In this time in our history when there is so much happening on so many economic fronts it is often difficult to fully grasp the magnitude of changes that are going on around us. I believe this is particularly the case when it comes to energy prices. All of us realize that energy prices have gone up a lot in the last few years but since we are all very busy managing our day-to-day lives it is hard to fully comprehend the magnitude of the change which has occurred. Fortunately, every now and then the team at the EnergyBible.com comes across data which helps us to crystallize and gain perspecitve on the changes that are occuring. In this case the data is from our friends at the U.S. Department of Energy.
The chart we will be referring to can be found at this link: http://www.eia.doe.gov/cneaf/electricity/epm/epmxlfile4_1.xls. It is a spreadsheet put out by the Department of Energy and what it shows is the cost of coal and oil from 1993 through the end of 2007. When I looked over this chart it really began to hit me just how dramatically our energy costs have changed in the last 10 years. Moreover, it helps to show how different the level of change has been based upon the type of fuel.
This particular price chart contrasts the price of coal versus the price of liquid petroleum (ie. fuel oil). One of the nice things about this chart is that it provides the prices for both in terms of cost per million BTU. This is a good way of comparing coal costs to heating oil costs since each type of fuel is measured differently. Coal is usually measured in cost per ton and fuel oil is measured in cost per barrel. By looking at the cost per btu (heat energy generated) we can accurately compare the costs.
In 1998 a barrel of oil cost $13.55 per barrel or about $2.14 per million btu. In that same year a ton of coal cost $25.64 per ton or about $1.25 per million btu. From this we can see that the cost of coal was about half or 58% the cost of oil. Therefore, it should not be a surprise to us, though it often does, that the majority of the electricity we use in the United States comes from coal fired power plants, not natural gas or fuel oil plants. Even 10 years ago coal was a lot cheaper.
Let's compare that with the situation at the end of 2007. By the end of 2007 a barrel of oil had risen to $87.46 per barrel or about $14.19 per million btu. This represents an increase in cost of oil per btu by 663% in just 10 years! What's even worse is that this data is now quite low because oil prices continued to rise dramatically in the first half of 2008 and is now hovering around $110 per barrel. Don't let anyone tell you the energy crisis is not real and not serious. These numbers prove that it is!
Now let's look at the increase in the price of coal over that same time frame. At the end of 2007 coal had risen to a price of $36.07 per ton or $1.82 per million btu. This represents an increase of 45.6%. A definite increase but nowhere near as dramatic as that for coal. Now let's put two and two together. The facts are that the price of oil has increased by an incredible amount while the price of coal has increased only moderately. America has run out of oil for the most part and has to import it, but America has a good bit of coal left, probably enough to last at least 30 years. Given this data what are electric plants running on fuel oil (and possibly even homeowners) likely to do? The answer is obvious, they will switch to coal.
So here we are in 2008 looking at the likelihood that America's electric plants and possibly even homeowners are going to be highly motivated to switch to coal, which is by far the most damaging fuel to our environment and the greatest creator of global warming. Given the economic situation oil and natural gas are no longer reasonable choices as a way of creating electricity. The only other choice is to go with renewable energy resources such as wind energy, solar energy, or hydro energy. This shows that there has never been a time when it is more urgent to push our civic leaders and legislators to get serious about renewable energy. If not we are looking at a near-term future where our skies become polluted and our planet becomes excessively warmed by the black clouds pouring from coal fired electric plants!
The chart we will be referring to can be found at this link: http://www.eia.doe.gov/cneaf/electricity/epm/epmxlfile4_1.xls. It is a spreadsheet put out by the Department of Energy and what it shows is the cost of coal and oil from 1993 through the end of 2007. When I looked over this chart it really began to hit me just how dramatically our energy costs have changed in the last 10 years. Moreover, it helps to show how different the level of change has been based upon the type of fuel.
This particular price chart contrasts the price of coal versus the price of liquid petroleum (ie. fuel oil). One of the nice things about this chart is that it provides the prices for both in terms of cost per million BTU. This is a good way of comparing coal costs to heating oil costs since each type of fuel is measured differently. Coal is usually measured in cost per ton and fuel oil is measured in cost per barrel. By looking at the cost per btu (heat energy generated) we can accurately compare the costs.
In 1998 a barrel of oil cost $13.55 per barrel or about $2.14 per million btu. In that same year a ton of coal cost $25.64 per ton or about $1.25 per million btu. From this we can see that the cost of coal was about half or 58% the cost of oil. Therefore, it should not be a surprise to us, though it often does, that the majority of the electricity we use in the United States comes from coal fired power plants, not natural gas or fuel oil plants. Even 10 years ago coal was a lot cheaper.
Let's compare that with the situation at the end of 2007. By the end of 2007 a barrel of oil had risen to $87.46 per barrel or about $14.19 per million btu. This represents an increase in cost of oil per btu by 663% in just 10 years! What's even worse is that this data is now quite low because oil prices continued to rise dramatically in the first half of 2008 and is now hovering around $110 per barrel. Don't let anyone tell you the energy crisis is not real and not serious. These numbers prove that it is!
Now let's look at the increase in the price of coal over that same time frame. At the end of 2007 coal had risen to a price of $36.07 per ton or $1.82 per million btu. This represents an increase of 45.6%. A definite increase but nowhere near as dramatic as that for coal. Now let's put two and two together. The facts are that the price of oil has increased by an incredible amount while the price of coal has increased only moderately. America has run out of oil for the most part and has to import it, but America has a good bit of coal left, probably enough to last at least 30 years. Given this data what are electric plants running on fuel oil (and possibly even homeowners) likely to do? The answer is obvious, they will switch to coal.
So here we are in 2008 looking at the likelihood that America's electric plants and possibly even homeowners are going to be highly motivated to switch to coal, which is by far the most damaging fuel to our environment and the greatest creator of global warming. Given the economic situation oil and natural gas are no longer reasonable choices as a way of creating electricity. The only other choice is to go with renewable energy resources such as wind energy, solar energy, or hydro energy. This shows that there has never been a time when it is more urgent to push our civic leaders and legislators to get serious about renewable energy. If not we are looking at a near-term future where our skies become polluted and our planet becomes excessively warmed by the black clouds pouring from coal fired electric plants!
