Friday, December 18, 2009

Oil IS subsidized!

Some people like to claim that oil is not subsidized, unlike alternative energies. A recent article supporting this is 


The externalities of oil production are not paid for by the consumer, but by the taxpayers. One could argue that half the Defense budget is spent on keeping "peace" in the Middle East trying to protect oil. The pollution effects of petroleum internal combustion engines are "paid for" by everybody in terms of higher disease rates. The noise pollution degrades our lives (electric chainsaws are much quieter than gas).

The US used about 290 billion gallons of petroleum last year. The defense budget was about $600 billion. If half the Defense budget is because of wars in Iraq and Afghanistan and patrolling the Middle East, it adds a dollar a gallon to the cost of gasoline. AAA (see ) claims that auto accidents cost $164 billion, or over 50 cents per gallon. MIT estimated in 2005 that US pollution costs about $250 billion (see While not all pollution is from petroleum, of course, one could rationally add 10 to 40 cents per gallon just on pollution effects.

Most of the roads in this country are NOT financed by gas taxes - all the city streets and county roads are paid by property taxes. Probably 25-50% of our local law enforcement costs are for traffic enforcement, and are paid by local taxes, not fuel taxes. A significant portion our medical expenses in this country are from auto accidents, paid by everybody's insurance, not just drivers.

In summary, the more I drive, the more it costs my neighbors to pay for the street, clients of my health care plan for their premiums, the taxpayers for law enforcement and traffic control in every town I drive in, and everybody within earshot and "lungshot" of the highways who get to hear and breathe my pollution. If I bike and walk instead, none of these costs go down for me, only for third parties. 

So petroleum, a very useful substance, creates huge amounts of pollution, soot, noise, deaths, and medical costs, without any obligations or costs.

With the exception of Norway and Canada, every major oil exporting country is despotic at best, and many are terrorist-financing bad actors, which creates "demand" for our military, DHS, the Patriot Act, and greater interference in the economy by the government. How much is the lessening of our freedom worth? Is oil paying its share?

The article also claims that coal can be clean. Ridiculous: coal has never been demonstrated to be clean. In theory, CO2 can be pumped into oil wells to increase flow, but that rarely is practical since coal-burning power plants are very rarely close enough to any oil wells. Coal to liquid technologies, such as the Fischer–Tropsch process, are generally very dirty since coal has so many contaminants, and are far from being economic. Sequestering CO2 underground has been discussed ad nauseum, and has yet be proved effective.

Coal mining also has the wonderful ability to effectively destroy the land and make it unrecoverable forever. While all mining has environmental challenges, coal is among the worst in polluting water supplies.

I am not a flaming alternative energy ignoramus. Petroleum is very valuable, and is great feedstock for many advanced plastics and chemicals. As a concentrated fuel source, it is very useful for certain transportation uses, such as aviation. It is ridiculous that we waste it for low tech uses like heating houses; that is like burning medieval manuscripts in the fireplace to keep warm. Much of our surface transportation needs can be met with NH3, electricity, natural gas, and perhaps some bio-fuels. All of our building heating can be met with non-petroleum resources.

Is the government effective in promoting alternative energy? No, of course not. It is the government! If somebody was effective, they would probably be working in the private sector. However, there is a lot the governments (plural) can do to facilitate alternative energy strategies, such as reducing the horrendous bureaucratic cost of approving new fuels, such as natural gas and NH3.

We (the US) do need a new "Interstate" Electric Grid. Our electrical infrastructure is similar to our highways in the 1950s, dependent on local states and counties with very little coordination. Eisenhower made a national Interstate Highway system which has been a huge positive. We need to have a uniform Federal tax (just like the gas tax) to create a national energy grid infrastructure linking all our energy resources, from the hydro in the Northwest and Canada, solar in the deserts, and winds offshore and in the Midwest, as well as our scattered coal plants. A national-scale grid would need to very high voltage (megavolt or higher) and DC current to minimize current losses. Major sections should be underground for security and land conservation, as China has been doing, see  We need to break free from 50 state Public Utility Commissions and their provincialism.

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