Fossil fuels helped to create this country.1 Coal, gas and oil enabled mind-boggling growth and progress, and improved the quality of life, (if not always the health), of humans, (if not nature). America, in a heyday of change and development, built up a culture, an infrastructure, a world that promised milk and honey, and required gushing and guzzling coal, gas, and oil.
When and why fossil fuels? Was it because after World War II, all those chemicals used to build bombs needed to be disposed of and, thus, were turned into fertilizers to be used against the nasty bugs in our soils and on our plants? Multinationals began selling petrochemicals2 to farmers around the world, this being not so good for soil and small farmers but excellent for profits and growth.
Or was it back a bit farther with Henry Ford’s invention of the automobile and the promotion of the American, Go-Westward-Young-Man way?
Or back farther yet, with the laying down of the coal-driven rail system that connected east to west, north to south?
Whenever, why-ever, it was gas, oil and coal that drove our economy. Fossil fuels were cheap, abundant and available day and night. Thus, our government’s energy policy supported them. Which brings up the question—since we are talking about economics—how much money has gone to support the fossil fuel industry? And how far back should we go?
Shall we include the 19th century land grants to timber companies and the granting of corporate charters to coal and railroad companies, and past and present protective tariffs on imported coal? Or the more recent spending of the Department of Defense on “energy security”–war?–which, over three decades, has cost over seven trillion dollars?3
Granted, numbers can be arranged. The EPA and National Highway Traffic Safety Administration calculate that same cost to be zero, and therefore do not include national defense costs in the Fuel Economy Standards program. The result is an unacknowledged subsidy of $0.28 per gallon for petroleum products in the U.S..4
Which brings us to two definitions that are significant in this brief study of the true cost of fossil fuels. We know the direct costs: utility bills. The price of gasoline at the gas station. But these numbers do not include the indirect costs, or externalities: Environmental damage. Health care costs that are a consequence of degraded water, air, and food. Wars for oil, and oil spill cleanup. Do we count those, include them in the cost of a gallon of gas? Can we afford that?
And then there are the subsidies, monies given out by a government to assist a business or industry to keep its prices competitive. Subsidies take public money away from other uses—like education and health care—and direct them elsewhere, in a very un-Adam Smithian5 way, though, at times, even more invisibly than his invisible hand.6 There are direct subsidies, and indirect ones: tax policy and giveaways; regulations, loans and price controls; federal funding for Research & Development, land, trees, and water; national security.
Not including the past decades of government support of the original build of the coal and nuclear plants, and the road and railway systems, the oil/gas industry is currently 50% subsidized. In comparison, renewables get 20-30%, cord wood, zero; and nuclear energy 80% with the government, also known as taxpayers, paying for most of its insurance.
“When externalities are included, as in a 2015 study by the International Monetary Fund, the unpaid costs of fossil fuels are upward of $5.3 trillion annually — which works out to a staggering $10 million per minute.”7
Roads have been and still are being paved (literally) for the fossil fuel industry . . . but it’s too expensive to change, right? It must be, given that even after G20 country governments signed their much touted agreements, they have continued to subsidize the production of fossil fuels to the tune of $444 billion a year, thereby undermining any attempts to stop the solar flare we call climate change.8
Oh heck, let’s call it what it is: climate chaos.
2 Petrochemical fertilizers are another name for the synthetic products because they are produced using large quantities of petroleum and other fossil fuels. Some common examples include ammonium nitrate, super phosphate and potassium sulfate; https://homeguides.sfgate.com/pro-cons-petrochemical-fertilizers-86254.html
3 “What would Jefferson Do?” by Nancy Pfund and Ben Healy, September 2011, page 28.
4 See http://secureenergy.org/wp-content/uploads/2018/09/Military-Cost-of-Defending-the-Global-Oil-Supply.-Sep.-18.-2018.pdf
5 Adam Smith is known as the father of capitalism.
6 This is Adam Smith’s theory that when people pursue their own self-interest, there are unintended consequences that benefit society as a whole.