Next to Milton Friedman, Pee Wee the landscaper is the most persuasive teacher
of energy economics I have ever encountered.
Pee Wee had the cheapest lawn service in the neighborhood, but we never knew why.
Then the city inspector showed up and told us: Pee Wee was dumping his trash
in an empty lot a few blocks away.
Pee Wee's service was not so cheap after all: It just seemed that way because
other people were paying for it.
I was thinking about Pee Wee as I slogged through 373 pages of a new report called
the
"Hidden Costs of Energy: Unpriced Consequences of Energy Production and Use."
This is the most thorough cost accounting of energy sources I have ever seen.
It shows how coal and other fossil fuels create enormous costs that the rest
of us pay for. Whether we know it or not. Whether we like it or not.
The National Academy of Sciences reports that the damages from coal costs us
$62 billion a year—that comes about to about from 25% to 100%
of what we pay for electricity from coal.
If that sounds like a subsidy, it should. Because that is exactly what it is.
And the National Academy did not even count any damages from climate change,
water pollution from mining, or dozens of other costly problems.
But still we hear that fossil fuels are cheaper.
Republican functionary Christopher Horner's
new book proclaims that renewable
energy will "bankrupt" this country and is a "declaration of war against America's
most reliable sources of energy—coal, oil, and natural gas."
Wall Street Journal editorial writer Stephen Moore agreed, calling it a plot
between Big Government and Big Labor.
Before I became a card-carrying member of this conspiracy, before I ever heard
about Pee Wee, even before I became the CEO of a solar power company in California,
I studied for my MBA at the University of Chicago. There I met and spoke with
on many occasions the inspiration for Horner and Hayes, the great man himself:
Milton Friedman.
Even more than a libertarian icon, Friedman was an economist who always asked
one question: What does it cost?
Not the price, that often hides the cost. You do not need a Nobel Prize to see
the freshman mistake of those who say wind and solar are too expensive to compete
with coal: They confuse price with cost. Just like Pee Wee's customers.
The hidden costs of oil are even larger.
Writing in the San Jose Mercury News, energy analyst Blaine Townsend says: "The
web of direct subsidies includes billions in government sponsored low-cost construction
loans and tax breaks like the Foreign Tax Credit. 'Last in, first out' accounting
practices, special write-downs for core operations, and royalty "relief" for leases
in the Gulf of Mexico have robbed the federal coffers of billions more."
We have not even started counting the costs of what could be the biggest and
most expensive oil spill in history.
And if you want to put a price on what it takes to send our bravest and best
heroes into harm's way to protect our supply lines in faraway places, go ahead.
Just make sure it starts with T.
Turns out, when you add up all the costs of all the different kinds of energy,
solar and wind are often less expensive than fossil fuels. And the price of solar
is going down, while the costs of coal and oil are going up.
This is not something we can wish away because it depends on questionable hockey
stick graphs or purloined emails.
The National Academy of Sciences says it is happening now and is real today.
Fossil fuels are costing us more—-way more--than any of us ever suspected.
Now it is hidden no more.
Utilities get it: That is why more are doing everything they can to
move away from coal in favor of their cleaner and less costly alternatives.
For that, we owe a debt to the National Academy of Sciences and economists like
Milton Friedman … and Pee Wee.
Tom Rooney is president and CEO of SPG Solar, a solar power company that works throughout the
Western United States