Buy a car on credit and pay double the sticker price. Same with a house. For instance, adjustable mortgages and balloon payments contributed mightily to the real estate meltdown. And taxes take a big bite. Just ask any small businessperson.
Maybe that's why we Americans like our energy costs low, or at least relatively.
But there are hidden costs there, too. Harvard Medical School's Center for Health and the Global Environment released a study in February that pegged the estimated hidden yearly cost of coal-generated electricity at a high of $538 billion, or an additional 18 cents per kilowatt hour. Peswiki.com listed the commercial cost of coal power at 4.8 to 5.5 cents per kWh.
For some perspective, solar costs between 15 to 30 cents per kWh and wind 4 to 6 cents.
"Coal carries a heavy burden," the "Mining Coal, Mounting Costs" report said. The Harvard study factored in health costs (11,000 deaths annually from lung cancer, heart, respiratory and kidney disease) and environmental impacts of fly ash spills (53 from 1974 to 2008) and mountaintop removal (500 removed and 1.4 million acres transformed).
The beauty of coal is that it's cheap, relatively simple to extract with today's technologies and domestic. There also is quite a lot of it. However, as the study points out, digging it up and burning it to create electricity does have drawbacks, at least with current practices. Addressing those would add to the price substantially and any increased regulations generally are opposed by the industry.
Natural gas performs better emissions wise and is easy on the pocketbook at 3.9 to 4.4 cents per kWh. Domestic reserves are expected to skyrocket as well with newly refined fracturing drilling techniques.
Oil on the other hand has its own troubles. As of this writing, oil per barrel prices had surpassed $105 and the one-year forecast had risen to $121, according to oil-price.net. And as the growing conflict in Libya illustrates, crude oil brings with it a high political cost.
Conflict between Libyan strongman Moammar Qadhafi and eastern separatists have caused California gas prices at the pump to climb 50 cents per gallon in the past month, according to californiagasprices.com. The development has politicians concerned it could derail the shaky economic recovery and consumers grumbling. Should commodities traders remain nervous and prices high, the cost of everything from food to services will climb.
For instance, I heard on National Public Radio that several airlines have already raised rates half a dozen times this year due to increasing fuel costs.
But this is a relatively transparent cost, outlined daily by major media outlets. The less visible but no less costly is what Gal Luft, executive director of Institute for the Analysis of Global Security, calls the "terrorist premium." In the report, "Oil and the New Economic Order," Luft says that premium costs the United States $65 billion to $85 billion a year.
Oil internationally receives a litany of subsidies from countries that shield consumers from up to three-quarters the cost of the fuel. As I wrote in a past post, the International Energy Agency in a report released this past summer says its analysis revealed that fossil fuel consumption subsidies amounted to $557 billion in 2008. This also elevates cost.
Green energy, by comparison, gets a pittance in subsidies. London-based research group Bloomberg New Energy Finance says, "governments last year gave $43 billion to $46 billion of support to renewable energy." This came by way of tax credits, guaranteed electricity prices known as feed-in tariffs and alternative energy credits. Germany is a leader in this groups with its solar feed-in tariff, but that may be decreased.
And making this debate continually interesting are advances improving the efficiency of solar power. Technologies concentrating the suns rays and various methods of creating power storage are elevating the ability of the renewable to compete.
I love the "battery" concept that uses a silo filled with water and a massive counter weight that pushes out the water to generate power when the sun sets or wind stops. The underground silo is filled with water by energy generated from the solar or wind system.
And more traditional battery technology is making massive strides. I tweeted recently about the lithium-water battery. No kidding. It may work.
So who knows how this will develop? Obviously, my nonprofit is biased. We'd like to see the San Joaquin Valley take off as a leader in all things renewable, generating spin-off businesses and inspiring entrepreneurs to make sense of all this harvestable energy surrounding us. And create some jobs in the process.
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