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Source link: http://archive.mises.org/13238/some-perspective-on-energy-use/

Some Perspective on Energy Use

July 12, 2010 by

The AIER offers the follows (via email):

The following breakout shows U.S. energy use by source:

TRANSPORTATION: 27.8 percent of total U.S. energy use.

  • 95 percent from petroleum;
  • 2 percent from natural gas;
  • 3 percent from renewable energy.

INDUSTRIAL: 20.6 percent of total U.S. energy use.

  • 42 percent from petroleum;
  • 40 percent from natural gas;
  • 9 percent from coal;
  • 10 percent from renewable energy, mostly hydroelectric.

RESIDENTIAL & COMMERCIAL: 10.8 percent of total energy use.

  • 16 percent from petroleum;
  • 76 percent from natural gas;
  • 1 percent from coal;
  • 1 percent from renewable.

ELECTRIC POWER: 40.1 percent of total U.S. energy use.

  • 1 percent from petroleum;
  • 17 percent from natural gas;
  • 51 percent from coal;
  • 9 percent from hydro and other renewable sources;
  • 21 percent from nuclear power.</

It seems like fossil fuels are the peoples’ choice, despite all the yammering about the glories of everything else. And, by the way, what is this impression that we get that renewable energy is somehow natural and earth friendly whereas everything else is artificial and dangerous? Coal (and there’s plenty of it) and oil (and there’s plenty of it) are as natural as wind and water.

(Sadly and strangely, the AIER will not give away its reports: this link asks for $39 to access it)


J. Murray July 12, 2010 at 8:42 am

One of the problems with the analysis is that it’s hard to determine what the people’s choice would be if it wasn’t for the gigantic maze of regulatory law and subsidy. Considering, for instance, that the production of a nuclear plant is 4 times more expensive becuase of DoE regulation, state law, and the ease of unnecessary litigation while the same factor is only about 1.5 for a coal or oil fired plant as they enjoy certain protections and fewer regulatory burdens. Certain aspects would likely remain unchanged for the time being, such as transportation use (petrolium products are simply more easily stored and transported), but we would likely see a major shift in preferences for the other three categories had we not dealt with a regulatory regime.

Slim934 July 12, 2010 at 10:53 am

Nuclear has one problem with it though: it is thoroughly in bed with the state, at all levels.

And this is how those players like it.

As someone who works in this field I can tell you right now that nuclear is and is not the panacea that people make it out to be. Overall it is still number 1 for baseload generation of electricity. The physics does not lie. The problem lies in how development is being done for it and how it HAS been done, and this has to do with its very close relationship with the state since the early inception of this science for power generation.

It is true that the various regulations and whatnot make it more expensive than it otherwise would be, but then again nuclear has numerous subsidies which also alter the structure of how that market developed. Namely these are federally guaranteed low interest loans as well as subsidies for their insurance. If these went away (as well as the entire regulatory apparatus for the quasi-monopoly power generation industry) the industry would look vastly different.

As a general baseline here is what I think would have happened. The current regulatory structure calls for big centrally located power stations to provide energy, so if this went away then there would likely be a shift to a much more decentralized structure of smaller plants. Also, if the subsidies and guarantees dried up then nuclear plants would likely not have been built in this country as early as they were. In order to bring down insurance as well as physical costs, more fundamental R&D would have been done to make the plants run safer and with fewer necessary components to do so. This is starting to happen now with folks like B&W building their smaller modular plants which will have significantly fewer components and run on something like passive safety systems; but this would have happened much earlier.

This of course does not take into account to scientific distortions produced by the huge amounts of money the DOE has been flooding into this sector. I have no doubt that this has been an extremely important contributor to simply the kinds of research which were done.

PK July 12, 2010 at 9:12 am

Jeffrey Tucker,

“It seems like fossil fuels are the peoples’ choice, despite all the yammering about the glories of everything else. And, by the way, what is this impression that we get that renewable energy is somehow natural and earth friendly whereas everything else is artificial and dangerous? Coal (and there’s plenty of it) and oil (and there’s plenty of it) are as natural as wind and water.”

You have to consider the factors of cost and availability of the product, in regards to preference. Coal was the #1 source for the electrical generation in this country because of pure cost and availability of coal, however there was a massive shift due to regulation and taxes/subsidies during the 80s and 90s that moved it towards Natural Gas. A recent resurgence of Coal power was in part because of government tax breaks for their Clean Air Act initiative to reduce sulfer, CO2 and NOX requirements which can be dictated by both state and the federal government.

It will take a number of years until renewable energies will be even considered in the same league as Natural Gas, Nuclear, and Coal; and this is based on Cost and Generating Costs. Unless the kW/hr rate generated can come close to what coal or natural gas can produce it will never be a viable option.

Vitor July 12, 2010 at 9:18 am

Hey Jeffrey, not reallly related to this topic, but Cracked made an article about 6 abusive police powers that I find worth of this blog:


mpolzkill July 12, 2010 at 10:59 am

Awesome (and entertaining) article on the wolves and the sheep, Vitor, thanks.

Michael A. Clem July 12, 2010 at 2:19 pm
Jake July 12, 2010 at 10:51 am

An interesting collection of figures. And I’d echo the sentiments of other posters that the energy market is so screwed up that we probably can’t claim what we’re seeing is a market-driven solution.

When I saw the title of this post I thought it was going to be about how little power goes to residential use even though that’s where all the gov’s compulsory conservation/regulatory efforts (and higher prices) go towards.

This is also true, and particularly frustrating, when it comes to water. Every time there’s a drought we the people are scolded for our wasteful ways and admonished to conserve water, even forbidden from watering plants. Yet residential water consumption accounts only for something like 2% of all water consumption. And even that statistic didn’t factor in the vast amounts of water wasted by government mis-management. Here in Atlanta a few years ago we had severe droughts, every day the news reported how far the cities main reservoir had fallen, and draconian and foolish restrictions were placed on households. Barely mentioned was the fact that the army corp of engineers had accidentally dumped BILLIONS of gallons of water downstream due to an improperly calibrated sensor reporting the reservoir being over-capacity instead of quickly drying up (apparently nobody bothered to look out the window, or wonder why despite record droughts the reservoir was still filled to the brim). And never discussed was how much water was wasted every time one of the city’s water-mains failed (which is about a weekly occurrence) From my personal experience of witnessing one of these failures I must say the loss of water was staggering.

Shay July 12, 2010 at 1:18 pm

And they never take the market solution to true water shortage: increase rates. One trivial change and everyone can intelligently adjust their usage and conserve where it’s easy and effective to do so. And it can be fine-tuned to achieve just the desired effect, and no more, by adjusting the rate.

michael July 12, 2010 at 4:07 pm

Shay: Graduated rates work best. Keep water affordable up to consumption point A. Then increase 20% or so to point B. Above B, double the rate. That way high-end golf courses and expensive lawns will still get to use all the water they want. Everyone sees the justice in this. No one likes to watch their lawns just die, without any recourse being offered them.

newson July 12, 2010 at 10:30 pm

can’t help playing the social engineer, can you? who is “everyone”, anyway? maybe just you and your projections.

Briggs Armstrong July 12, 2010 at 10:54 am

Yes, as others have mentioned it is a difficult case to make based upon the data.

Consider the case of nuclear. The NRC has created a “fast track” for obtaining a permit to build new facilities. Now it only takes 5 years to get the permit! Note that to use this fast track, companies must choose from a few pre-approved designs rather than build an ideal structure for the circumstances.

I’m not saying American consumers would support nuclear on the same level as France (78% of electricity) but certainly more than the current data would seem to indicate.

PK July 12, 2010 at 11:37 am

These pre-approved design are only built by two or three companies; Mitsubishi, GE – Hitachi, and Areva. Not really competitive bidding.

David C July 12, 2010 at 11:33 am

The enviro-elitists already know that fossil fuel energy is not going anywhere for a long long time, that’s why they pretend to be pro-renewable when in truth they just want an excuse to tax the hell out of global energy markets. Other viable alternatives like nuclear are simply regulated out of existence.

PK July 12, 2010 at 11:39 am

Actually, its not only you’re so called “enviro-elitists” that want renewable energy, but energy companies would love to have these products since the inputs to these things are not dependent on market forces but natural forces. They do not have to go through a supplier or find these resources from foreign hostile nations.

Walt D. July 12, 2010 at 12:39 pm

“They do not have to go through a supplier or find these resources from foreign hostile nations.”
This may be true for the wind and sun. However, the windmills and solar panels will all be manufactured in China.

Nate July 12, 2010 at 3:04 pm

Ah, coal and oil, the oldest biomass and biofuels of them all.

Seattle July 12, 2010 at 6:21 pm

Silly Libertarian, fossil fuels are not the people’s choice: They are the “choice” forced upon consumers by the Big Evil Capitalists. Once we abolish capitalism and establish rule of the people all will live in perfect harmony with nature!

jason4liberty July 12, 2010 at 9:30 pm

I watched an interesting documentary this weekend “Burning the Future”. Though the cases were not couched in these terms, the whole show was about the tragedy of the commons and also intervention to favor the interests of one property owner over another. My analysis of the movie is that one group, the miners of coal, are allowed to externalize their costs on their neighbors. I am not talking about changing the vista due to mountain top removal, but polluting the water table with heavy metals, altering the pattern of water runoff, and putting fines into the surface water are all intrusions into the private property of others, that today, are protected by the State.

All of the downstream users of electricity benefit from this arrangement at the expense of the property owners adjacent to the mines and coal processing facilities. The cost of making the operations “clean” should be born by the industry – and then ultimately passed on to the consumers like me. A lot of critics of the “strong private property camp” blame us for an inconsistancy of position – that we won’t accept the “negative” aspects of our position. I just want to put out here that this particular “strong private property guy” definitely believes that negative externalities must be eliminated or compensated for if justice is to exist.

I am not a green. But if the negative exernalities of energy industry actually became a cost of the industry that was passed along to the consumer, perhaps other methods of generating power would become more financially viable.

newson July 12, 2010 at 10:53 pm
Giovanni Parra July 13, 2010 at 5:45 am

I don’t know exaclty, but here in Brazil almost all of the electric power is made from hydroelectric power stations. Is it the market choice?

J. Murray July 13, 2010 at 11:09 am

You’re in Brazil, it’s likely not a market choice. Brazil is not exactly known for being a bastion of free markets.

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