Toward a Sane US Energy Policy

cropped-bob-shapiro.jpg   By Bob Shapiro

One measure of America’s Standard of Living is GDP per capita. The standard of living for each nation shows a direct relationship with the energy consumed per person in that country. The more energy a nation uses, the better off are the people who live in that country.

Here is a chart from Gapminder World, which shows the relationship.

Energy Use vs GDP per capita

The more energy used, the higher is GDP per person.

Clearly, the well being of a people is dependent on an adequate supply of cheap, reliable energy. The US government’s job is not to supply that energy, but to allow our Free Enterprise system to do the job.

Based on price and other signals for each type of energy, consumers choose the best energy source for the use and location. For transportation, oil predominates. For electricity generation, coal has the lead, but natural gas soon should move to the top spot, because advancing technology has given it a price advantage. For home heating, it’s a mix of oil, natural gas, and propane.

While nuclear is somewhat politically out of favor, and hydro is regional, these two also are major contributors to the mix. Renewables, such as wind and solar, also are in use. Solar is the current best solution for calculators and for roadway and remote signs and communications.

However, at current market prices, use of solar and wind cannot be justified for most of our energy needs. These cost far and away more per Kilowatt-Hour than fossil fuels, nuclear, or hydro. Willis Eschenbach’s analysis in “The Levelized Cost of Electric Generation,” shows costs for most of the ways electricity is generated:

US Cost of Electric Generation

Since solar works only when the sun is out, and wind works only when there is wind (and not too much of it), both of these are unreliable (called non-dispatchable). They require dispatchable backup, which adds greatly to the cost. So for example, wind with NatGas Combined Cycle backup costs $0.09 + $0.07 = $0.16/KWh.

Current US government policy, based on a false environmental premise (we’ll discuss that elsewhere), is to subsidize wind and solar while penalizing (or prohibiting) the competition. According to the GAO, last year Uncle Sam spent $22 Billion on environmental issues, including subsidies to wind and solar (and $165 Billion since the CAGW scare began).

This policy of forcibly eliminating cheaply available, reliable energy sources, while subsidizing colossally expensive and unreliable “sustainable” energy, is impoverishing all Americans. While more well off Americans may have enough wealth to squander on alternative energy, the poor are being made destitute.

We see the results of this stupidity in Europe, where energy poor people will be going hungry or freezing to death this winter. Closer to home, several utilities near where I live, north of Boston, have been forced to shut down coal fired electric generation facilities. National Grid has announced a 1/3 increase in rates, effective the beginning of 2015. Cheap reliable energy is being forced out, while it is impossible for renewables to take up the slack.

The US government has an energy policy, but it is wrong!

A sane energy policy needs to be put in place. We’ll discuss the many changes we see as necessary in subsequent posts. For now, let’s look at the bare minimum needed to start the process.

 

Action Item: Both houses of the US Congress should pass, and the President should sign legislation which:

  • Eliminates all subsidies for wind and solar. Where subsidies exist for other energy sources (a tax reduction is NOT a subsidy), those subsidies also should be removed.
  • Removes regulatory impediments on all forms of energy.
  • Reduces taxes on exploration, production, processing, generation, and distribution on all forms of energy.
  • Opens up public lands for exploration and production. Allow pipelines to be built with private funds. Allow energy companies to pay Uncle Sam for the privilege of giving us the cheap, reliable energy that will improve the standard of living for all Americans.

 

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