The True Cost Of Energy

[Bodie Powers]

It's hard to predict when natural sources of fossil fuel (coal, petroleum, natural gas) will be depleted, but the consensus is that by the end of this century nearly all of the economically recoverable fossil fuels will be gone. Until then, what remains will be rationed by price....typically expressed as "market price".

Market price alone doesn't represent true economic cost. Subsidies, impact to the environmental and to health all carry costs that should be considered. A price per kilowatt hour charged to the consumer typically ignores these additional costs.

JVC and I began this discussion in another thread, discussing whether the technology exists to convert to so-called "clean" energy. I cited a Stanford U. study, and the discussion went from there:

Originally Posted by Bodie

According to 2 research experts from Stanford University, the technology exists today to begin the conversion to clean energy: http://news.stanford.edu/news/2011/j...gy-012611.html

Originally Posted by John

First off, wind and solar have yet to work cost wise without massive gov subsidies. The money to completely change the system out is just not there. Would you be happy for your electric bill to double or triple just to hedge your bet???

Originally Posted by Bodie

How about the subsidies that exist for fossil fuels? Last May, Scientific American published details of an International Money fund (IMF) study that calculates annual government fossil fuel subsidies at $5.3 Trillion per year and rising. Subsidies = Taxpayer Dollars. http://www.scientificamerican.com/ar...sen-pollution/

Additional cost/impact info:
"In 2009, the U.S. Congress directed the National Academy of Sciences to complete a study to calculate the impact of fossil fuel burning on our health care system. The result: $120 billion per year of health care costs that are directly related to burning fossil fuels in America. The costs were about even between coal and oil. (It's certain that these costs are MUCH higher today, given the skyrocketing increase in healthcare costs since 2009)

In 2011, Scientific American reported the healthcare burden of fossil fuels equated to 30,100 premature deaths each year – with 5,130,000 workdays lost." http://www.capital-content.com/2014/...lion-per-year/

Harvard Medical School,MIT, and numerous other credible research institutes have done similar studies that show enormous hidden costs directly associated with the burning of coal and oil.

Conveniently, the groups that are opposing clean technology (Including the Koch Brothers) fail to report these costs when making their case against clean energy

Originally Posted by John

Bodie---just wondering if you read the IMF report that the SA article was based on???

http://www.imf.org/external/pubs/ft/wp/2015/wp15105.pdf

If you did, than you would realize that:
Quote:
For the purpose of simplicity in reporting, producer subsidies are lumped together with pre-tax consumer
subsidies and the sum simply referred to as pre-tax subsid
ies in the subsequent discu
ssion. Producer subsidies,
as estimated by the OECD, are relatively small, at
$16.8 billion in 2011 and $17.9 billion in 2015.
What the main focus of the report was on is post tax subsidies which by their definition are:

Quote:
Post-tax consumer subsidies
additionally require estimates
of undercharging for global
warming, local air pollution, and (if applicable)
vehicle externalities for each energy products
and estimates for general consumption taxes
All those post tax subsidies are according to the study taxes that governments(or preferably a world authority) should be charging, and:

Quote:
Moving to efficient energy
pricing in one step would require very large increases in consumer energy prices,
in particular for coal with a global average price increase of more than 200 percent. For petroleum products,
natural gas, and electricity, the global averages are 52
percent, 45 percent, and 69 percent respectively. Some
regions have particularly high price increases, for example, for petroleum products about 400 percent in
MENAP and 152 percent in the CIS. In countries with large pre-tax subsidies, a gradual reform strategy should
focus first on raising consumer prices to cover supply
costs and then on incorporating an efficient tax leve
appears that much of that "large increase" to eliminate energy subsidies would be to consumers.

[jgleason]

Originally Posted by Bodie

Market price alone doesn't represent true economic cost. Subsidies, impact to the environmental and to health all carry costs that should be considered. A price per kilowatt hour charged to the consumer typically ignores these additional costs.

This is true of all forms of energy, right? Is there anyone out there that has pulled together this information? Factual, without bias, and considering all of the costs involved? I'd love to see that.

[Steve in Denver]

Bodie,

You've touched on one of my personal hot-button issues - the gap between economic price and the true cost. The buyer pays the economic price, and the group as a whole (typically not evenly distributed) picks up the tab for the rest. It affects virtually everything, not just energy, and it's one of the primary reasons why unregulated capitalism is broken.

I can't speak to the "government subsidy" angle, but I've generally found this to be overstated / not subsidies in the sense that people think about...I'll read up on that, but my guess is that it's based in truth, but probably disingenuous to use the "subsidy" label.