Cost of Oil: 1861 to Present Natural Gas Prices The cost of oil affects the costs of other commodities What we pay for in a gallon of gas p. 46 People use less electricity when it costs more Hidden Costs of Oil: Tax Subsidies to Oil Companies (Percentage depletion allowance, nonconventional fuel production credit, expensing of exploration and development costs, enhanced oil recovery credit, foreign tax credits, deferral of foreign income, accelerated depreciation allowances, state and federal tax code interactions and tax rates, Taxpayer Relief Act of 1997, etc.) (Source: International Center for Technology Assessment) Hidden Costs of Oil: Government Spending Subsidies (Transportation Infrastructure, DOE Research and Development, US-funded multilateral development banks, Army Corps of Engineers Civil Program, regulatory oversight, response to oil contamination, environmental liability) Hidden Costs of Oil: Protection (US Military costs ensuring oil availability and continuity, Strategic Petroleum Reserves, police, fire, and emergency response) Hidden Costs of Oil: Environmental, Health, and Social Costs (Air pollution, human mortality and morbidity, agricultural crop losses, loss of visibility, pollution damage to buildings and materials, global warming, water pollution, oil spill cleanup, roadway de-icing and runoff, hydrologic impact of roadways and parking lots, noise pollution, motor vehicle waste disposal, environmental impacts of sprawl, etc.) Hidden Costs of Oil: Other Costs (Oil import dependence and spike susceptibility, travel delays, uncompensated damage for accidents, subsidized parking, weather-related financial loss, etc.) Hidden Costs of Oil: Total The marginal cost of oil production is the point below which it becomes uneconomic to bring new oil projects to market. Above the marginal cost of production, oil can be extracted and sold at a price that will return to investors an acceptable after-tax capital return adjusted for risk (now at about $90-100/bbl). Costs of Electricity: Remain Low Costs of Energy: Costs of Energy (from Energy Information Administration) ($/MWhr): (Doesnt include hidden costs) Costs of Electricity: 2011 The source of electricity around the country is driven by the cost, which is often a result of geography Change in German Total Energy Sources: Energy and Conflict Iraqi forces set 700 Kuwaiti oil wells on fire. Fires burned for more than 10 months. About 6 million barrels of oil burned each day, for a total of 1.5 billion barrels (The total oil from the Deepwater Horizon spill was about 5 million barrels) Gulf War in Kuwait US Budget: $3.7 trillion proposed for 2013 2013 Budget: US Proposed Energy Budget: 2013 Energy as a part of all science funding: 2009 World Total Defense Spending: $1.53 trillion World Total Defense Spending: Change from US Military Spending: Per Person Total US Petroleum Imports ( 2011) Iraq Oil Production Iraq/Iran Oil Production Global Hotspots: Straits of Hormuz (DOE): The worlds most important oil chokepoint 20% of the worlds supply of oil passes through here 17 million barrels of oil a day Any sustained blockage in the strait could trigger a 50 percent increase in the price of oil and trigger a full-scale global recession or depression Global Hotspots: Straits of Hormuz Iranian Government has threatened to blockade the Strait with continued oil embargoes by the west US Military is focused on this region Global Hotspots: South China Sea Multiple countries have competing claims on various offshore oil and gas resources China has claimed them all Global Hotspots: South China Sea Most other countries in the region have joined the ASEAN (Association of Southeast Asian Nations), which has the full support of the US Global Hotspots: Caspian Sea Basin Global Hotspots: East China Sea Japan and China are clashing over who owns the oil and gas fields in the East China Sea Future Scenarios: