Energy 101

When oil prices go up, the price of just about everything goes up, sooner or later. It isn’t just because of shipping costs, although that’s part of it. It’s because most of the cost of just about everything you buy is for energy. If energy were free, the price of a new car would probably be on the order of $100 dollars or so. Cars are made mostly of iron ore, sand and oil. Using energy, the iron ore is converted into steel, the sand into glass, and the oil into rubber. This may leave out a few ingredients, but the point is that the raw materials are almost dirt cheap and what it takes to gather those raw materials and turn them into finished materials and assembled into a car is just energy. The machines to turn those materials into a car are themselves made of steel, etc. That is, their cost is mostly for the energy it took to produce them.

When you buy a new shirt, the cost of the cotton on the plant, or wool on the sheep, or oil in the ground that went into the rayon is negligible compared with the cost of turning those raw materials into a shirt. That cost is mostly for energy.

What do you suppose you would have to pay for a potato in the ground, or a quart of milk still in the cow? Pennies. The major cost is for the energy it takes to get it to the store in a saleable form.

What about labor costs? Well, what does the laborer do with his income? He buys stuff that, again, has energy as it’s major cost. So labor costs are just energy costs at arms length.

Does solar energy have a positive payoff? Not if the additional dollar cost (which is mostly for energy) doesn’t pay back in an acceptable time. What is acceptable? That’s up to you. If you are a businessperson, you might think in terms of prevailing interest rates. If it requires government subsidy to make it saleable, there’s a clue that it doesn’t pay.

What about the hybrid car? If the extra cost has a good payback, then it’s worth it. If gasoline prices continue to rise like they have recently, then it may be well worth it.

There is, of course, a lag between the time energy, e.g., oil, prices go up and the prices of goods in general rise. Where the major cost is for fuel itself, as in seafood, the lag is short. Where a large portion of the cost is for production machinery, the lag is longer.
There is also a lag between oil prices and the price of other other fuels, since it takes time for industry to change to the cheapest fuel. So when oil prices go up suddenly, automobile prices will go up later and more slowly.

So if you are genuinely interested in minimizing your “carbon” footprint, you can do it by minimizing your expenditures on energy, since energy production (whether in power plants, airplanes or automobiles) is the major cause of that “carbon”. And since all expenditures on materials are mostly for energy, stop buying stuff. Let the Native American of yesteryear be your role model. Live in a tepee. Eat what you can harvest or kill. At least live in a small house, drive a cheap car with good gas mileage, and get your clothes from Goodwill.