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T. Boone Pickens has proposed converting automobiles from gasoline to natural gas. However, it would be much cheaper to convert oil-fired furnaces and boilers to natural-gas units. Many commercial and industrial boilers have dual-fuel burners, which would make switching from oil to natural gas easy.

Coal, nuclear, and fuel-oil utility power plants average only 33-percent efficiency. New combined-cycle gas-turbine power plants are 60-percent efficient; when combined with heat recovery, they are up to 85-percent efficient. Converting oil- and coal-fired power plants to combined-cycle gas turbines would reduce U.S. energy consumption by approximately 12 percent, or 12 quads.

To reduce the U.S. trade deficit, all non-transportation oil use should be converted to natural gas. By reducing energy consumption and converting coal-fired power plants to more efficient combined-cycle gas plants, CO2 output could be cut in half.

NUCLEAR ELECTRIC POWER
In 2007, the United States had 104 nuclear reactors providing 97 GW, or 19 percent of the country’s total annual electricity, at an average utilization factor of 91.8 percent.10 The average operational cost of electricity from nuclear plants was 1.66 cents per kilowatt-hour.10 In comparison, the average operational cost of electricity from new gas-fired combined-cycle plants was approximately 10 cents per kilowatt-hour.

Construction of the newest nuclear power plant in the United States began in 1977 at an estimated cost of $5,000 per kilowatt. Since then, the U.S. nuclear industry essentially has been shut down.11

The Energy Policy Act of 2005 is providing up to $18.5 billion in federal tax benefits for new nuclear power plants. Cost estimates range from $8,000 to $12,000 per kilowatt. With a $10,000-per-kilowatt installed cost and 10-percent interest rates, the capital cost of a new nuclear power plant operated 8,000 hr (8,000 kwh) a year would be 12.5 cents per kilowatt-hour.

New nuclear power plants are expected to have high capital costs that could result in unaffordable electricity rates, which would encourage conservation. Moreover, uranium shortages are expected by 2030.12 And the nuclear-waste issue still needs to be resolved.

The Department of Energy (DOE) has been funding the development of several new designs of plants, including one that produces hydrogen as a byproduct. It will take decades of building and testing prototypes before a meaningful number of nuclear power plants can be built.

HYDROGEN ECONOMY
Hydrogen can be made from numerous energy sources, including solar, wind, nuclear, and fossil fuels. Experts see hydrogen as a possible long-term solution. Progress has been made in terms of research and development. Federal decisions regarding the use of hydrogen for transportation are to be made in 2015 and 2020.

ECONOMICS
The United States’ free-market approach to energy has resulted in large price swings. Oil prices rose from $10 a barrel in 2000 to $147 a barrel recently and since have fallen to below $40 a barrel. Recent high energy prices have slowed the world economy and reduced energy demand, but once the world economy recovers, increased demand again will cause energy shortages.

A massive energy-conservation program is the most cost-effective energy solution. An energy tax can be an important energy policy. For evidence an energy tax would reduce demand, one needs to look no further than the recent high oil prices, which have reduced U.S. demand by 5 percent.

In 2008, world energy supplies did not increase enough to meet world energy demand, leading to energy shortages, higher energy prices, and, ultimately, reduced energy demand. Energy taxes would have raised prices artificially, which would have reduced energy demand and real energy prices. Unfortunately, without energy taxes, the increased revenue from higher energy prices went to foreign countries and oil companies, which increased the trade deficit and lowered the United States’ standard of living. With energy taxes, that money would have gone to the government, reduced other taxes, reduced the trade deficit, stretched energy supplies, and lowered the real cost of energy.

Energy taxes should be phased in over time, with future energy-cost increases used to encourage change.

Energy costs have been high enough to change some lifestyles forever.

Higher energy taxes/prices and/or additional tax incentives are necessary to complete the change to an energy-efficient society and “built” environment and to reduce the trade deficit. If the country waits for the free market to create another world energy shortage, oil prices could be $200 a barrel.

GLOBAL WARMING
Energy conservation in the existing built environment could reduce U.S. CO2 levels by 25 percent or more. Further, converting residential, commercial, and industrial oil-burning systems to natural gas would improve the quality of air. Moreover, converting 33-percent-efficient oil- and coal-fired power plants to 60-percent-efficient combined-cycle gas-turbine systems would reduce energy consumption and convert dirty fuels to clean natural gas. These steps would have a far greater effect than all of the solar-energy and wind-power systems that could be installed over the same period, but at a much greater cost.

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