energy is money. Proven reserves have been the measure of wealth from that day to this. You have to spend money to make money. Our economy depends on burning oil, gas and coal, but what that has meant for a generation is that the value of whatever remaining wealth exists has gone up. This is why oil prices remain so high. For those who have it, money has been steadily appreciating. Incredible Charts says that since the current recovery started in 2009 the price ratio between oil and gold has been fairly steady, at around 15 barrels/ounce.
But there is a threat to this stability. What if there were another source of potential energy? That's renewable energy. Whenever I make this argument at Seeking Alpha, I get lots of pushback from the oil bulls. They insist that renewables are subsidized (not as much as oil), that renewables are too expensive (they're getting cheaper) and that you can't store renewable energy. On the last, they're right. Battery technology has not kept pace with the growth of renewable supplies. In Hawaii, utilities want to end "net metering," in which they buy the excess power of solar panel owners, because they can't store it efficiently. This problem is now spreading to California and will become a nationwide concern within five years when the cost per watt of producing energy from solar panels falls below 50 cents -- a new generation of panel makers are now saying they can meet that figure by 2015. Of course, if you could store excess electricity in a battery at home, you could use that to run your Chevy Volt. If you could turn it into hydrogen, breaking the chemical bonds of water and turning it into gas, you could then use the hydrogen in a fuel cell. You might even go further, turning hydrogen into ammonia, NH3, which is a more stable liquid. Then use the ammonia in a fuel cell, as a Danish company called Amminex proposes. The point is, renewable energy is about to turn into real money. This frightens the owners of oil and gas reserves, a lot, and they're doing everything they can, within and without the political system, to forestall it, as The New York Times detailed last week. When renewable energy becomes money, when we can store it and it costs less to produce than oil and gas, the remaining store of oil and gas is going to become worth less. It's going to decline in value. That's the next major revolution in the history of money, and it's not nearly as far away as you think. The sun shines, the wind blows, the tides roll and we live on a molten rock. Hawaii is our future. Aloha. At the time of publication, the author had no financial interest in any company mentioned here. This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.