Electricity is the cornerstone for our quality of life. It is not just a luxury anymore. If we do not have electricity for even a short time, our quality of life suffers a great deal. In fact, people can die if electricity is lost in places like hospitals and emergency management facilities.
The Difference Between Energy and Electricity: Some of us confuse the discussion of “energy” to mean “electricity.” Energy is well north of a trillion-dollar annual market in America, but less than half of it is electricity. This is important because the markets for the various transportation fuels made from crude oil, and all the products made from the oil derivatives from refined crude oil are more than “just” electricity.
- Oil produces gasoline, diesel, aviation, and bunker fuel, but it also produces raw materials for almost everything else we use. It is converted into plastics, packing material, and other source terms that produce more than 6,000 other products we use every day. In fact, oil was a staple of the U.S. economy long before automobiles became popular.
- In fact, gasoline was a waste product of oil refining in the 1800s and sometimes set rivers aflame as it was discharged. So, if you think getting rid of oil is only about getting rid of gasoline, you are sorely mistaken. Gasoline, diesel, aviation, and bunker transportation fuels are strange commodities as well.
- Crude oil processed through multi-billion-dollar refineries are the major source of “non-electricity” transportation fuels for planes, ships, trucks, cars, and space programs, and the oil derivatives that are the basis of more than 6,000 “products” in our society that did not exist 200 years ago.
In general, if prices go up, demand goes down. However, this is not so for these fuels. People continue to buy them at almost as much volume no matter what their price is. So, rising prices in these fuels take a large chunk of daily budgets. This is why artificial price hikes for gas and diesel are compared to “extra taxes.” It is interesting to note that the prices went up lately even though supply was plentiful (in the United States). So, prices are hiked on emotion and rumors, not necessarily on supply and demand. You can interpret your own meaning out of this, but that is the case. The thing to remember is that, despite the complaints about “high prices,” you would all charge as much as you could if you produced the gasoline, and you continue to buy it no matter how high it gets (there is some limit, but it is pretty high). But this article is about electricity.
How is Electricity Actually Delivered? We get electricity in the United States (and most of the world) from a tangle of wires called a grid. The one we have in the United States is old, vulnerable to terrorism, cyber disruption, and transformer failures. In a perfect free enterprise system, such things would be fixed by the “owners” because without a grid, they could not sell their product. For some reason, however, the producers of electricity do not seem to care about keeping the grid viable. You can imagine your own reasons for this, but the responsibility for regulating the grid has been usurped by the federal government and managed by the Federal Energy Regulatory Commission (FERC) and the North American Electric Reliability Corporation (NERC). Like many responsibilities assumed by the government, private enterprise has backed off from their involvement and left it up to “the Feds.” Again, the result is less than sterling. This is the delivery part of the electricity market.
The production side of electricity is equally, if not more, volatile than the delivery system. Although operated by private firms known as “utilities,” the market is far from competitive. So, we are challenged by dealing with a private monopoly for your supply of electricity and a federal monopoly of the same for your delivery. We are seeing the results as prices for electricity constantly rise as subsidies for the commodities wane. You should expect this, but most “ratepayers” (note, we are no longer customers) seem surprised when it happens. The point of this article is to suggest some reasons why “ratepayers” should pay attention to this market.
Who Pays for the Additional Costs of Delivery? Electricity is the most important commodity you buy. You can go a relatively long time without food, medical care, and transportation without major effect, but you cannot go even a minute without electricity messing up your day. To date, outages have been few and related mostly to natural or manmade disasters. There are emergency contingencies in place to deal with these events, but everyone knows what is at stake here. Our lives, indeed, all lives, are severely degraded without electricity.
On the supply side of electricity, however, we are saddled with monopolies to provide our electricity production. If the government dictates that we use more wind and solar power, we are going to do that, no matter the cost. If we are told to “get rid of oil,” we just do it. Basically, the customer (I am sorry “ratepayer”) has no say. You have only one source of electricity supply, so you just pay. Indeed, you are also paying for the subsidies that make your bill look to be lower, even though you do not see that directly. You should know that for every $1 trillion subsidy, each person in the United States pays $3,000. Somebody pays that cost since it is spent in real time. I will leave it to you to perceive who pays it, but it is mostly paid by the same “ratepayers” who use electricity. In fact, you can never know the true cost of your electricity since the market does not really care. We are told what price to pay and we pay it. There is no other option. Again, you tolerate it.
The Cost of Central Control: We often tout nuclear power in these articles simply because, if there were no government bias or monopolistic power, it would be far and away the cheapest power. But if highly influential entities want to sell wind and solar power, they just create the illusion that it is “cheaper” and “cleaner.” They tell you that CO2, although it is the most necessary molecule for life, is a danger. The government can even entice “agencies” to declare it toxic. So, you dutifully pay whatever cost it takes to produce electricity from wind turbines and solar panels. You never bother to even find out what that cost is. Indeed, regulatory agencies and monopolistic companies have a vested interest in hiding the real cost from you. But, make no mistake, you will pay for it.
In South Africa, the country has experienced severe planned outages, while the price of electricity has risen more than 900 percent since 2007, leaving a trail of deindustrialization in its wake. Mines, smelters, factories, and small businesses have closed due to untenable electricity prices. This while having installed more than a dozen gigawatts of wind and solar and being the largest wind market in Africa.
Our research has led to the conclusion that nuclear power is the cheapest, cleanest, safest, compact, and most readily available fuel for producing electricity. We have presented these results in numerous articles over the years. Basically, nuclear power is producing all the time. Wind and solar, maybe average about 25-30 percent of the time. Nuclear power plants operate for up to 80 years (and more) while wind and solar have, at most, a 25-year life (wind turbines, 10 years or less).
Natural gas and coal generated electricity costs are 80 percent attributable to the cost of fuel while nuclear power is, at most, 10 percent attributable to the cost of fuel. Best of all, its “nuclear waste” is recyclable to produce 30 times the original electricity while wind and solar materials are, essentially, non-recyclable.
Energy Reality: The ignorance of the “energy illiterate” leaders is shocking, as they never explain how the “energy” from wind turbines and solar panels can provide transportation fuels: jet fuel for military and commercial aircraft, diesel fuel for trucks and construction equipment, gasoline fuel for cars, bunker fuel for merchant and cruise ships, and exotic fuels for space programs.
Energy reality is that wind turbines and solar panels only generate electricity but cannot make any products or transportation fuels for life as we know it. Planes, ships, trucks, and cars run on transportation fuels manufactured from crude oil by multi-billion-dollar refineries.
The world is dependent on the products and transportation fuels made from oil, the same products and transportation fuels that unreliable green electricity from wind and solar cannot make.
Ronald Stein is an internationally published columnist and energy consultant, and a policy advisor for The Heartland Institute.
