Solar Energy Is Far from Ready to Replace Petroleum

Published November 1, 2004

Editor’s note: The following article was published as a letter to the editor in the August 23 issue of Utility Point International Issue Alert, in response to a letter printed in the publication’s August 9 issue. (See boxed text at right.)

Hydrogen is a carrier of energy, not a source of energy. Making hydrogen requires energy. If we use petroleum as the low cost energy source to make hydrogen then we only distribute the air pollution or dilute it out of the transportation congested areas such as cities, not get rid of it. Furthermore, this source of energy for the production of hydrogen still does not solve our dependence on foreign oil.
I would like to see hydrogen as our future transportation fuel source, and that it is made from renewable energy, not from non-renewable sources. This will be expensive, but worth the investment.
I work with photovoltaics. I believe in solar energy. Unfortunately it is not inexpensive. Unfortunately, petroleum is subsidized via our taxes which go to our military which is deployed to protect the foreign petroleum sources. We need a government sponsored leveling of the playing field.
Robert Dally
Project Engineer
Shell Solar
Letter published in the August 9, 2004 issue of Utility Point International Issue Alert.

Robert Dally [project engineer, Shell Solar] attempts to justify increasing subsidies to the solar energy industry, most likely for generating electricity, by declaring the petroleum industry receives huge subsidies. These claimed subsidies are in the form of using U.S. military forces to protect foreign petroleum sources.

By implying that petroleum is a major competitor to solar, Mr. Dally claims that government sponsorship of solar is needed to provide a level playing field. In so doing, he clouds the issues rather than clarifies them.

Different Uses for Solar and Petroleum

First, in the United States the principal use of petroleum is for transportation instead of electrical generation. According to the U.S. Energy Information Agency (EIA), transportation accounted for 68 percent of total U.S. petroleum consumption in 2002. Petroleum consumption for transportation is heavily taxed–not subsidized–by local, state, and federal governments. Annually, the federal government alone collects about $40 billion. Of this, more than $33 billion is spent on highways and similar improvements, about $6 billion on mass transit, and about $70 million for the EPA-administered Leaking Underground Storage Tanks Fund.

Persian Gulf a Minor Source of U.S. Oil Supplies

Second, to claim that U.S. military action subsidizes the petroleum industry by ensuring secure sources is dubious at best. After the first Gulf War, we returned the captured oil fields to Kuwait. Also, we are returning the oil fields in Iraq to that government.

According to the EIA, in 2002 less than 12 percent of total U.S. petroleum consumption came from the Persian Gulf states. These sources are more important to Europe and the Far East than to the United States.

Petroleum a Global Market

Third, the sources of the petroleum are not important, because there is a world market for oil in which the United States is a major component but not the defining factor. The defining factor is the combination of the competition among various energy sources and the competing consumption of many users in all countries which, together, establish the worldwide price. Lengthy disruptions of supplies from one region will cause a temporary increase in world price that will result in expansion of production and facilities in other regions.

Although inconvenient, a major disruption could trigger the use of the Strategic Petroleum Reserve to smooth price increases. Many nations are more vulnerable than the United States to such disruptions.

Producers Have Self-Interest to Sell

Fourth, we do not need the military to secure stable sources. For decades, nations, tyrants, dictators, etc. have willingly sold petroleum because it is to their benefit to do so. And it is to their benefit to protect their sources. Permitting disruptions deprives these countries of needed revenues. An exception to this “need to export” occurred in the 1970s when certain nations attempted to influence American policy towards Israel by initiating what was called the Arab Oil Embargo and denying export to the United States. The attempt failed totally. During the embargo the United States imported more oil than it did prior to the embargo.

This failure is clear evidence of a world market in a fungible (interchangeable) commodity in which no nation or region can dominate. The long lines many Americans experienced at the gas pumps during this time were a result of a foolish government policy to allocate the distribution of fuel, rather than a shortage of fuel.

Coal the Main Competitor of Solar Power

Finally, in 2002, petroleum generated slightly more than 2 percent of total electricity generated at U.S. power plants. That same year, solar sources generated about 0.01 percent of the nation’s electricity. The biggest competitor to solar electrical generation is not petroleum but coal, which generates about 54 percent of the nation’s electricity. The source of this coal is the United States, which has immeasurable amounts of it and requires no military commitments outside its borders to protect it.

Mr. Dally is not seeking a level playing field to protect the solar industry from the petroleum industry. Instead, he is seeking a highly tilted playing field to protect the solar industry from its fiercest competitor, the U.S. coal industry.

S. Fred Singer ([email protected]) is president of the Science & Environmental Policy Project, distinguished research professor at George Mason University, and professor emeritus of environmental science at the University of Virginia.