In order for green energy to be widely adopted, the unsubsidized cost needs to be cheaper than the alternative. If that were the case, there would be no need to build new coal plants. We’re starting to nibble around the edges cost-wise but we’re not there yet. It is pretty clear we’ll get there eventually, but we’re some years out still.
Fundamentally, the price of green energy (including nuclear) is a function of global manufacturing capacity. The more you build, the cheaper it gets, the technology improves, which brings the price down, and so on. Green energy should have been subsidized to a far great degree years ago to accelerate the clock developing manufacturing capacity.
Compare a home connected to the grid vs. one that also has solar panels and battery backup. Neither knows nor cares where the grid got its energy. The home with the panels saves on the electric bill and has blackout, and brownout protection.
My impression is that calculating the net cost of the green investment is beyond most home owners and the decision is made more on affordability and practical utility.
The calculation might be simpler when considering an EV.
Oil and gas are subsidized, but I’m not sure you’d appreciate equal treatment. Last summer the EIA published a report on federal energy subsidies. In it they write that “most federal subsidies were for renewable energy producers (primarily biofuels, wind and solar) low income households and energy efficiency improvements.” 46% were for renewable energy and 35% for end users.
Million $ per
Trillion BTU
Solar 4.153
Geothermal 1.665
Wind 0.947
Coal 0.072
Biomass 0.060
Nuclear 0.048
Oil & Nat Gas 0.033
Per unit of energy produced, wind gets 29x the subsidies for gas and oil, while solar gets 125x per unit of energy!
I’m gonna guess they didn’t include “the Navy”, “the Pentagon”, and “the cost of arms, soldiers, drones, and VA benefits” in the calculation of “oil” from the Middle East. A hidden subsidy is still a subsidy.
Heck, if it wasn’t for oil, would we even care what happens in the Middle East? We certainly don’t for most of Africa. Or the area of Eastern Europe like the Caucasus and beyond. By relatively recent history we support Israel, but without oil would we have bothered?
“You cannot say “solar/battery is expensive”, for example, and ignore the cost of the US Navy”
that is such an important point, and it is hardly ever mentioned. I don’t own an EV ( yet. live in a northern environment, and no desire at all to move south, but west could happen ), but I do recognize that the American taxpayer is laying out an enormous # of $'s to keep the oil market orderly, and the cost is hidden under the category of “military budget”.
Thanks Goofy and UNJ, that is exactly what I was getting at and what DB2 completely ignored. To put it differently, extract the US Navy from the Persian Gulf and let’s see what happens to the price of petroleum (both in price and price stability).
On the flip side, though, you could internalize the externality and it wouldn’t much affect the price of oil too much.
The annual budget of the entire US Navy is roughly $200 billion. There’s obviously no breakdown of how much of that is spent protecting oil, the whole budget is allocated among seven fleets, of which one (not the largest) is stationed in the Gulf area. If we take 1/7th the budget and allocate 80% of it to protecting oil (which is too high - we also protect the massively important Suez shipping lanes and use the 5th as part of our power projection to Pakistan and India), you get about $23 billion in expenditures on protecting oil flows. As a total WAG.
Total oil production from the Gulf is about 7 billion barrels a day. So internalizing that externality might increase the price of a barrel of oil by $3-4. Well within the ordinary variation in the price of a barrel of oil, so probably not big enough to change markets by any appreciable amount.
Alright, let’s use Albaby’s WAG of $23 billion per year. Add that to the $2 billion in subsidies for gas and oil and you get $25 billion for our 69 trillion BTU. That’s $0.36 billion per trillion BTU.
Solar subsidies are $7.5 billion for 1.8 trillion BTU. That works out to $4.2 billion per trillion BTU, which is almost 12x the subsidies for gas and oil.
It would be really difficult to put an exact dollar figure on it, but I am sure the “$23 billion” is massively low. You should include the cost of Gulf War 1 (amortize it over several years if you like) and Gulf War 2 (ditto), throw in the subsidies for Egypt and Israel, and …
… add in the pollution costs of burned oil vapors spewing out of a billion tailpipes, the smog and medical costs of asthma and lung diseases, the other implicit costs of oil production and the externalities of oil (yes, there are minor examples in solar and wind too, but those pale in the face of the oil industry) and you come up with a far higher number. And yet I’m the first to say the number is “unknowable.”
But here’s a thought exercise, already voiced upthread: what would the price of oil be if we simply stopped meddling in the Middle East and let the Saudi’s and Iranians (and Russians and Venezuelans) do whatever it is they’re going to do without Big Daddy around? We saw a version of that in the 1970’s and it wasn’t pretty, not for the US, not for the world.
Impossible to know. The most likely outcome is that the area would simply move from the US sphere of influence to the China-Russia sphere of influence. Both Russia and China would start projecting power into the area in a major way. Russia’s been a player in the region for a while, since it provides a strategic check on NATO and because their southwest is critical for maritime and naval access to blue water. China would not only reap enormous strategic benefits controlling the security for their oil supply (China’s the biggest purchaser of Gulf oil), but I’m sure they’d love to be in de facto charge over the Suez international trade routes as well.
It’s also possible that the area just blows up in regional warfare, but Sino-Russian control is more likely.
Needless to say, that’s not great either for our allies in Europe or the global interests of the U.S.
Oh…almost forgot. The price of oil. Hard to say, since it depends on whether the region falls under the influence of the other global superpowers or falls to war. But if the former, I wouldn’t expect it to be much changed, as other global powers gladly and enthusiastically step up to replace the US as a regional guarantor that the shipping continues…on their terms, of course.
I’m not sure we really have a sphere of influence there - other than Israel, and that seems to be deteriorating in the sense that they just do what they want without our ‘influence’.
The other countries don’t seem ‘influenced’ by us either - perhaps ‘restrained’ though.
Oh, we have a big sphere of influence there. The Fifth fleet is a major naval presence, and Saudi Arabia and several of the other Gulf States depend on our de facto security guarantees to protect them from Iranian/Syrian aggression. That doesn’t mean they obey us - every nation responds to their own interests and domestic political concerns. But their security needs against Iran push them more into alignment with us than Russia or China - so that when things go down in the region, those countries are more than happy to let us overfly their airspace and stage in their countries.
Every country “does what they want.” Influence means just that - we can influence, but not control, policy decisions around the edges in countries that depend upon us for security and other interests.
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