Blog by Bill Luyties (OWOE Founder and Editor): Over the past few weeks, I’ve had multiple articles pop up on my news feeds that proclaim that an EV can cost as much to drive per mile as an ICE vehicle. These all appear to be based on an Anderson Economic Group report titled: Real World Cost of Fueling EVs and ICE Vehicles (2nd Edition), dated April 2022 but apparently not issued until early 2023. One article headline actually shouts: Shocking study finds EVs cost more to fuel than gas cars in late 2022. While I generally feel that the Anderson study did a good job of trying to compare costs, the authors of these news articles ignore most of the study and focus on a single headline-grabbing finding that for mid-priced cars EVs cost about the same as ICE cars when charged at home, but cost more when using commercial chargers (see Figure 1). This may well be true today, but the Anderson study and these articles miss the real point – such a comparison is misleading and almost totally irrelevant for a number of key reasons.
This study, and every other one like it ignores the full cost of burning a gallon of gas.
What is the true cost? The price one pays at the pump at the neighborhood Shell station is not the true cost of a gallon of gasoline. It is missing a number of key elements that are not visible to the consumer and yet cost the consumer eventually. Costs that are not included:
Social Cost of Carbon (SCC) which attempts to account for the impact of greenhouse gas emissions on society and the environment, including global average temperature, sea level rise, energy consumption, and agriculture. The EPA, in its September 2022 report: Report on the Social Cost of Greenhouse Gases, concluded that the median cost for year 2020 ranged between $110 and $370 per metric ton of carbon dioxide emitted for a variety of analytical models and input assumptions. We can convert this to a cost per gallon of gas using the fact that gasoline contains 5.5 lbs of carbon per gallon, which would produce 20 lbs of carbon dioxide per gallon when burned; then adding another 2.75 lbs per gallon for emissions associated with crude oil production, transportation and refining per a 2018 Stanford University report (10.3 grams of emissions for every megajoule of crude); which gives a total of 22.75 lbs carbon dioxide per gallon. Using the average mileage rating for a light duty vehicle of 25 mpg, the SCC values range from $4.50 to $15.1 per 100 miles driven.
Including this SCC cost would increase the numbers in Figure 1 for mid-priced ICE cars from $10.34 per 100 miles to between $14.84 and $25.44 per 100 miles, i.e., both greater than the “mostly commercial charging” value for EVs. Also, note that the SCC cost ranges from $1.13 to $3.78 per gallon, as compared to the average cost of regular gasoline across the US in 2021 used by Anderson as $3.32 per gallon.
It should be noted that the EPA report does not account for a number of social costs that would increase these numbers, including: impact from changes in precipitation, extreme weather events, impact on livestock and fisheries, impact on tourism, impact on biodiversity, displacement and migration, etc.
Tax breaks and other subsidies that the fossil fuel industry has enjoyed for decades and that are funded by taxpayers, estimated at $20 billion annually in the US, although some of this can be considered offset by current government subsidies for EV technology.
Cost of drilling related environmental disasters, such as the 2010 BP Horizon disaster that cost BP $65 billion to address. Oil companies attempt to recover as much of these expenses possible from consumers by raising gasoline prices. However, this is not necessarily possible due to the fact that oil is a commodity with price set predominantly by worldwide supply and demand. Much, if not all, of such costs will be borne by shareholders and insurance companies.
Cost of pipeline spills such as the Keystone Pipeline’s 2022 major spill that cost $480 million to clean up. Similar to the above, much of these costs are likely to be paid for by shareholders and insurance companies.
Cost of natural disasters such as the current Alberta wildfires. A recent study claims to link about 37 percent of the total area burned in the Western U.S. and Southwest Canada since 1986 to the heat-trapping emissions released by the world’s 88 largest fossil fuel and cement producers.
Cost to plug all 130,000 abandoned oil and gas wells across the US, which has been estimated by the US Department of the Interior will cost between $3 and $19 billion. Some of this cost will be carried by the oil companies, but a significant portion may need taxpayer funding given that many of the responsible companies are no longer in business.
One must also keep in mind that the technology associated with EVs is evolving rapidly and will also change the overall picture in favor of EVs. Whereas ICE technology is well over 100 years old and at the stage where only incremental improvements are likely, EV technology is rapidly advancing. Over the next several years, the industry is likely to see significant changes that will continue to reduce cost and other perceived shortcomings of EVs:
Reductions in battery weight and cost.
Increase in battery capacity (vehicle range).
Reductions in charging times.
Increase in charging options, both home and away, which will address costs identified in the Anderson report as deadhead miles cost (purple bars).
Etc., etc…The magnitude of these unaccounted-for costs and evolving technology make any such ICE vs EV comparison ridiculous. If one were to ignore everything else, including only the SCC cost in the comparison, the headline for these articles would be more like: “Boring study shows that EVs cost less to drive than gas cars and are much better for the environment.” But such articles don’t get attention and online clicks.
Guest blog by Yumusbe Joacquin: Here are some interesting and somewhat offbeat energy stories that haven’t gotten much media attention over the past year.
Wind Turbines Causing Earth to Speed Up
In 2020 scientists noticed that the earth’s rotation had begun to speed up. Historically, the earth has been slowing down, primarily due to the drag created by the gravitation effect of the moon. The International Earth Rotation and Reference Systems Service (IERS) has been adding leap seconds every now and again to make up for the slower spin (which last happened on December 31, 2016). However, there were 28 days in 2020 where the earth actually spun faster than any time during the previous 60 years. And on July 26, 2022, the earth completed its quickest-ever spin with a rotation that was 1.50 milliseconds less than its nominal 24-hours.
Guest blog by S.A. Shelley: For some time, I’ve written in previous blogs that the world has gone nuts with respect to energy policies and proclamations. Too much emphasis is on a speedy , if not immediate, Green Energy transition that does not mesh with physical reality. Politicians are master tacticians but lousy strategists and while the world needs more green and renewable energy and associated products, the world is instead starting to see uncontrolled cost increases, supply chain bottlenecks, and increasing local opposition to energy salvation. Reality bites.
Blog by Bill Luyties (OWOE Founder and Editor): I had the opportunity and pleasure to visit the Floating Wind Solutions (FWS) 2023 conference in Houston, Tx, last week and thoroughly enjoyed the three days of exhibits, presentations, networking, and reconnecting with colleagues. This was the third annual FWS and by far the largest and best attended with close to 90 exhibitors and approximately 800 attendees. The mood of the participants was very upbeat, as floating wind has experienced a number of positive developments over the last year. While there are still key hurdles to overcome, the industry appears to be on the verge of taking off.
Guest Blog by S. A. Shelley: Welcome dear readers to another blog highlighting more energy follies. The world is a mess on several levels, with equity markets roiling, bonds markets churning and of course inflation running amok. Politicians at every level use every hurricane to announce that catastrophic climate change has arrived, and every excuse except fiscal imprudence as the sinister root cause for inflation (nytimes.com, nbcnews.com). We have Europeans still worrying about heat this winter and OPEC+ machinating oil prices. In response to OPEC+ moves, Washington intelligentsia responded by condemning OPEC while sidelining any effort to increase US oil production let alone finish the Keystone XL pipeline. In Europe, Germany has rapidly fired up previously shut down coal burning power plants, and citizens in Austria are scavenging forests for firewood (euronews.com, abcnews.com). In one panicked moment Germany has fallen back to fossil fuels and will once again pump more CO2 into the atmosphere than when it began its Energiewende. Perhaps the sudden new German energy plan is to accelerate global warming to prevent freezing of its populace?
Guest blog by S.A. Shelley: WARNING: Adult language and un-woke phrases are embedded in this blog.
Writing a good blog takes some forethought and planning. But sometimes, nay too often these days, so many politicians of all stripes are continuing to make horrendously dumb statements regarding energy matters that I feel compelled to write a rebuttal to something that Angela Merkle, the former German Chancellor, said last week.
Venezuela has the largest proven oil reserves in the world, reported at 303 billion barrels in 2019 (BP Statistical Review of World Energy), and yet only produced 723,000 barrels per day (MBPD) in August 2022. In contrast, Saudi Arabia is a close second in total reserves at 298 billion barrels, produced 11 million barrels per day (MBPD) that month. That is, with essentially the same reserves, Saudi Arabia produces over 15 times as much oil. The history behind the collapse of the Venezuelan oil industry is a clear lesson of the failure to understand how to manage a critical natural resource in today’s complex, interdependent world economy. If we turn to Russia, before the invasion of Ukraine it was producing 11.3 MBPD and was the largest exporter of oil to the world’s markets at 7.8 MBPD in December 2021. About 60% of those exports went to European countries. Given the West’s determination to end its dependence on Russian oil coupled with the impact of Western sanctions on Russian finance and industry, it is not hard to see the collapse of the Russian oil industry and a new oil-rich but oil-dysfunctional country ensuing, one which we will start referring to as Eastern Venezuela.
Bill Luyties, OWOE Founder and Technical Editor: Last year OWOE published a blog titled “Don’t Blame the Suppliers. It was intended to help focus the narrative related to climate change from attacks on the supply side of the contributors to climate change, i.e., the big oil companies, to the demand side, i.e., consumers who want big cars and to buy lots of everything. However, since that time I have come across several articles published by the BBC: one published in 2020 titled “How the oil industry made us doubt climate change” and another published earlier this year titled “The audacious PR plot that seeded doubt about climate change“. These articles document the efforts of the fossil fuel companies to engage in a public-relations campaign to sow doubt in the science of climate change by following the playbook of the tobacco industry from several decades earlier. Thus, I would like to update the title of that blog to “Don’t Blame the Suppliers, Unless They Are Big Oil”.
OWOE Staff: The battle against climate change is not going well. President Biden’s climate agenda has fallen apart. Russia’s war in Ukraine and its fallout within Europe has led to an increase in coal power and a push to increase world oil output. Germany is proceeding with plans to shut down its last 3 nuclear power plants in December which will eliminate 6% of its annual electricity generation and 11% of its non-fossil based generation. World oil production which peaked in 2019 at 99.7 million barrels per day before the Covid pandemic slashed demand has risen back almost to pre-pandemic levels and is expected to exceed those levels in 2023. We can all lament those factors as lost opportunities, but there are two factors driving Americans’ behavior that make OWOE seriously question whether any real progress can be made. We call them NIMBYism and IWINYism. We will address NIMBYism, or the Not in My Back Yard syndrome, here and cover IWINYism, or the I Want it Now or Yesterday syndrome, in a future post.