54.40 or fight: the cost of biofuels, emissions, energy security and economic development

The energy security price

Now, what about energy security? What’s the price of avoiding the unrest that being short on fuels brings?

Well, there are estimates all over the map. One line of thinking assigns the cost of the US Firth Fleet to the cost of oil — since the Fifth Fleet generally guards the Straits of Hormuz and is dedicated to assuring a flow of oil out of the Gulf.

Another, more conservative approach is to assign the cost of fossil energy subsidies as a cost of energy security. Generally, the subsidies are paid out to keep national populations content in a world of unstable and high energy prices — and to keep national economies producing. Those can be thought of as costs associated with being short on energy, or energy insecure.

Fortunately, the IEA has been tracking fossil energy subsidies — and it comes out to 3.70 cents per pound, if you assume that half of fossil energy subsidies go to fuel (the IEA says that it is “more than half” and leaves it at that), and that about 80 percent of the barrel goes to fuels (as opposed to chemicals and other co-products).

So, if you like to factor in energy security, you might start there, which brings your 2040 target price up to 70.37 cents per pound.

Today, we look at the economic development effect; and the bottom line — by following the page links below.