Economics Essays – Fossil Fuel Resources

Fossil Fuel Resources

Introduction

The U.S. energy demand and costs of energy production continues to increase. The Energy Information Administration ( EIA ) of the Department of Energy ( DOE ) estimates that the U.S. will demand 5,478 billion kWh electric by 2030 which is 162 % higher than the domestic electricity demand in 1980. The EIA studies that U.S. energy production failed to run into the increasing energy demand and there will be a turning disparity between the domestic energy supply and demand until 2030. The U.S. has been intensively importing fossil fuels from the major energy manufacturers to run into the turning energy demand. The energy growing in quickly developing China and India tightens the planetary energy markets and increases the monetary values. The growing rate of planetary energy demand is estimated as 4.5 per centum after the rapid development of China, India and other freshly industrialized states. There will be an extra 10 million barrel demand per twenty-four hours by 2012 but the planetary energy production remains about stable after the new millenary. The bing oil Wellss are aging and decreasing in the non-OPEC manufacturers and OPEC members are less likely to run into the turning energy demand with bing installations. Oil extraction will hold to go on on harsher geographic conditions to maintain gait with turning demand. Sufficient degrees of oil extraction will necessitate $ 20 trillion new investing by 2030.

The planetary dodo fuel resources have peaked and there is an outlook of diminution in the natural gas and oil supplies. The United States is at a critical point to do significant investings for future energy demand. Nuclear energy has the alone potency to force up the electric coevals for the domestic demand without foreign dependence. However, the atomic energy has been underutilized due to monetary value concerns and misconception about the security challenges. This paper investigates the advantages and disadvantages of the atomic energy production. The paper will supply a policy deduction for the energy policy shapers in the United States about future viability of atomic energy through measuring the costs of electric coevals, environmental issues, proliferation, safety, waste direction and public sentiment towards the atomic energy.

Overview of the planetary and domestic atomic energy production

The United States continues to be the largest atomic energy manufacturer but atomic reactor building in the United States has been diminishing since 1970s. Harmonizing to the Energy Information Administration the last commercial atomic reactor started its operation in 1996 and no other atomic power workss have been build after this day of the month. However, the atomic production in China and India has been quickly turning during the past three decennaries. The IAEA studies that there are 443 atomic reactors in the universe in 2007. While the United States has 103 reactors, France has 59 reactors, Japan 55 and Russia operates 31 atomic reactors. The International Atomic Energy Agency ( IAEA ) anticipates important sums of enlargement at the figure of atomic reactors by 2030. The IAEA estimates that planetary atomic energy production will increase from 370 GW to 679 GW between 2006 and 2030 with an one-year growing rate of 2.5 per centum.

Presently, France produces 78 per centum of the electric energy from atomic reactors. The ratio electric coevals from atomic power workss is “ 54 per centum in Belgium, 39 per centum in Korea, 37 per centum in Switzerland, 30 per centum in Japan, 19 per centum in the USA, 16 per centum in Russia 4 per centum in South Africa and 2 per centum in China. ” Among the atomic states France deserves a particular attending. The energy independency desires motivated France to spread out its atomic energy production since the mid 1950s. The closing of the Suez Canal in 1956 by the Egyptian authorities and the Arab oil trade stoppage in 1973 and triggered the atomic investings in France. The Gallic society did non hold big oil and natural gas militias but they were able to construct the atomic reactors to salvage them from energy dependence. The public sentiment in France preponderantly favored atomic electric coevals particularly after the energy crisis in 1973. France was an electric importer during the seventiess but presently it became the largest net exporter of electric in Europe and the World.

Asia is the fastest turning part in footings of atomic power works building. Harmonizing to the IAEA study, more than 50 per centum of the on-going 29 atomic installation buildings were in Asia in 2006. Indian atomic production has grown 9.5 per centum yearly between 1970 and 2004 and about a one-fourth of the planetary atomic power works buildings were conducted by India in 2006. Indian authorities is anticipating to bring forth 26 per centum of the domestic electric from atomic power workss by 2052. China is the 2nd fastest turning atomic power. Presently, Chinese authorities programs to increase atomic energy production by 500 per centum until 2020. However, they will be able to run into merely 4 per centum of domestic electricity demand from atomic power workss by 2020.

Presently the U.S. has 103 atomic power workss, which produce 20 per centum of the domestic electric energy but about 45 per centum of these atomic power workss will necessitate license reclamations by 2030. The state of affairs indicates that US atomic electric coevals will diminish about 50 per centum if the energy companies do non construct new commercial atomic power workss. The overall function of atomic energy in electric coevals decreased 1 per centum since 2002. Without new building, the part of atomic reactors to domestic electric coevals will diminish from 20 per centum to less than 10 per centum by 2030.

The energy companies in the United States have been loath to construct new atomic power workss because of the comparative high cost of atomic energy production. Number of atomic reactors remained stable during the past three decennaries. However, presently the increasing electricity demand, authorities committedness and environmental runs are forcing for resurgence of atomic energy for the hereafter energy demand. A Financial Times ( FT ) on November 18, 2007 studies that 20 American companies are earnestly sing about building 30 new atomic power workss after the encouraging policies of the federal authorities.

The costs, militias and atomic energy economic sciences

Nuclear energy continues to be the most expensive option for electric coevals. Interdisciplinary MIT Study indicates that atomic energy is uncompetitive with the coal and natural gas in footings of the building costs of power workss. Contrary to the popular belief, inexpensive electric coevals from atomic energy is non preponderantly dependent on the monetary value of U. By and large the cost of uranium histories for less than 8 per centum of all the outgos in atomic power workss. The chief part of the entire costs of the atomic electric coevals is the capital cost. Harmonizing to Alan M. Herbst and George W. Hopley “ A new 1,000 megawatt atomic power works costs $ 1.5to $ 2.0 billion and takes at least five old ages to build. This compares to $ 1.2 billion and three to four old ages for a coal-burning installation, and $ 500 million for a combined-cycle gas works. ” The MIT survey argues that entire costs of electric coevals is higher in atomic power workss but the Nuclear Energy Institute ( NEI ) found that entire costs of atomic electric coevals have been reduced to a favourable degree during the past decennary. NEI suggests that while the coal fired reactors needed an mean 2.37 cents to bring forth a kW ( kWh ) electric energy in 2006, the natural gas fired power workss merely needs around 6.75cents to bring forth this energy. On the other manus, as seen in table 1, atomic power workss merely need 1.72 cents to bring forth a kWh electric energy. The operation and care costs of atomic reactors ( 1.26 cent/kWh ) are higher than the care costs of coal ( 0.54 cents ) and natural gas fired reactors ( 0.52 cents ) but fuels costs of atomic reactors ( 0.46 cents ) are much lower than the fuel costs of coal ( 1.83cents ) and natural gas ( 6.23 cents ) fired reactors.

The atomic energy becomes more advantageous and monetary value competitory when we consider the outwardnesss of C emanations from the natural gas and coal discharged power workss. The C emanations lead to environmental amendss and major wellness jobs in the society. The comparative societal cost of atomic energy lessenings as the authoritiess increases the revenue enhancements on C emanations. Presently the emanation revenue enhancement rates vary between $ 50 and $ 200 per ton of C released to the ambiance. The World Nuclear Association anticipates that the revenue enhancement rates will increase in Europe and the United States as the authoritiess have become more concerned about the planetary heating.

The monetary value of fossil fuels has been extremely volatile since the past three decennaries. The nominal petroleum oil monetary values have increased about 27 crease between 1970 and 2007. While a barrel of rough oil was $ 3.35 per barrel in January 1970, the monetary value skyrocketed to $ 94.62 in November 2007. Energy Information Administration notes that the nominal monetary value of natural gas has increased 11 times between 1976 and 2007. While monetary value of a three-dimensional pess of natural gas was $ 0.54 in 1976 it increased to $ 5.92 in 2007. On the other manus, the monetary value of uranium merely increased 73 per centum between 1978 and 2007. The monetary value in 1978 was $ 43.40 per lb and it increased to $ 75 in 2007 in the planetary markets. Natural gas will be a less feasible alternate energy if the monetary values continue to surge in the hereafter. Furthermore, the United States has experienced high degrees of monetary value exposure and supply breaks of natural gas during the Hurricane Katrina and Rita. President Bush has become committed to increase atomic energy productions after these catastrophes and he believes that atomic energy is the safest and most reliable alternate energy beginning for the United States. From the energy security position, atomic energy is more feasible since the U.S. owns one of the largest Uranium militias in the universe. Furthermore, other largest U and Th militias are stationed in friendly governments such as Canada, India, Australia and Turkey. Thus, the atomic energy monetary values and costs will be more stable than fossil fuels in the hereafter.

The MIT survey suggests that “ world-wide supply of U ore is sufficient to the fuel the deployment of 1,000 reactors over the following half century. ” On the other manus World Nuclear Organization ( WNO ) estimates that the bing U militias are sufficient to fuel the atomic reactors about 200 old ages. The WNO anticipates that the new engineering could widen this period to over 100s of old ages. Contrary to diminishing the dodo fuel geographic expedition, uranium geographic expedition rates have been stable since 1975. Furthermore, atomic energy is besides produced from the Pu and Th elements which are abundant in the universe. Accretion of U, Pu and Th militias may about duplicate the supplementation period of the atomic power workss with new engineering. Thus, atomic energy appears to be much more feasible than the fossil fuels.

Safety of the atomic power workss

The safety concerns have been one of the major challenges against the energy policies which are recommending for publicity of the atomic energy. The United States have been bring forthing electric energy from the atomic reactors for the past five decennaries. The safety of the atomic reactors has been improved from the first coevals to the 4th coevals. The research workers and the power companies are aware of the fact that atomic power reactors could give to the deadliest accidents when the safety steps are omitted. Therefore, the security has been a primary policy for the commercial atomic reactor operators.

The planetary atomic reactors have been runing safely except for two of major accidents. The first accident took topographic point in Three Mile Island of the U.S. in 1979 and the 2nd accident took topographic point in Chernobyl Nuclear power works of the Soviet Union on April 28, 1986. Both of these accidents chiefly resulted from operator errors instead than an outsider onslaught or system failures. The three mile accident released minimum radiation but fortuitously the radiation could be contained without detonation and human loss. However, the Chernobyl accident has been the most detrimental atomic accident in the human history. The atomic reactor operators disregarded the proficient specifications when they were doing the regular care on April 28, 1986. The rapid flow of radioactive stuffs led to two detonations in the 4th unit of the reactor. Since the Chernobyl atomic power works did non hold containment substructure significant sums of radiation was released to the environment. The Nuclear Energy institute studies that ab initio 19 forces were killed during the incident but the accident is responsible for farther decease of about 4,000 thyroid malignant neoplastic disease patients.

The Mile Island accident has been a accelerator for increasing the safety of atomic reactors in the United States. The Department of Energy and the atomic operators launched a series of enterprises such as increasing the preparation of the atomic forces, reexamining licences, bettering reactor designs, increasing reviews, establishing the Institute of Nuclear Power Operations to patrol the atomic reactors and increasing international information exchange. There has been no atomic accident the United States after the Three Mile Island thanks to these advanced security steps. On the other manus, the Russian authorities implemented serious steps to increase the safety of atomic reactors after the Chernobyl accident. The Communist party launched a comprehensive plan to better reactor quality, better the preparation of operators and to better the automatic chilling system. However, the Russian reactors still have containment design and exigency direction jobs in comparing with the atomic reactors in the United States. The atomic power workss will be much safer after the 4th coevals reactors will be introduced.

Nuclear energy and environment

Particularly the industrialised states became more concerned about the planetary heating and the planetary nursery gas emanations by the mid 1990s. The Kyoto protocol was signed in 1997 with an huge committedness from the planetary community to cut down the nursery gas emanations. The Kyoto protocol proposes that each developed state should cut down emanations until 2008 to the degree of 5 per centum lower than their existent emanation degrees in 1990. The MIT survey notes that during the electric coevals coal and natural gas are two major beginnings of U.S. C emanations which have important impact on planetary heating. Nuclear energy plays a important function on controling the C emanations in the United States. Harmonizing to the Nuclear Energy Institute ( NEI ) , Nuclear energy constitutes more than 70 % among the emanation free electric coevals in the United States. The NEI study indicates that atomic power workss prevented emanation of 682 million dozenss of C dioxide, 3.3 million dozenss of S dioxide and 1.1 million dozenss of N oxide gases in 2005. This sum about equals to the all C emanations by the rider vehicles in the US. Particularly after the Kyoto protocol, environmental benefits of the atomic energy are highlighted by increasing Numberss of energy and environment experts.

Patrick Moore, one of the co-founders of the Green Peace high spots that “ More than 600 coal-burning electric workss in the United States produce 36 per centum of U.S. emanations. Nuclear energy is the lone large-scale, cost-efficient energy beginning that can cut down these emanations while go oning to fulfill a turning demand for power. ” Another laminitis of the Green Peace, James Lovelock high spots that “ merely atomic power can hold planetary heating ” within the extremely energy demanding future. The interdisciplinary MIT survey found that 1,000 gigawatts of atomic electric end product will forestall the emanation of 800 million dozenss of C emanations.

Nuclear power workss are much infinite efficient than the other energy production units. Nuclear energy production needs little sums of natural resource and land allotment. On the other manus, energy coevals from the air current, solar and biomass requires allotment of big countries. Jack Spencer notes that while bring forthing 1000 MW electricity will necessitate merely 500-1000 estates for atomic reactors, it will necessitate 150,000 estates for air current and 14,000 estates for the solar energy installations. Therefore, atomic energy could be a better option for the metropolitan metropoliss such as Tokyo, New York and London which faces with land scarceness.

The direction of the atomic wastes

The radioactive waste of atomic energy production is one of the nucleus statements of the anti-nuclear runs. The atomic wastes can still be radioactive after 1000s of old ages. Harmonizing to the Energy Information Administration the atomic reactors releases about 2,000 metric dozenss of spent fuel yearly. However, a 1,000 megawatt capacity reactor merely produces 23 dozenss of solid waste in comparing to 300,000 dozenss of ash from a coal fired reactor. Presently the atomic wastes are stored in multiple finishs but the U.S. Federal Government has built a depository at Yucca Mountain in Nevada to roll up the atomic wastes into a individual centre. When it is to the full functional the Yucca Mountain will be able to hive away 77,000 atomic wastes in steel containers. However, operator errors, Earth temblors, twister, wars and panic onslaughts could destruct the containment substructure which could bring forth a atomic catastrophe. The atomic experts and the authoritiess still debate how to incorporate a stuff over 1000s of old ages. The sum of atomic wastes continues to increase as more and more states become atomic. The MIT survey estimations that we will necessitate another Yucca Mountain for every three or four old ages to incorporate the planetary atomic wastes.

The Department of Energy ( DOE ) initiated a Global Nuclear Energy Partnership ( GNEP ) plan in 2006 to portion the radioactive atomic wastes with Russia, Japan, China, The UK and France. The DOE anticipates farther partnership from the Australia, Bulgaria, Ghana, Hungary, Jordan, Kazakhstan, Lithuania, Poland, Romania, Slovenia, and Ukraine. The U.S. will hold to construct lesser atomic waste reservoirs after the GNEP plan is to the full implemented. Furthermore, the reprocessing will non merely salvage from reserve disbursals but besides it will make economic chances for the United States.

Nuclear proliferation

The atomic proliferation has been a serious concern for the planetary community after the Second World War. The peaceable commercial atomic power workss could be abused by hostile governments to bring forth atomic payloads. The International Atomic Energy Agency ( IAEA ) was established by the UN Security Council in 1957 to supervise the planetary atomic energy plans to forestall farther proliferation. The atomic plans in the Iraq, Iran and North Korea have raised peculiar attending by the U.S. federal authorities because of the hostile statements of their leaders against the United States. The containment of atomic proliferation in the “ knave ” governments has become a really of import pillar of the U.S. national security policy. Currently the North Korean authorities has stopped atomic proliferation plans and accepted the monitoring conditions of the IAEA inspectors. The being of arms of mass devastation and atomic proliferation was one of the grounds of the War in Iraq but the U.S. military forces could non happen any atomic proliferation plans in the Iraq after the Invasion.

The chief challenge remains the possible atomic proliferation plan in Iran.

Persian President Mahmud Ahmadinejad late announced that they were able to develop 3,000 atomic extractors for domestic energy ingestion intents. Nuclear experts believe that Iran can bring forth a atomic bomb from the 3,000 extractors within a twelvemonth. President Ahmadinejad proudly noted that “ the West thought the Persian Nation would give in after merely a declaration, but we have taken another measure in atomic advancement and launched more than 3,000 centrifuge machines ” . The timing of the proclamation was critical as it took topographic point when President Bush was observing the new understandings with North Korea. Although President Ahmadinejad and Supreme Leader Ali Khamenei declared that the Persian atomic installations will merely bring forth energy to run into the domestic demand, the Bush Administration has ever been disbelieving about “ peaceable ” purposes of Persian government. As a contemplation to the recent resurgence of Persian atomic plans, the White house warned for new moving ridge of international countenances. The United States is forcing the international community and the UN Security Council to fasten the containment against the Persian atomic proliferation plan.

The September 11 terrorist onslaughts revealed that non-state histrions could be a serious menace against the national security of the United States. The U.S. authorities is earnestly concerned that the terrorist organisations could obtain atomic payloads. Phil Williams and Paul Woessner argues that peculiarly the organized offense groups in the Eastern European states and Russia could supply the bootleg atomic stuffs to the terrorist organisations. Harmonizing to Williams and Woesnerr atomic payloads could be produced from 3-5 kilogram enriched uranium or 1-8 kilogram Pu and a kg of Pu volumes about 50.4 three-dimensional centimetres. The atomic stuff ictus of the Russian security forces increased from 41 to 267 between 1991 and 1994. Fortunately none of the terrorist organisations have used atomic payloads but it will be a catastrophe for our societies when the terrorists use the atomic arms against the metropolitan metropoliss.

Current U.S. Nuclear Energy policies and public sentiment

The U.S. Energy Policy Act of 2005 enabled a Renaissance for the atomic energy. The Act Authorizes the U.S. Secretary of Energy to supply 80 per centum loan warrants to the energy enterprises to cut down green house gases. The major donee of the US section of energy loans will be the atomic power companies. The act provides hazard insurance for the atomic power works building and licensing holds. Furthermore, the Energy Policy Act of 2005 paves the manner for 1.8 cent per kWh power production revenue enhancement recognition for the atomic reactors. However, these revenue enhancement credits are merely restricted for the initial 6,000 megawatts of atomic power production from the atomic power workss. The revenue enhancement recognition is less likely to make full the production cost spread with other beginnings of electric coevals.

The Bush Administration launched the Nuclear Power 2010 in 2002 in order to heighten to partnership between the Department of Energy and atomic companies over future atomic undertakings. The federal authorities provided $ 49.6 million fiscal support to the atomic energy companies in 2005 and $ 56 million in 2006 within the model of the Nuclear power 2010 plan. Harmonizing to a recent article on Science Daily News ( SDN ) the budget of the Office of Nuclear Energy has been increased 70 % in 2003. The SDN article notes that the budgetary part on the bureau catalyzed the research investing on the atomic energy undertakings. Furthermore, the Office of Nuclear Energy increased its attempts to develop new types of atomic reactors and the bureau began upgrading the bing atomic plans that create H. The partnership plan between the authorities and private enterprises reduces the clip span for atomic licence petitions. The Bush Administration reduced the bureaucratic processs to heighten the building of more atomic reactors. Presently, the permission procedure is expected to take around 5 old ages for the NRG Company but before the new ordinances, the usual clip span for the permission procedure was longer than 11 old ages. President Bush shown his committedness on his address in Limerick, Pennsylvania on March 24, 2006:

“ Nuclear power is safe. It is safe because of progresss in scientific discipline and technology and works design. It is safe because the workers and directors of our atomic power workss are improbably skilled people who know what they ‘re making. For the interest of economic security and national security, the United States of America must sharply travel frontward with the building of atomic power workss. ”

However, the public sentiment is of import for the energy policy shapers to increase atomic power which is largely misunderstood by the planetary society after the World War II. Anti-nuclear anterooms launched several runs that atomic energy production should be stopped because of the security hazards and environmental amendss. The CBS Poll Tracking found that the public favoring for atomic energy has declined from 70 per centum to 50 per centum between 1977 and 2001. The least support for the Nuclear energy was during the mid 1980s after the Mile Island accident. Another study conducted by the IAEA indicates that while 28 per centum of the citizens in 18 industrialised states favored building of new atomic power workss, 59 per centum rejected new atomic power works buildings. The IAEA study found that merely 40 per centum of the U.S. citizens favored atomic energy.According to the public sentiment research conducted by Bisconti Incorporation, the ratio of atomic energy protagonists has been increasing since 1980s. While less than 50 per centum of the Americans favored atomic energy in 1983, the ratio of pro atomic Americans increased to 73 per centum in 2006. The Bisconti study indicates that the ratio of oppositions decreased significantly over the past two decennaries. Majority of the public studies found that the public sentiments do non prefer building of new atomic power workss. The U.S. authorities has to increase the public runs to alter the public sentiment towards more pro-nuclear platform in order to be able to do future atomic investings.

Decision

The exposure of US transit, electric and industry sectors exacerbated as the monetary value of oil reached to $ 95 per barrel. Nuclear energy is a powerful and dependable option to cut down US dependence on foreign oil and natural gas manufacturers. The technological capacity of the atomic energy changed over the past 60 old ages. The atomic power workss became safer, more energy efficient and environmentally friendly. The 4th coevals of atomic reactors will be safer and energy efficient. However, there are five staying counter statements against the atomic energy: the high cost, proliferation by the knave governments, reactor safety, public sentiment and disposal of the wastes. The authorities policies to extinguish the concerns on these major challenges will lend to the publicity of atomic energy in the hereafter.

There is no disconnected solution for the planetary energy supply breaks and monetary value volatility. However, atomic energy bases as a significant option. There are abundant U and Th militias in the universe. The United States is one of the taking states in footings of the planetary U and Th militias. Furthermore, these the planetary militias are situated in friendly governments. Therefore, the supply decrease hazard is lower for the atomic energy. Although the initial capital costs of atomic power workss are higher than coal and natural gas fired workss, the mean costs of atomic energy will be leveled during the ulterior stages of electric coevals.

Although some public sentiment studies indicate that huge bulk of the society favours public sentiment, other public studies still indicates that U.S. society is still preponderantly against atomic energy. Society is concerned with the possible environmental amendss, safety and high monetary value of electric coevals from the atomic power workss. Contrary to the widespread misperception, the atomic power workss are the most feasible environmentally friendly energy option for the United States. The GNEP plan enables sharing of atomic wastes with spouse states. Therefore, the atomic wastes will be a less environmental and economic challenge in the hereafter. Nuclear energy saves us from significant sums of nursery gas emanation every twelvemonth.

The authorities of the Unites States should take the advantage of the best patterns applied by the Gallic atomic policy shapers. France is a alone illustration of energy independency through atomic power coevals. The state was net energy importer during 1970s ; nevertheless it became the largest energy exporter within three decennaries thanks to its atomic plans. The United States could cut down its foreign dependence by advancing atomic energy. The authorities should increase the subsidies to the energy companies who invest for constructing new atomic power workss. The municipal franchising and high capital costs of atomic power workss creates natural monopolies in the atomic energy market. The authorities subsidies can extinguish the concerns on the high capital costs. Thus the atomic energy market can be more competitory in the hereafter.