Summary of Hidden Costs of Not Switching to Alternative Sources of Energy


 

 

 

Co-Authored by David M. Ginsberg and Etan J. Ginsberg

I. INTRODUCTION

While many consumers and governmental officials are concerned about the environment, and desire to go “green” no matter what the cost or inconvenience, many people and decision makers care primarily about the monetary cost of energy. This is seen when energy companies seek rate hikes, for example, or when consumers complaint about increased costs of gasoline at the pump. People want cheap utility bills, cheap gasoline, and cheap cars. (Chua, 2008)

“Green” Alternative sources of energy are often referred to as renewable sources of energy. To some extent, there is tremendous overlap. But depending upon a person’s definition of “green” and a person’s opinion of the particular impact of a particular source of energy, there are some differences. Most significantly, nuclear energy, while considered “renewable” is not considered “green” (see discussion later). On the other hand, hydroelectric and even windmills have been attacked for their effect on fish and birds, respectively. Windmills have also been attacked as detracting from the beauty of our country by being aesthetically unpleasing. Insofar as definitions differ, and it is clear that changes need to be made (and as technology and innovation reduces the criticisms), they are not addressed in this paper.

It is the considered opinion of this author, and the purpose of this blog, that the true costs of conventional sources of energy are actually more expensive then “green” alternative energy, when the hidden costs of conventional energy are added back. This will become even more true in the long run, as the hidden costs increase, and as the costs of “green” alternative energy decreases, which it will, in the same manner as computers of today are hundreds of times more powerful than they were a decade ago yet are a fraction of the cost.

2. DESCRIPTION OF SOURCES OF “GREEN” ALTERNATIVE ENERGY

There are many sources of alternative energy and now many of them are no longer available just to utilities and big companies, but even homeowners have real options to go green for energy matters. (Chua, 2008) For the purposes of this paper, we are addressing only the already well developed sources as there are hundreds of ideas in various stages of development and exploration, including ocean/wave generated energy, energy from bacteria, and on and on.. It is submitted that the reasons for going green on the known and better understood sources may apply to new ideas and technologies if science proves that they work well. Additionally, nuclear and related sources as many do not consider these sources “green” due to the potential for environmental damage due to nuclear waste and the radiation caused when accidents occur, as was seen so recently in the unfortunate disaster in Japan.

     Solar Power

The cost effectiveness of solar power can vary upon how much sun an area gets (Chua, 2008). Of course, solar power has to be used either in connection with storage of electricity through batteries or other means as the country is dark for part of each day (during the evening and night), which also fortunately corresponds to the time period where usage is decreased due to lessor usage by some workplaces which close, and ultimately, people sleeping who use even less electricity.

The reliability also depends on how solar energy is used to create energy. As it can be used by photoelectric cells to directly create energy, that energy dissipates quickly, if not stored. On the other hand, it is also used to heat hot water, and if properly insulated, that water can retain heat for hours.

Wind Power

Wind poser has been around for thousands of years. The first know B.C.E. when used to power sailboats.

The cost effectiveness of wind power also depends upon the relative on the geographical location, as some areas are windier then others. Additionally, overall the amount of wind can vary. Unlike solar power, however, and due to the nationally connected electric grid, this is less of a problem as there are many areas which are very windy most of the time and windiness varies from region to region within the United States, as opposed to solar energy which has a period of time in which the entire country is dark.

Geothermal

Geothermal energy comes from the Greek words “geo” and “therme” heat. Geothermal energy is continuously being produced inside the earth and is found in large areas called “geothermal reservoirs. These include volcanoes, hot springs, geysers, and holes (where volcanic gases are released) called “fumaroles.” We recover this energy by using the heat directly as steam or hot water for heating, and also to generate electricity similar to the way nuclear power or water power turns turbines which due to the laws of physics, generate electricity.

Hydroelectric

Hydroelectric power has been around for a long time, and has many clear advantages. By disrupting the natural flow of a river, and the power of the water going downstream turns turbines which generate electricity. The amount of electricity produced can be increased tremendously by creating huge damns, such as Hoover Dam, which generates tremendous amounts of electricity. While this dams are expensive to build, this source is generally reliable and cheap, one built. (Chua, 2008)

One significant disadvantage, and one reason many people concerned with the environment, is that they disrupt the natural flow of the water. This adversely effects the fish and wildlife along the river, and is especially problematic for fish which return and travel upstream to spawn, such as Salmon. Many damns are currently being dismantled, and Hydroelectric power would not be recommended in many ecologically sensitive areas.

3. SUMMARY OF EXISTING SOURCES OF ENERGY

Oil

Oil comes from many sources and is arguably the most problematic, at least according to the reasons and opinions of the author and explained herein. They include domestic drilling, offshore drilling, and imported oil. This occurs both in their refining for use as well as in their actual use, such as in automobiles. Oil is also a source of electricity, which is vital to our existence and quality of life.

The last two major sources of obtaining oil are the most problematic. Offshore drilling for oil is not only more expensive, but possesses significant environmental risks, as was evidence by the recent disaster in the Gulf of Mexico which caused damage to our environment and wildlife which can not even be determined. Because of the “web of life” theory, in which every aspect of life and the environment is considered vital to every other (for example phytoplankton in the ocean is considered vital in the food chain to our sources of food and trees around the world considered vital to the earth’s atmosphere, elimination of oxygen, and so forth), we will never really know how badly this disaster affected the health, economy, and wildlife and environment of the entire earth.

Unfortunately, as our demand for oil grows, and existing cheaper and relatively safer means of obtaining oil are depleted (such as domestic drilling on land) offshore drilling is being held in deeper waters and in more fragile ocean environments, thus increasing the risks and monetary costs.

Importing foreign oil is also expensive and has many additional costs. To the extent that it is obtained by offshore drilling, the same risks as domestic offshore drilling occur, but may be enhanced by governments that fail to enact or enforce the same safety regulations in the USA. Moreover, war and conflicts further increase that risk. As is addressed in this article, there are other hidden costs of imported oil. One other environmental risk is that imported oil must be shipped to the USA, and there is a significant risk of catastrophic environmental damage, as was evidenced by the Exxon Valdez incident in Alaska.

Coal

While one advantage which is cited about coal is that there are abundant supplies contained in America and it is a cheap source of energy. (Tallying Coal’s Hidden Cost, 2011), it has two major disadvantages. One is that it also produces carbon and other emissions, as does oil, when it is used to produce energy, as oil does. Another is that it is generally used to produce electricity, and cannot replace oil for use in automobiles and the trucking industry.

Natural Gas

While it is important to note the use of this existing source of energy, it is beyond the scope of this paper to discuss it except to note that it exists and contains many of the same problems as Oil and Coal. On the other hand, its use is still under scientific development and innovation. It is currently being imported by the means of liquefying it (after freezing it) and shipping to terminals in the USA where it is offloaded.

4. THE REASONS WE HAVE NOT SWITCHED

There are many reasons that the use and implementation of alternative sources of energy has not occurred as quickly and extensively as possible. There are many reasons, and again, it is beyond the scope of this paper to discuss in detail every reason, such as political lobbying, artificial price reduction. While they will be mentioned, the most important reason, the relative monetary costs will be addressed.

Political and Industry Influence

The existing oil, coal, and natural gas industry, and the foreign countries who export these products, are among the richest and most powerful in the world. Alternative sources of energy represent their only competition and threat to their profits, especially as it become more readily available on a smaller scale by relatively smaller competitive companies.

They have spent inordinate amounts of money to prevent the development, use, and switching to alternative sources of alternative energy. They have taken advertisements on TV and the print media, and spend untold tens or hundreds of millions of dollars lobbying congress and the government improperly influence governmental decisions. Money for research into alternative sources has been limited. Tax subsidies which should have been implemented have been delayed, reduced, or prevented. Tax subsidies, credits, and accounting rules have been enacted which have helped make conventional oil artificially cheap.

Price Fixing to Discourage Green Alternative Fuels and Oil Efficiency Increases

Unlike most of the products produced, sold and bought throughout the world, the prices of conventional sources of energy are controlled by a few companies and countries. Most of the foreign countries who produce oil, for example, are members of, or follow OPEC. “Russia’s stance towards OPEC is a critical question for the world’s oil markets” (Institute for the Analysis of Global Security, October 30, 2003), OPEC, which is a cartel which artificially sets prices and productions levels of oil which is exported to the rest of the world, including the United States.

It has been alleged that when the political and/or economic climate causes the American public and government to turn to the development and use of alternative sources of energy, OPEC and the oil companies have intentionally temporarily reduced prices to “take the wind out of the sails” of the movement to develop and switch to alternative sources of energy. Unfortunately, a reasonable discussion and documentation of this point is again beyond the scope of this paper and would require hundreds of pages to discuss and document, and, at least within the last few years, may have become less relevant as the price of oil has indeed skyrocketed.

The Monetary Cost

The principal reason that the public has not researched, developed, and implemented “Green” Alternative Sources of Energy is that it has been, so far, more expensive than conventional sources of energy, and this is a major reason that “Green” alternative energy sources are not favored by many as they are price sensitive. (Wald, Costs Work Against Alternative Energy Sources in Times of Recession, 2009)

5. THE HIDDEN COSTS OF CONVENTIONAL SOURCES AND THE REASONS WE MUST SWITCH

Economic

First, the price reflected at the gas station does not reflect the true monetary cost of gasoline. The federal government subsidizes the oil industry with numerous tax breaks and government protection programs worth billions of dollars annually. (Institute for the Analysis of Global Security, 2011).

The economic penalty from our undue dependence on imported oil exacts from the US economy the loss of 828, 400 jobs and $159.9 billion dollars from our GNP annually, and if reflected, these monetary “hidden costs” would raise the price of gasoline to over $525 a gallon. (Institute for the Analysis of Global Security, October 30, 2003)

Coal power’s rock bottom price for utilities and consumers omits a host of attendant costs associated from its production, from public health impacts to local and global environmental effects. (Tallying Coal’s Hidden Cost, 2011) Coal costs the US economy between $140 billion and $242 billion a year in public health impact. (Wald, 2008)

Pollution

All three conventional sources of energy cause emissions, including carbon dioxide emissions which cause pollution and contribute to the depletion of the ozone layer, and curbing these emissions seems necessary and inevitable. (Wald, Costs Work Against Alternative Energy Sources in Times of Recession, 2009)

     Environmental

Because we have discovered most of the existing supply of oil on the land in the United States, and have drilled and depleted these wells, while at the same time our demand has increased, we need to find other sources. As stated previously, The last two available sources of obtaining oil are the most problematic. Offshore drilling for oil is not only more expensive, but possesses significant environmental risks, as was evidence by the recent disaster in the Gulf of Mexico which caused damage to our environment and wildlife which can not even be determined. Because of the “web of life” theory, in which every aspect of life and the environment is considered vital to every other (for example phytoplankton in the ocean is considered vital in the food chain to our sources of food and trees around the world considered vital to the earth’s atmosphere, elimination of oxygen, and so forth), we will never really know how badly this disaster affected the health, economy, and wildlife and environment of the entire earth.

Unfortunately, as our demand for oil grows, and existing cheaper and relatively safer means of obtaining oil are depleted (such as domestic drilling on land) offshore drilling is being held in deeper waters and in more fragile ocean environments, thus increasing the risks and monetary costs.

Importing foreign oil is also expensive and has many additional environmental hazards. To the extent that it is obtained by offshore drilling, the same risks as domestic offshore drilling occur, but may be enhanced by governments that fail to enact or enforce the same safety regulations in the USA. Moreover, war and conflicts further increase that risk. As is addressed in this article, there are other hidden costs of imported oil. One other environmental risk is that imported oil must be shipped to the USA, and there is a significant risk of catastrophic environmental damage, as was evidenced by the Exxon Valdez incident in Alaska.

National Security

Our dependence on foreign oil makes us dependent upon the supply of foreign oil. Thirty years ago, in an attempt to influence US Middle East policy (especially our alliance with Israel), the OPEC cartel composed of either anti-Israel Arabic states or Arabic friendly states, decided to cut oil supply to the US. (Institute for the Analysis of Global Security, October 30, 2003)

This has come into question again, as the current war in Libya, recent political hostilities by the head of Venezuela, and Russia’s supply cut of oil or natural gas to certain eastern European pipelines has shown that this is a real and reoccurring threat. (Institute for the Analysis of Global Security, October 30, 2003)

Almost 49.1 billion dollars is spend in annual defense outlays to maintain the capability to defend the flow of Persian Gulf Oil. (Institute for the Analysis of Global Security, October 30, 2003) This does not include aid to governments, political deals, which are either against our moral, long term, or other interests. For example, to protect our supply of oil from a vicious dictator who was friendly to the USA, we supported the Shah of Iran. Although we are a democracy which finds torture and oppression to be abhorrent, we helped keep the Shah in power. Unfortunately, when overthrown, one factor behind the tremendous hatred of the USA by the Iranian country was our support for this dictator. Iran has become a major enemy of the USA and severely threatens our national security, both directly and by supporting other enemies and terrorist organizations. They are even developing nuclear weapons and have threatened to use them against Israel, which would not only cause the world to suffer extreme environmental damage, but would drag us into a major and perhaps nuclear war (not to mention the human costs to Israel.)

If the United states does not decrease its use of Middle Eastern oil and develop alternative fuel methods, it risks even greater reliance on the Arab world, according to one expert, and Saudi Arabia, which has demonstrated its willingness to use its vast oil reserves as a foreign policy tool, has not acted to aid US efforts to rebuild Irag. (Institute for the Analysis of Global Security, October 30, 2003)

Natural Gas possess similar risks regarding our dependence on foreign supplies, and an additional security risk. While a disaster at sea may pose less risk to the environment, an accident while being offloaded possess the risk of acting like an atomic bomb. For example, currently, Liquefied Natural Gas is currently offloaded after passing right next to Boston. Were an explosion to occur in close proximity to Boston, it has the potential of killing tens of thousands of people or more. It is vulnerable to terrorist attacks. (Institute for the Analysis of Global Security, October 30, 2003)

6. FUTURE & CONCLUSION

Because our demand for energy increases, and our supply of relatively safer, cheaper, or reliable sources of conventional energy decreases, the importance or our switching to “Green” alternative sources of energy become more compelling. Stated differently, the hidden costs of not switching will increase. Similarly, while we cannot predict whether the world will become politically and militarily more dangerous or safer, we cannot take that gamble.

Because the effects of conventional energy on our environment and pollution are often cumulative (pollution), often catastrophic (oil spills), perhaps cataclysmic (in the case of the depletion of the ozone layer), these hidden costs of conventional energy are not only increasing, but reaching a critical level and becoming unacceptable.

On the other hand, there will be significant cost reductions in low carbon energy systems die the learning curve, reduction of technical barriers, changes in industry structure, increased demand and economies to scale. (Nemet, 2006)

In conclusion, the actual monetary costs of conventional energy must be added to the hidden costs of conventional energy and when compared to the true costs of “Green Energy”, compel us to rapidly invest in the development and use of “green” alternative sources of alternative energy. This will only become more true as the hidden costs of conventional energy increase and the costs of “Green” Alternative Sources of Energy Decrease.

The compelling conclusions I reached were best described in the last article read for this blog.

“World competition for dwindling oil reserves will force the US to increase its footprint in the [Persian Gulf] region where oil generated wealth would continue to provide extremists the capital to market and implement their ideas worldwide. The unavoidable result is even more terrorism and instability. So when it comes down to the question of whether we can actually afford to shift away from petroleum-based energy system one should remember that the combined impact of wars, terrorism, and environmental degradation is likely to send the price of oil firth through the ceiling over the next two decades. Alternatively, the cost of emerging technologies is likely to decrease over time, as mass production and commercialization takes place.” (Institute for the Analysis of Global Security, October 30, 2003)

Bibliography

Tallying Coal’s Hidden Cost. (2011, Ferbruary 17). NYTimes.Com.

Chua, J. K. (2008, October 6). True Cost of Renewable Energy. Live Science.Com, p. Web.

Institute for the Analysis of Global Security. (2011). How Much Are We Paying for a Gallon of Gas. Institute for the Analysis of Global Security.

Institute for the Analysis of Global Security. (October 30, 2003). NDCF Report, the Hidden Costs of Imported Oil. Institute for the Analysis of Global Security.

Nemet, G. (2006). Behind the Learning Curve: Quantifying the Source of Cost Reductions In Phiotovoltaics. Doctorate Thesis, University of CA. At Berkley.

Wald, M. (2009, October 28). Costs Work Against Alternative Energy Sources in Times of Recession. New York Times.

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About davidmginsberg

This is a more limited, more international version of my full blog, which is currently on Google. It may replace my entire blog since Google's Blogger is blocked, I understand, in China (even though my Blog is favorable to China), and China is of interest to me. My full blog is currently at http://usa-china-international.blogspot.com/ and a link to it with more information about me is at http://www.chinablognetwork.com/general/david-ginsberg-international-and-domestic-blog. This is ironic that a Blog site in China, listing China related sites, lists my blog, but prohibits Chinese people from visiting my Blog, which, at worst, has posts which have nothing to do with China, and at worst, has blogs which speak favorably of China.
This entry was posted in Alternative, Alternative Sources of Energy, Coal, Energy, Geothermal, Greem, Hidden Costs, Natural Gas, Oil, Solar, Solar Power, Terrorism, Uncategorized, Wind. Bookmark the permalink.

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