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The Real Costs of Alternative Energy

A clear-headed look at the true costs of energy is something many -- including our political leaders -- sorely need. Understanding our energy options, their present capabilities, and their future potential, is vital to help decide what deserves our support and what should be left in a heap of false hype. Subsidies are just one of the costs of supporting alternative energy, but are they worth it?

The subsidy myth
There are plenty of people on both sides of the renewable subsidy debate. Maybe the free market should determine the winners with no intervention from Uncle Sam. Maybe subsidies are essential to support the clean energy humanity needs to survive over the long term. Both sides have charts and statistics to damn the other side, but many cherry-pick data to make a compelling case that's slightly less than honest. With that in mind, I went to the source to find specific subsidy info for 2010:

Power Source

Total U.S. Subsidy 

Coal $1,358
Oil and gas $2,820
Nuclear $2,499
Biomass / biofuels $7,761
Geothermal $273
Hydro $216
Solar $1,134
Wind $4,986

Source: U.S. Energy Information Administration.

The problem with looking solely at subsidy numbers is that it easily ignores the many other stories our energy use can tell. The cost of our energy addiction (in direct government subsidies) was scarcely half a percent of the total federal budget last year. Still, some forms of energy gave the economy a lot more bang for the buck, as the following chart shows:

Power Source

2010 U.S. Power Consumption 
(million bbl. oil equivalent)

Subsidy Cost per Energy Equivalent Barrel of Oil Consumed

Coal 3,439 $0.39
Oil and gas 10,012 $0.28
Nuclear 1,394 $1.79
Biomass / biofuels 381 $20.37
Geothermal 35 $7.80
Hydro 414 $0.52
Solar 18 $63.00
Wind 153 $32.59

Source: U.S. Energy Information Administration.

The hydrocarbon giveaway
Oil companies hardly need the handouts. In Power Hungry, Robert Bryce reports that "In the United States, there are about 5,000 independent oil and gas companies. … in 2007 alone, those companies spent $226 billion drilling and equipping some 54,300 wells." BP (NYSE: BP  ) , despite the Gulf catastrophe, reported $10 billion in positive cash flow last year. Its liability losses are likely to stretch on for a long time; ExxonMobil (NYSE: XOM  ) managed to drag the Valdez litigation out for almost two decades, during which it suffered not a single remotely unprofitable year.

American coal-fired generation is on the decline, to the glee of environmentalists and many politicians, but remains quite profitable. Peabody Energy (NYSE: BTU  ) , one of the country's largest coal miners, has a better profit margin than ExxonMobil, though with far lower revenues. Fool Aimee Duffy notes that American Electric Power will soon reduce its coal use by 17 million tons, but that's barely more than a tenth of Peabody's annual production from one rich Wyoming seam. Why offer any subsidy at all?

A renewable boondoggle?
On the other hand, renewable energy's costs to the government are in some cases so high, and the actual energy returns so low, that it hardly seems worth the investment. Solar's pitiful slice of American power use -- less than a single day's worth of oil consumption -- is underwritten by enough taxpayer money to simply buy most of the power outright and provide it to taxpayers for free.

Wind power, on top of its costly handout, requires another layer of expense: conventional power generation in a supporting role. Cambridge Energy Research Associates concluded that wind power "is more expensive than conventional power generation, in part because wind's intermittent production patterns need to be augmented with dispatchable generators to match power demand."

Wind and solar might currently be more costly to the consumer than hydrocarbon-sourced power, but their increasing competitiveness makes biofuels look like a wasteful boondoggle. You might remember that the Navy recently signed a fuel contract with Dynamic Fuels, a joint venture of Tyson and Syntroleum (Nasdaq: SYNM  ) , which subcontracted a large amount of the production out to Solazyme (Nasdaq: SZYM  ) .

The contract was worth $12 million for 450,000 gallons worth of biofuel. Basic math tells you how lousy the Navy is at basic math: Every gallon will cost it $26.67, or $1,120 per barrel's worth. Even if costs are ever reduced to reasonable levels, which is doubtful, biofuel production demands vast swaths of arable land to produce any meaningful quantities.

The best option for now
Wind and solar power have their drawbacks, but continue to make notable improvements year after year. However, neither option can yet provide the clean, constant, and convenient power the world demands. Natural gas offers the best opportunity for the near term. It's plentiful, well-developed, and efficient, and will take on greater importance as dirtier hydrocarbons lose market share. The Motley Fool's found one exciting opportunity to play the natural gas boom, with a small company turning our oil-guzzling vehicle fleet into clean-burning nat gas machines. Find out more and claim your copy of this free report while it's still available.

Fool contributor Alex Planes holds no financial position in any company mentioned here. Add him on Google+ or follow him on Twitter for more news and insights. The Motley Fool owns shares of Solazyme. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (41) | Recommend This Article (37)

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  • Report this Comment On January 04, 2012, at 11:39 AM, Cake123xyz wrote:

    "Even if costs are ever reduced to reasonable levels, which is doubtful, biofuel production demands vast swaths of arable land to produce any meaningful quantities."

    Your comments here show a great degree of ignorance and lack of actual research. For starters, you associate Solazyme's processes to conventional biofuel production, of which it is is not. There are no vast pools of algae or large tracks of used arable land as you insinuate. The company's generates its fuels directly inside close vat systems inside (currently) leased fermentation facilities.

    The cost remains high due to a lack of scaled facilities which take time to be built and are in the process of doing so.

    Last of all, in the case of Solazyme, they already have metrics that prove they can be surpass comparable costs to a barrel of crude oil. So to further debunk your subjective thoughts on whether they can bring the costs down to a "reasonable level", consider the the following as to why this is possible:

    Solazyme its able to make entire barrels of particular parts of a barrel of crude with a customization of their algae strains. Whereas a barrel of crude might include 10% diesel, 20 % light heating oil, 30% asphalt, etc., SZYM can make barrels of 90% diesel, etc. This ability to market the most valuable cuts of the crude allows it to bring down the costs and obtain metrics not met by today's biofuel industry as a whole.

    A more useful article about this company might be seen here:

    If you leave these growth technologies where they lay, of course you're going to get the results you see now. Nevertheless, these companies are trying to scale up into entities that can make a difference.

  • Report this Comment On January 04, 2012, at 12:07 PM, seattle1115 wrote:

    Good article. A couple of points to bear in mind: First, with very few exceptions (nuclear and geothermal, mostly), ALL energy consumed on the planet is, essentially, solar energy. Coal, oil, gas, wind - these are all examples of energy that was once just sunlight.The problem is that nature seems to do a better, more efficient job of storing that energy over time than human technology can do. The lesson here, I think, is that none of our renewable energy sources are likely to perform well relative to traditional fuels until battery technology improves. Second, biofuels will never make sense as long as we are actually growing crops for the purpose of converting them to fuels. Biofuels might make sense, however, if we can find ways to use agricultural byproducts and/or algae to produce fuels in a cost-effective manner on a sufficiently large scale. Finally, it is worth pondering whether the price we pay at retail for fossil fuels really represent the actual cost of those fuels, or if that price hides significant uncaptured negative externalities. Without accounting for those externalities, the nominal cost of a particular energy source doesn't really tell us much about its real cost.

  • Report this Comment On January 04, 2012, at 12:09 PM, idiotprogrammer wrote:

    This is an unfair and misleading piece.

    First, why on earth couldn't you link to the EIA site? I presume your EIA source is this

    Second, let's take oil and gas out of the equation for transportation. Why? The EIA didn't take into account cost of roads and defense protections (Iraq, etc). These extra costs are considerable -- not to mention increased costs for asthma, etc.... It's apples and oranges.

    Stephen Lacey pointed out a few months ago that this EIA analysis painted an incomplete picture of subsidies. Pardon me for quoting at length, but a site like Motley Fool needs to have the full story:

    As the EIA admits in both reports, looking simply at yearly energy expenditures does not accurately show how much each sector is getting in subsidies.

    By looking at just one year's worth of spending, the numbers are skewed against capacity that was installed during that time period -- and since renewables represent a large amount of the capacity being put online today, the numbers are weighted against them. A more accurate way to compare yearly subsidies for various energy sources would be to examine the amount of money spent when capacity was actually installed.

    Because fossil-fueled plants need a continued supply of fuel over the lifetime of the plant, factoring in direct and indirect subsidies for mining and transportation add more to the cost per unit of energy; by comparison, renewables like wind and solar have no fuel costs.

    There are also trust funds associated with black lung, leaky pipelines, and nuclear waste storage -- all of which may result in energy companies "receiving an implicit subsidy," according to the EIA. The nuclear industry also gets an implicit subsidy from the government through the Price-Anderson Act, which puts a limit on liability for a nuclear plant owner in case of disaster.

  • Report this Comment On January 04, 2012, at 12:24 PM, idiotprogrammer wrote:

    Sorry, I provided the wrong link (to a secondary source instead of the EIA).

    The EIA source is here:

  • Report this Comment On January 04, 2012, at 12:25 PM, idiotprogrammer wrote:
  • Report this Comment On January 04, 2012, at 1:23 PM, Cl1ffClav3n wrote:

    The Navy paid $430/gal for Solazyme algae diesel oil and $149/gal for algae jet kerosene for its recent ship and airplane stunts--fuels that normally cost the military less than $3 a gallon in bulk. I say "stunts" because that is what RAND said in its Jan 2011 study ( that these are wastes of taxpayer money that answer the wrong question: we already know biofuels can be made to work in engines, what is proving impossible is making them economically, with a positive net energy balance, without destroying the environment, and without causing famines. Honeywell UOP just won a DOE contract for $1.1M to produce 100 gallons of fuel-that's $11,000 a gallon. This is how the Administration and the Navy are spending our tax dollars. The 2.5 barrels used to deliver this fuel literally won't be big enough to hold the cash the government is paying.

  • Report this Comment On January 04, 2012, at 1:25 PM, Melaschasm wrote:

    Thanks for a nice look at energy subsidies.

    Most of the time ethanol subsidies are listed as 'oil and gas' subsidies, since a decent chunk of ethanol subsidies go to the oil and gas companies that blend the two fuels. Did your numbers separate ethanol from oil and gas?

    To a previous comment, all federal road construction and repairs in the USA are paid for by taxes on gas. These gas taxes not only pay for all the road costs, but they also help subsidize public transportation such as buses and light rail.

  • Report this Comment On January 04, 2012, at 1:36 PM, seattle1115 wrote:

    @Cl1ffClav3n: " Honeywell UOP just won a DOE contract for $1.1M to produce 100 gallons of fuel-that's $11,000 a gallon."

    Is it not the case that a substantial portion of that $1.1 million is going toward capital investment? Is it your impression that the plant capacity paid for by that $1.1 million will now be mothballed, and never again employed for productive purposes? Because if that is not your impression, I confess I'm having a difficult time grasping the point you are trying to make.

  • Report this Comment On January 04, 2012, at 3:37 PM, DJDynamicNC wrote:

    @idiotprogrammer - Absolutely spot-on response. Cheers.

  • Report this Comment On January 04, 2012, at 3:38 PM, DJDynamicNC wrote:

    I'd also like to point out that the oil and gas and coal industries externalize costs heavily, and that is only sustainable for so long. A proper carbon pricing regimen would bring the applied expenses up to compensate for the externalized costs and that will also impact this analysis.

  • Report this Comment On January 04, 2012, at 3:50 PM, XMFBiggles wrote:

    @ Cake123xyz -

    I think you're confusing the actual process of fuel creation with the need for plant material. Solazyme -- or any other biofuel producer for that matter -- has to start with base material, and that requires space to produce and infrastructure to harvest. A company might only have a few acres of fermentation vats, but where is the raw material going to come from? I've got an upcoming piece that looks directly at energy efficiency, which ties in to this argument. I hope you'll stick around to read it, although Solazyme is not directly called out.

    @ seattle1115 -

    I came across a few interesting quotes that claimed bio-waste would be a viable alternative fuel source during my research. People have been predicting that this would become a meaningful alternative to oil for a long time, to no success. I agree that the negative externalities need to be factored in, but that is the subject of a different book!

    @ idiotprogrammer -

    My source was the EIA as well. I read through the PDF linked, but chose to use simpler versions from the organization to keep the analysis on a fairly narrow track. Here are the relevant links:

    (all the subsidy costs -- biofuels and biomass were combined in this instance)

    (most non-renewable sources)

    (renewable sources)

    You're welcome to do the math yourself, but it was pretty straightforward. You'll have to convert BTUs to barrels of oil equivalent, but there are sites online that can do this easily.

    This might be a simplistic assessment, but let's be realistic here. A full accounting of all the secondary subsidies, in the form of implicit rather than explicit support, would still not bring oil and gas up to anywhere near the level of renewables. If you were to double the use of every single renewable fuel it would still lag. If you increase their use by 500% they would still lag significantly.

    I have another article upcoming that details energy efficiency regardless of federal subsidies. This was a simple intro. As you say, it's not complete -- but I can only do so much in one day.

    @ Melaschasm -

    I used the straightforward numbers as linked in this comment. Ethanol subsidies were included in the Biofuels segment.

    A broad response -

    I know that this isn't a complete assessment of the true costs of energy. I never intended it to be. I'm simply hoping to get people thinking about our energy use in a broader way. I appreciate the responses thus far and I hope to see many more.

    Also, to respond to the biofuel cost per gallon -- the $12 million for Solazyme/Syntroleum is a significant reduction from earlier costs, but still represents a major premium over simply buying petroleum fuel. Biofuels might some day reduce costs and come near oil in terms of cost per gallon in the future (especially if oil prices rise to $200/barrel or higher), but the external costs of biofuels are larger than many people think.

    Stay tuned, and thanks for reading.


  • Report this Comment On January 04, 2012, at 5:27 PM, oxboro wrote:


  • Report this Comment On January 04, 2012, at 5:32 PM, xetn wrote:

    "Maybe subsidies are essential to support the clean energy humanity needs to survive over the long term" This is a complete supposition and there is no proof of this. Environmentalists certainly make the claim, but they make all kinds of claims most are unfounded.

  • Report this Comment On January 04, 2012, at 5:36 PM, xetn wrote:

    I forgot to add: there should be NO subsidies of any kind for any reason. Subsidies are based on the fallacy that a bureaucrat knows best how to spend your money and where to spend it. They do not.

  • Report this Comment On January 04, 2012, at 7:00 PM, williamcmarsh wrote:

    I agree with other commenters that this is a poor analysis.

    1. Solar and wind subsidies are for physical plant, not fuel, which is free in both cases. The physical plants are viable for 30 years, but the costs are computed for 1 year.

    2. Costs for coal do not include costs for physical plants, only fuel.

    3. And, of course, no mention is made of external costs of fossil fuels in pollution and health. It is reasonable that the government take action to make sure these external costs are recognized, preferably through a carbon tax, but possibly through subsidies to clean fuel.

  • Report this Comment On January 04, 2012, at 7:32 PM, XMFBiggles wrote:

    @ williamcmarsh -

    Power coming from wind and solar must generally be backstopped by other generative capacity due to the inconsistency of the energy source. If you could always match the energy demand without a backup, then it might be free.

    And as mentioned in my previous comment, I recognize external costs can be substantial, but can only cover so many issues in a single article. I might very well do a thorough investigation of these external costs for future articles.

    - Alex

  • Report this Comment On January 04, 2012, at 8:11 PM, Frankydontfailme wrote:

    Excellent article, simple and to the point.

    The criticisms in the comment section amused me.

  • Report this Comment On January 04, 2012, at 8:16 PM, williamcmarsh wrote:

    Thanks Alex,

    I agree the need for baseload power is an issue, but it is not such a slam dunk as commonly assumed and it is being increasingly challenged:

  • Report this Comment On January 04, 2012, at 9:04 PM, maiday2000 wrote:

    Finally, a decent article on the true costs renewable energy from the MF.

    People who want to believe in the renewable energy story always want to point out the externalities (Roads? Seriously?). The problem is, there is really no way to provide a cost to these, and some of the amount of costs themselves are theoretical (e.g. climate change). Besides, it's not like their aren't externalities from wind and solar as well (noise pollution, killing birds, etc.).

    Looking at the subsidies or cost "at the time the capacity was actually" installed as an argument for renewables makes the classic error of ignoring sunk costs. If these renewable sources simply needed to "scale up" to be viable then there would be plenty of private money that would be out there to fund these providers. They wouldn't need taxpayer dollars. But they do, so there is obviously too much risk in what they are selling.

    I think that someday solar will be viable as compared with fossil fuels. But with $3 natural gas, we aren't even close yet, and there is no reason to go throwing a bunch of money away on large projects that accomplish very little.

  • Report this Comment On January 04, 2012, at 10:38 PM, MKB711 wrote:

    I do agree that comparing inefficient, unreliable wind & solar to our reliable, dispatchable baseload power sources is comparing apples & oranges.

    The only thing "green" about Wind & Solar is $$$ -- OUR money, as it's being siphoned out of this country and into the pockets of multi-national mega-corporations, many of whom are the same guys that own big, bad oil & coal. You want to talk about crony capitalism, wind & solar are it!

    See: "Why Wind is Full of Hot Air and Costing You Big Bucks"

    And contrary to all the claims, these things are not "free". Among many other things, electricity from wind & solar are dependent on rare earth elements that come from China. See:

    Professor Colin McInnes FREng wrote in his recent article: "No Time To Abandon Energy Density" (, "As it stands, today’s policies ignore the lessons of engineering history. We now seem determined to replace historical transitions toward fuels of greater energy density with diffuse energy production. This step will require vast quantities of materials, land and subsidies, misallocating economic resources that we could use more productively elsewhere."

  • Report this Comment On January 04, 2012, at 10:44 PM, seattle1115 wrote:

    @lanceim59: Why would you say that? As Alex said, his goal here was to spark conversation, and (obviously) he succeeded. You may disagree with his analysis - as, to a certain degree, I do - but that's a far cry from evidence of ignorance.

    Alex: You make an excellent point, both in the original article and in your comment at 7:32 PM, that one of the most difficult problems with renewable energy sources at the present time is the necessity of backstopping wind and, to a lesser extent, solar generation plants. One of the nice things about fossil fuel and/or nuclear power, from the point of view of a grid manager, is that power can be routed to the grid practically instantly and as needed. Wind and solar power do not share this feature - power is generated when the sun shines or when the wind blows.

    This is why improved battery technology is crucial. I've been very interested lately in the potential of presented by vanadium flow redox batteries (full disclosure: I'm long on Largo Resources). Whether or not that particular technology pans out, the fact remains that some sort of instant-on, instant-off, high capacity storage will have to be available and affordable before wind and solar have any chance of contributing significantly to overall power generation.

    Again, thanks for the article and for sparking this conversation.

  • Report this Comment On January 04, 2012, at 11:18 PM, XMFBiggles wrote:

    @ williamcmarsh -

    I read your first link with interest. Proposed alternatives are always exciting, but I remain a very cautious optimist.

    @ MKB711 and seattle1115 -

    I encourage you both to stick around through the week to catch more articles in the same energy vein. They will be touching on energy density, rare earths, intermittency, and battery technology in greater detail.

  • Report this Comment On January 04, 2012, at 11:34 PM, seattle1115 wrote:

    @MKB711: Hiding your Faux News and Daily Fail links behind tinyurl doesn't make them any less disreputable. Your third link - while still, in my opinion a wrong-headed analysis - is, at least, a real source, and I thank you for providing it.

    Alex: I very much look forward to reading the remainder of this series. Thanks again.

  • Report this Comment On January 05, 2012, at 12:25 AM, joandrose wrote:

    Firstly - I am surprised that no mention has been made of SASOL in S Africa - which is currently producing large quantities of ETHANOL at totally market competitive prices - and has been doing so for years. SASOL now has a plant in Germany , also producing ETHANOL. Their production process is tried and proven !

    Secondly - when fossil fuels start to run out (their continued availability is finite) - costs per barrel will climb eventually to levels we are not even dreaming about today ! Costs of alternate energy sources will then become much more viable.

  • Report this Comment On January 05, 2012, at 1:15 AM, williamcmarsh wrote:

    Some other aspects of solar:

    1. The times when demand for electricity peaks are the same times when solar electricity is most plentiful

    - hot sunny days.

    2. Distibuted solar power (roof tops) delivers electricity near where it is needed and avoids the loss associated with long distance transmission.

    3. For the record, there is a concentrating solar power plant in Spain that stores heat in molton salts and provides 24 hour electricity.

  • Report this Comment On January 05, 2012, at 2:39 AM, CaptainWidget wrote:
  • Report this Comment On January 05, 2012, at 5:50 AM, dbtheonly wrote:


    "Maybe subsidies are essential to support the clean energy humanity needs to survive over the long term" This is a complete supposition and there is no proof of this. Environmentalists certainly make the claim, but they make all kinds of claims most are unfounded."

    Logically true, but the only test of not curbing pollution would be to risk the EXTINCTION OF THE ENTIRE HUMAN RACE. How much do you REALLY want to risk on your politics?

    The pollution issue was settled back in the early 1970s. You are perhaps too young to remember the pre-Clean Air/Clean water days. Things have improved.

  • Report this Comment On January 05, 2012, at 7:53 AM, dbhendrix wrote:

    Natural gas makes a poor motor fuel for several

    reasons not the least of which is that the energy content per unit of volume is so low that very high pressure tanks are needed and even then range is very limited. Propane on the other hand would work very well but cant seem to get much traction because of the lack of someone like T. Boone Pickens to promote it. I have 3 trucks that burn propane and plan to have more. Cheap and easy.

  • Report this Comment On January 05, 2012, at 8:29 AM, MKB711 wrote:

    Seattle1115, Seems you're going to be more apt to consider something published in the NY Times:


    Everyone who wants to understand our energy issues would benefit from reading: Power Hungry: The Myths of "Green" Energy and the Real Fuels of the Future, by Robert Bryce.

    Mr. Bryce's excellent article, "America's Worst Wind Energy Project" ($16.3 Million Dollars per job created) can be seen at:

    The Wind Farm Scam by Dr. John Etherington is another must-read.

    More on the realities of the "Wind Farm Scam": "Wind Energy's Ghosts":

    This 2 minute video from the Hawaiian island of Moloka`i (I Aloha Moloka`i/IAM) says it all:

  • Report this Comment On January 06, 2012, at 12:07 AM, Retired31B5M wrote:

    One thing that people apparenmtly failed to consider is how much thos 'subsidies' to the fossil fuels industry is offest by the rent, tax and royalty revenues the government gets.

  • Report this Comment On January 06, 2012, at 12:14 PM, wasteworker wrote:

    A good first start, but two things to consider in more detail in your next article(s)

    1) Like the space program, substantial initial seed money is needed for disruptive innovations and technologies to evolve. It's difficult to gauge true costs associated with things that have not yet been invented, perfected or scaled up in comparison to all of the built in cost efficiencies of technologies that have been around for 100 years or more. (Soapbox time - expecting the free market private enterprise system in this country to solely take the risks and fund those disruptive technologies when entire countries like china, germany, korea, etc. with their limitless piggybanks continue to heavily fund research and technology development is a recipe for ensuring this country's future growth prospects do not come to fruition, and continue to be outsourced.)

    2) What are the true present worth and future value costs associated with wastes and pollution from all of the energy sources (ie coal ash waste, oil spill cleanups, a long term nuclear waste repository(ies), mining waste/ leaching/cleanup, groundwater/drinking water impacts, air quality issues). Yes, there is a slant toward older technologies and long term impacts on my list, but only because I am not that familiar with the wastes generated by newer technologies).

  • Report this Comment On January 06, 2012, at 2:32 PM, ershler wrote:


    People fail to consider how subsidies to O&G companies are offset by royalties and taxes because they are completely separate things with nothing in common.

  • Report this Comment On January 06, 2012, at 3:02 PM, ajstudebaker wrote:

    If we end subsidies for solar and wind, we should also end them for ethanol. Note, in particular, that many attempts to develop an economically viable process for producing cellulosic ethanol have failed.

  • Report this Comment On January 06, 2012, at 4:13 PM, idiotprogrammer wrote:

    I'm going to mention this for readers (and for the author). Venture capitalist & environmentalist Robert Kennedy gave a one hour talk last summer to Climate One about the need for a unified smart grid. He also did a thorough analysis of negative externalities. indirect subsidies and power potential. One hour long, 15 mb mp3 and highly recommended!

  • Report this Comment On January 06, 2012, at 4:45 PM, KevinSS13 wrote:

    You cannot determine "The Real Costs of Alternative Energy" by disregarding the indirect subsidies & external costs due to old energy (oil & gas & goal). Yes - it may be hard to put a price on it, but air pollution is a serious exterrnal cost - whether or not you believe in the human contribution to global warming. Also, our military spending is largely forcused on protecting our sources of oil. It is no coincidence that countries in the Middle East receive a majority of our foreign aid AND are the locations of our last 3 wars (Iraq 1, Afganistan, Iraq 2). How many trillions of dollars have we spent on these activities in the last decade alone?

    There are several other benefits to alternative energy that are even harder to quantify. How much of the spending on Alternative Energy stays in the USA?? I think we should all be concerned that a huge percentage of our spending on oil/gas fuels goes overseas - often to people in very repressive countries that promote very undemocratic principles beyond their borders - and often support our enemies. I think it is worth something to reduce the funding Americans directly/indirectly send to these people.

    Just because we can't put a precise dollar figure on these costs/benefits doesn't mean they are worth nothing.

    This is where the "free market" fails because it doesn't recognize these external/indirect costs and subsidies - and it often ignores the longer-term consequences in favor of short-term payoff.

    With external/indirect costs so large it is appropriate that our govenrment subsidize alternative fuels that might someday free us from these costs and prepare us for a the next 40 years as the world population doubles - thus increasing demand for energy and certainly the cost of that energy.

  • Report this Comment On January 06, 2012, at 5:51 PM, msw48 wrote:

    Any comparison of the cost of energy subsidies needs to consider the value of our young men and women being spent to keep the oil lanes open. Additionally, all the necessary hardware used in these efforts are a form of subsidy that is never considered. I believe we should have the most powerful and best trained military in the world. I just think we should honestly consider how we are spending our assets.

  • Report this Comment On January 06, 2012, at 9:21 PM, Kiffit wrote:

    If continuing to expand the use of burning fossil fuels lead to serious global warming, the economic consequences of that will be catastrophic.

    Alex, do you follow the climate science? Do you agree or disagree with its broad conclusions. Or are you just not taking any notice?

    If ice cap melting owing to global warming floods the low lying parts of the coastal cities around the world, is that efficiency or what?

  • Report this Comment On January 07, 2012, at 1:24 PM, XMFBiggles wrote:

    I've already responded to the comments calling me out for failing to acknowledge pollution and warfare as hidden costs of our oil addiction. I recognize that they exist, but that was neither the focus nor the point of this article. Everyone should realize what a massive topic that is and how virtually impossible it would be for me to give both sides a fair shake in the course of even a few articles, let alone one.

    For comparison, the Fool published a series on the MF Global collapse. There were nine articles and three infographics published just for that series, and I'd venture to say that the writers of that series could have easily kept going.

    So no, I'm not a climate change denier or a head-in-the-sand proponent of nothing but "drill, baby, drill." But you can't move towards the future if you don't understand why the present takes its particular shape.

    - Alex

  • Report this Comment On January 08, 2012, at 9:18 AM, YjDraiman wrote:

    Electric cars are they conserving energy? Rev2

    Note: Electricity is a secondary form of energy derived by utilizing another form of energy to produce electric current.

    Let us look at the facts:

    In order to produce electricity, we need some form of energy to generate electricity, whereby you lose a substantial amount of your original source of energy.

    In the process we are losing the efficiency of the initial energy source, since it is not a direct use of the energy.

    Let us take it a step further. To generate electricity we utilize; coal, oil, natural gas, nuclear, hydro electric - water, photovoltaic-solar, wind, geothermal, etc. Many electricity generating plants utilize fossil fuel, which creates pollution.

    How much of the initial source of energy do you lose to get the electricity you need for your electric automobile; you also lose electricity in the transmission lines.

    Why are we jumping to a new technology, without analyzing the economic cost, the effective return and efficiency of such technology; while computing and measuring its affect on the environment?

    Natural gas vehicles are a direct source of energy, where you get the most for your energy source – in efficiency and monetary value.

    In these hard economic times – I would think, you would want to get the most for your dollar – and not waste resources.

    Another economic impact would be the loss road tax on fuel, these funds are used to build and maintain the highway infrastructure

    YJ Draiman, Director of Utilities & Sustainability

    “It is Cheaper to Save Energy than Make Energy”

  • Report this Comment On January 09, 2012, at 5:39 PM, Que2646 wrote:

    This article does not take into account the true cost of our use of fossil fuels as it does not include the environmental damage or the cost of people’s health. These should be considered significant subsidies to the fossil fuel industry. Estimates by the World’s top economists such as Britain’s Nicholas Stern are that right now it would cost about 2% of the world’s GDP to mitigate environmental damage – but if delayed, that amount could rise to 20% or more of the world’s GDP by 2050 and put us at risk of an environmental catastrophe. Using 2% of the US GDP for 2010 would give environmental cost of $291 billion. The American Lung Association estimates that the EPA’s proposed guidelines for soot emissions could prevent 38,000 heart attacks and premature deaths, 1.5 million cases of acute bronchitis and aggravated asthma, and 2.7 million days of missed work or school. They estimate the economic benefits associated with reduced exposure to soot to reach as much as $281 billion annually.

    Those two add up to about $572 billion, and when divided by the 13541 million barrels of oil equivalent given in the article for coal, gas and oil together amounts to an additional subsidy of $42.52 per barrel of oil equivalent. The calculations are are rough but they do give us an idea of how much we are subsidizing the fossil fuel industries by ignoring the damage to people's health and the environment. Then there is the added risk of an environmental catastrophe.

    There are people using this article as a justification for recommending the scrapping sustainable energy projects. The article is certainly misleading and the author should withdraw it until he calculates and includes the external costs into the subsidies.

  • Report this Comment On January 18, 2012, at 8:04 PM, thidmark wrote:

    "Faux News and Daily Fail"

    Gawd, I wish I could be that clever ...

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