What should be the real cost of using oil/coal for our modern lifestyles?

Question

Given that we can say burning coal yields around 6-9cenets per kilowatt/hour, and that say solar is just 20cents kw/hr ( I know its not, just ex.) Couldnt we argue that since it takes (millions of years) to produce coal and that solar is fresh everyday that the real cost of coal should be more or less 20cents a kw/hr and solar 6-9 cents kw/hr? Im not talking semantics either, just real world costs seriously.

Opinions welcome, Im curious if that matter shouldnt be thought of this way.

Goof

Answer 1

Well the oil & gas & coal actualy doesnt come from the Dinasoure but the Fossil plants and is continueing to recycle now. Look at the plant world loke a olive tree,if the animal eats it and gets fat ,where did the oil come from. The same process that recycles CO2 to oxygen also the plant keeps the C to produce food for them . The plant die and wash down to the delta where it is compacted into fossil fuels. Useing the fossil fuels should be Coal firat ,second oil and then natural gas. Coal is the oldest and some oxidation has started to take place.

Answer 2

The real cost should be the cost determined by the market.  What other way is there to set the cost?

Answer 3

For starters we have no such thing as a free market.  And free markets are not the magical solution to everything, anyway.  This idea has taken an economic theory and turned it into some kind of religious belief.  I actually heard one commentator on FOX say we should let the free market decide which animals should be allowed to go extinct.  That is insanity based on a religious belief in an economic theory.

  All the fossil fuels are heavily subsidized.  The subsidies for alternative energy are miniscule by comparison.  One estimate of tax credits and subsidies for oil companies is as high as $80 billion annually.  The hidden costs of oil, including these subsidies is estimated as high as $800 billion annually.  This includes up to $100 billion a year for military costs of protecting oil shipments and hundreds of billions in added health costs and environmental costs.

If those estimates are accurate,  it would add about $8 to the price at the pump, of a gallon of gas.

  And that doesn't include the cost of wars in the mideast.

Answer 4

Great question.  Shows the irony in the name you choose!

Lets just look at the free market (like the US).  This might not hold true with other systems (communism, unconstrained capitalism).

The US has a capitalist economy constrained by the rules of a free market.  Some of the basic rules are:

1- companies are not allowed to regulate entry and exit from the market or fix prices to control competition

result is if the market makes a very high profit, it will encourage more companies to provide the products and drive prices down to an equilibrium point.  Governemnt's role is to be sure this is not occurring so that society can benefit.

2 - producers and consumers have PERFECT information about products and competing products cost and benefits

Nobody can really know this, but the government regulates advertising and labels for example to try to achieve this as much as possible. You have to look and shop around to make ultimate selections.  Most of the responsibility for this rest with consumers, with the idea that if the information provided by the companies is truthful, the consumer will make a choice that maximizes their welfare.

3 - Cost are borne by those who receive the benefit.

Another tough condition to enforce.  This mostly deals with externalities (cost transferred to others).  Companies receive profit for making products so they are expected to bear all the cost (the costs of keeping the air and water clean for example).  The government regulates this also (air and water permits for example).

However, this is extremely difficult area to consider because lots of products benefit society as a whole that a company cannot directly receive a profit from.  Electricity is a good example but gas and oil work as well.  Cheap electricity, gas and oil let businesses and people other that energy companies profit.  There is a social benefit to their product that they cannot profit from (at least easily).  Therefore society has to bear some of the cost (i.e. live with a little bit dirtier water and/or air to receive the social benefit).

That is pretty much what the global warming slug-fest is about: trying to determine how much cleaner the environment needs to be to avoid high cost in the future that will reduce social welfare, and who will bear these costs.

There are two schools of though:  1). All GW is not accelerated by human activity - it is all natural.  This implies that there is nothing we can do now to reduce the costs to society in the future.  If this is the case,  we will need to spend huge amounts of money to protect society assuming negative impacts of global warming occur.  Some people assume that no significant negative impacts will occur.  If they don't occur, no big deal.  We just deal with the usual pollution the way we always have.

2). Other think that much GW is caused by human activity and controlling human activity will slow the rate of climate change.  This will reduce the severity and increase timing of the impacts.  If this is true, then investing now in technologies and policies that will reduce the amount we need to spend in the future makes sense because we are using the time-value of our investment to get more benefits in the future (i.e. spending a little now can greatly reduce future costs).  This line of thinking assumes we can identify the most likely impacts.  If we identify the impacts, we can work on ways to reduce the rate of change, or offset the impacts in other ways.

Evidence clearly supports the fact that accelerated global warming is occurring now.  This is not even disputed anymore by scientists. Most scientist think human activity contributes significantly to the acceleration in warming.  Scientist (engineers and economist among them) are looking for alternatives to reduce the human contribution to warming.  All of these alternatives will end up in the political forums to be argued and finally considered (doing nothing is one option to be considered).  This is what all the fuss is really about.  It is scary to think that politicians will decide this in the end, but it is the only way.

This, obviously, doesn't answer your question.  I tried to lay out a basic example of the difficulty involved with answering this. You are ahead of the pack with this question. The real costs depends on knowing the real environmental and social problems, as well as accurately measuring the real benefits.   The benefits, we have a better idea of, but there are still social benefits not considered. The answer to your question is something we are trying to determine, and the answer changes as new information becomes available.  It changes over time - it will be different in 20 years and for different generations.  You're no Goof!

Answer 5

Well Goof, no doubt there could be hundreds of variables in comparing the pros and cons of these choices. Maybe also your perspective on how it should be thought about and/or suggestions you have for society could be the best.  Part of the issue you aren't mentioning is the actual production today as to why the costs are as they are.  To move the prices closer to what you are saying would need government fiat declaring perhaps higher taxes on coal/oil and/or major subsidies of solar production.

   I certain you are aware that in many instances and localities especially areas with abundant sunshine are already seeing benefits of solar energy production today on an even cost comparison. Regional differences in the world are generally a fairly important factor on this type of comparison you are talking about.

Answer 6

the earth

Answer 7

What the market dictates without government intervention.