Friday, March 11, 2011

Price vs. Cost of Energy Conservation and Efficiency

Our lack of coherent energy policy reflects both the price and cost jeopardizing both our national security and future prosperity. Unfortunately energy efficiency has failed to be realized as a national priority. Presently energy inefficiency has a huge hidden price and cost. How we can better generated and consume energy must be adequately addressed.

U.S. energy demand consists of 85% fossil fuels or about 50 million barrels of oil consumed each day in America. As we past $100 per barrel for crude and this price shortly could easily double. Energy imports of oil account for 20% of our total U.S. energy requirements. However the cost for this is a huge burden not just on our balance of payments and on our environment.

Approximately, 61%of energy produced is lost due to factors such as poor insulation, inefficient gas guzzling vehicles and other reasons according to a 2007 National Petroleum Council report to the Department of Energy. This translates to an overall efficiency of 13% for oil that is converted to a usable form. Another way to illustrate this is that only one of three barrels is recovered. How can we afford to allow this to happen?

Currently the U.S. depends on foreign countries to supply us with 66% of the oil we use. It is believed we have passed our peak of oil production in 1970’s or 80’s. Presently our petroleum comes from: USA Petroleum Production-34%; Petroleum Imports from OPEC-27%; Non-OPEC Petroleum Imports-39% (Canada, Mexico, Russia, etc.)

One example is oil wasted in consumption comes from the do-it-yourself consumer. The American who changes their own oil yearly wastes over 400 million gallons of used oil and 500 plus million oil filters. One gallon of used oil improperly disposed can contaminate one million gallons of fresh water or ruin the water supply for 50 people for a year.

There is a price for using oil besides impacting climate change. Exploration, development, production, product treatment, and waste management activities associated with oil and gas production projects can have a variety of costs on our environment and health. Roughly one trillion gallons of oilfield waste we inject into deep wells in addition to the 3 billion tons of oil and gas wastes we generate yearly by our oil and gas exploration and production in the U.S. Unless we place a price and cost on inefficiency we will continue to subsidize this hazardous waste of dollars, resources and health impacts.

For over a century Americans have greatly benefited from oil. Now the question is how we price and cost our dwindling oil resources. Why do create incentives toward energy depletion? Once we make this energy life cycle investment we will celebrate the enormous future benefits of efficiency. The future we reveal the true costs and expense of energy inefficiency unless we wisely act. Let’s profit from preventing waste by fully investing in energy efficiency.