Often, when I speak at conferences, I tease my audience by saying that the price of fuel is ridiculously low. Of course, no one agrees with me. It’s normal. When people have been accustomed for years to paying $1 per litre for fuel (less than the cost of a bottle of water), they consider $1.25 as excessive. As I write these lines, the price of a barrel of oil is around $55. It contains 159 litres and is worth the equivalent of $0.35/litre, before being refined of course. In the maritime sector, heavy fuel oil sells for approximately $500/ton or roughly $0.48/litre.
Fuel is energy and, in this case, liquid energy that is expressed in kWh. Some 200 years ago (not that far back in time), the majority of available mechanical energy came from living beings: horses, bulls and humans. But, exactly how much did that energy cost in today’s dollars?
It’s not a given to own a horse since one must buy it, feed it, take care of it and shelter it. Let’s say that the cost of the above amounts to $3,000 a year. Now, how much energy does the animal generate on a yearly basis? The power exerted by a horse is designated by the term horsepower (HP) which is the equivalent of 746 watts. If the horse works 8 hours per day, 300 days per year, it will produce 1,790 kWh of energy at a cost of $1.70/kWh.
At best, a man can generate 100 kW of energy. Going by the same values as above, he will generate a meager 240 kWh of energy per year. If we give him a starvation wage of $30,000 per year (which, for the purpose of this exercise, would be equivalent to buying a slave, housing him and keeping him alive), his energy output would cost $125/kWh. It should be noted that, at that price, we would have the benefit of a more highly evolved brain.
Now, what is the cost of this same amount of energy when generated by oil? One litre contains approximately 11.66 kWh of energy. It will be consumed by a machine whose efficiency rarely exceeds 45%. Consequently, the amount of useful energy actually consumed by the machine is approximately 5 kWh. The remaining energy is lost in the environment through entropy and will never be recovered. The cost of this energy amounts to $0.25/kWh or 7 times less than the energy supplied by the horse and 500 times less than that of a man!
This very low cost of oil is what enabled the abolition of slavery and the elimination of horses in our society. It had nothing to do with newfound social awareness, respect for animals or concern for the human condition.
Now, how do we determine the real cost of this energy? We have just seen that, in the current context, its price is 500 times less than what it cost 200 years ago. But that doesn’t take into account the cost to the environment which is eye-popping. With the advent of climate warming, God knows how much it will cost us! In addition, this resource is non-renewable. It took millions of years for the earth to generate it. There’s a high likelihood that humanity will never be able to harness it again.
The consequence of the low cost of energy today is that we waste it like there is no tomorrow. We built our economy on this resource that we thought was infinite. Yet, it is actually quite finite.
Man is presently at the peak of the Anthropocene Era. We live in the golden age of humanity. In another 200 years, life on earth will be substantially different than today. When our great grandchildren look back at the past and realize the speed at which we consumed our resources, they will surely wonder how it was possible that we did not place greater value on them and prevent their depletion. These resources will then become much more precious in their eyes. How is it that we have allowed ourselves to waste it to this extent?
The only way to make governments and individuals more aware of the importance of saving energy is through its price. If the efforts being made today to save energy are not sufficient and the issue of fuel consumption does not rank high in the minds of people, it’s because oil costs almost nothing.
In a world where returns and profitability are the gods of businesses, the only way to pool our efforts to reduce GHGs and fight climate change is to raise the price of oil from 7 to 500 times its current price.
Growth at all levels must also be curbed. The fewer people and machines, the less energy and resources are consumed. Up to now, no alternative forms of energy (wind generators, solar panels, etc.) have been able so supplant fossil fuels and there is every indication that it won’t happen in the future. On the contrary, these alternative sources have simply been added to humanity’s annual consumption of energy which itself continues its relentless growth. Our only salvation is to reduce our consumption and implement harsh energy saving measures.
Of course, we could eventually strike a balance between the environment, and live with 100% renewable energy. We did it before… 200 years ago. The population back then was only 800 million, life expectancy was 30 years, and more than half the population cultivated fields. People plied waters on sail boats and fished from rowboats. I am not sure we can do it with 10 billion people with life expectancy of more than 70 years and consuming about 200 times more energy than before.
The reality is that one day we will have to reestablish that balance. It will be up to us to decide if we are able to manage this deceleration of growth or if it will be imposed upon us through the agency of the natural laws that govern our planet and that we will have to bear. I agree that it is not going to be easy, but I prefer by far the first scenario. The second one would no doubt take the shape of wars, famine and/or pandemics. After the return to balance, chances are very good that there will be quite a lot more people in fields growing potatoes. Oranges from Florida, raisins from Chile and avocadoes from Mexico will then be out of reach.
Our growth and population explosion are due to oil, but the result today is that we are living on borrowed time.
As a society, we must, at the very least, treat the remaining oil with respect and avoid wasting it. Energy efficiency is a way to show our concern and regard to our environment and future.