Fossil Fuels Pricing and Implications to Competition of Other Fuels

Topics: Peak oil, Wind power, Renewable energy Pages: 3 (950 words) Published: October 14, 2013
Energy is essential to economic development and currently; America is at an energy crossroad. While the United States produced a record of 78 quadrillion Btu (quads) of energy in 2011, it consumed more than 97 quads, fossil fuels made up more than four-fifths of U.S. energy consumption (EIA 2012). With the rising price of oil, security risks associated with petroleum dependence increasing, and the environmental costs of fossil fuels becoming more evident, the market is open for renewable energy to enter.

Currently, fossil fuels are our nation's primary energy source, but they are a limited resource. Therefore, it is vital that we begin to make a shift towards renewables by bringing costs down and making them more readily available. Ever since industrialization, oil has been the driving force behind contraction and expansion of world economies. In the U.S. oil prices have risen since 1970, causing the price of goods that we consume on a daily basis to go up. This inflation slows economic production because the demand for those goods is down. Oil price rises impacts: the general price level, trade balance, domestic and international credit markets, the exchange rate in the United States and many other countries (CBO 2009). According to the U.S. Energy Information Administration, global oil production reached a record high in 2012, that same year also saw record high oil prices. It can be said that as drilling for oil continues, the price consumers pay will go up as well. Renewables, relying as they do on free fuels like sunlight, present no such economic pressures, and as they become an ever-larger percentage of our energy mix, fossil fuels’ huge GDP drag will begin to disappear (Jabusch 2013). According to a report released by the World Watch Institute and the Center for American Progress, renewable resources currently provide just over 6 percent of total U.S. energy, with the potential for that figure to increase rapidly in the years ahead (World Watch...

Cited: "CBO | The Effect of OPEC Oil Pricing on Output, Prices, and Exchange Rates in the United States and Other Industrialized Countries." Congressional Budget Office (CBO). (accessed September 4, 2013).
"Energy Perspectives: Fossil fuels dominate U.S. energy consumption - Today in Energy - U.S. Energy Information Administration (EIA)." U.S. Energy Information Administration (EIA). (accessed September 4, 2013).
Jabusch, Garvin. "Ten Economic Risks of Fossil Fuels | Alternative Energy Stocks." Alternative Energy Stocks: The Investor Resource for Investing in Alternative Energy Stocks. (accessed September 4, 2013).
"Renewables Becoming Cost-Competitive With Fossil Fuels in the U.S. | Worldwatch Institute ." Worldwatch Institute . (accessed September 4, 2013).
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