BRICKS WITHOUT STRAW
by Arthur Robinson
June 22, 2009
As U.S. government authorities debate “cap-and-trade,” a gigantic new tax and rationing burden with which they plan to further hobble American coal, oil, and natural gas technology, consider for a moment the qualifications and accomplishments of the lawyers, bureaucrats, and now community organizers who have gradually displaced, as energy “decision makers,” the engineers and industrialists who built America’s energy industries.
Under the guidance of these worthies over the past several decades, a vast system of taxation, regulation, and government-sponsored litigation has been imposed upon our energy industries.
Cap-and-trade is just more of the same. Much more! These policies have created a business climate in the United States that is unfavorable for the production of energy, so most new energy production has been located abroad. Americans, therefore, now import 30% of their energy – a luxury they can no longer afford.
How much do we import? While most eyes glaze over in discussions of “gigawatts” and “zillions” of dollars, many have seen or read about Hoover dam – the great engineering miracle that harvests energy from the Colorado River. Hoover dam is still considered so important that it is now hidden behind “homeland security” precautions so rigorous that public photographs of the dam are forbidden, lest terrorists plot its destruction.
Today, the three-reactor Palo Verde nuclear power station near Phoenix, Arizona produces six times the electrical energy of Hoover Dam – electricity that powers Los Angeles. Palo Verde was supposed to have ten reactors, but the other seven were stopped by anti-nuclear propaganda in the 1970s and 1980s. Actual replacement cost of the three-reactor Palo Verde power station in 2009 – leaving out the extra costs imposed by government – is about $6 billion. So, the capital cost of nuclear equipment to replace the electrical output of Hoover Dam is about $1 billion. American energy imports currently cost about $1 billion per day.
Every day – every 24 hours – the energy policies imposed by Washington destroy an amount of capital that could build the electrical generating capacity of one complete Hoover Dam.
If one ten-reactor Palo Verde nuclear power station were built in each of the 50 states, the United States could be a net exporter of $200 billion per year of energy, rather than a net importer of $300 billion per year. Exports would probably be lower because, as prices dropped several-fold from the end of foreign dependency and installation of the best new technology, American use of energy – and concomitant prosperity – would markedly increase.
While not as clean, safe, and inexpensive as nuclear power, a similar scenario can be given for hydrocarbon power development. A free-market solution to our energy problem would involve the construction of large amounts of both nuclear and hydrocarbon capacity – each technology built for those specific applications where it is most useful.
The problem is that the best new technology uses hydrocarbon and nuclear fuels. The United States is awash in essentially unlimited quantities of these fuels – uranium, coal, oil, natural gas, and methane clathrates – but the U.S. government is inhibiting their use. That government instead insists that the energy industries use boutique energy sources such as windmills and solar panels to produce energy, even though these technologies are far too expensive for large scale power generation.
Last week, energy expert Obama spoke at Nellis Air Force Base, where government has caused the construction of a 140-acre solar array at a cost of $100 million (2005-2007) to produce 14 megawatts of electricity – when the sun is brightly shining. Nellis AFB reports power output of 30.1 gigawatt hours per year for this array. Obama lauded the Nellis plant as an example of taxpayer-subsidized energy production. He opposes free market hydrocarbon and nuclear power.
The cost to build the three-reactor Palo Verde nuclear power station was $5.9 billion (1976-1988). It produced 26,782 Gwh of electricity in 2007. Correcting costs by the U.S. consumer price index, Palo Verde cost $4.35 billion per reactor, and Nellis cost $106 million – in 2009 dollars. Therefore, each reactor at Palo Verde cost 41 times as much as the Nellis plant and produces 297 times as much electricity – while occupying less land than the Nellis solar array.
So, the capital cost of electricity from the solar array at Nellis is 7.2 times higher than that of Palo Verde. Over a 30-year period, this is 1.62 cents per kilowatt hour for Palo Verde and 11.7 cents per Kwh for Nellis. Moreover, built with modern designs (the Palo Verde plant is 1970s technology) and fuel reprocessing, the 2009 cost of a Palo Verde equivalent is estimated to be about half that of the original plant. This makes solar power as exemplified at Nellis 15 times more expensive than nuclear power.
Operating and other costs, including nuclear fuel, for the two installations are comparable. Actually, Palo Verde is less expensive here too, since its lifetime before major reconstruction is estimated at 50 years vs. 30 years for Nellis. Also, solar power is intermittent, so – if used in large amounts – solar power requires large additional expenditures on base load power plants and power grid changes.
Based on actual cost of construction - without government interference, the nuclear and hydrocarbon industries using private capital could increase U.S. energy production from 70% of our current requirements to 120% for a cost of between $1 and $2 trillion. Using solar technology this would instead cost $15 to $30 trillion.
The people of the United States have a clear choice – either continue to destroy the capital equivalent of Hoover dam every day, or get rid of the politicians in Washington who have caused and continue to cause this destruction. To force our engineers and industrialists to make useful energy without hydrocarbons and uranium is the modern equivalent of asking ancient Egyptian slaves to make bricks without straw. If we continue to allow this, we will have fewer bricks and inferior bricks – less energy and less prosperity.
� 2009 - Art Robinson - All Rights Reserve