The biggest bumps on the road for American families this summer may be at the gas pump.
However, the dirty little secret behind America’s energy policy is that the true cost of gas or electricity is much more than what we see at the pump or on our utility bills. Our energy decisions have hidden costs that influence our health, the environment, and national security.
Examples include the Deepwater Horizon oil leak, the deaths of 29 West Virginia coal miners, and the nuclear plant catastrophe in Japan. While these events are tragic, the daily expenses of energy usage in the United States are significantly worse.
What options do we have? Our domestic energy plan requires a paradigm shift. The so-called “social costs” of energy sources, such as those associated with damaging emissions or foreign policy decisions, must be valued so that businesses and consumers can make informed judgments.
Consider this: coal power plants generate about 45 percent of U.S. electricity at an apparently modest cost just 3.2 cents per kilowatt hour (KWh), or enough electricity to run your microwave for an hour.
However, the true cost of that energy is 170 percent more. Each KWh of coal-fired power costs us an extra 5.6 cents in health and environmental costs. According to a recent National Academies of Science analysis, this includes around 3.4 cents in negative health effects. The remaining 2.2 cents comes from climate change-related damages, according to the US government’s social price of carbon assessments.
These extra expenses are not included in our monthly budgets. But we, the people of the United States, are still on the hook. Shorter life spans, more respiratory ailments, a changing environment that threatens our way of life, and limited foreign policy are all part of the cost.
When comparing the social costs of different types of power, some surprising results emerge. According to a new Hamilton Project document, the complete cost of power from a new natural gas plant is around 6.5 cents per KWh. This is more than a quarter of the price of power produced by existing coal plants.
Furthermore, it is far less expensive than the full expenses of nuclear power, clean coal power, and existing renewable technology.
Why does America continue to rely on polluting fuels despite the availability of solid, evidence-based knowledge about the true costs of energy? It’s simple: current energy policy does not enough penalize energy sources that cause societal harm, nor does it effectively promote energy sources that do not cause these costs.
A new energy policy should establish a level playing field, in which the costs of production, as well as any health, environmental, or national security consequences, are reflected in the prices of all energy sources. Businesses and individuals would be free to make better, more informed decisionsand choose the energy sources that truly cost the leastonce energy prices reflect their true costs.
While this will increase our gas and utility costs in the short term, the payoff will be in the form of longer and healthier lives, a better environment, and stronger national security.
What is the cost of natural gas per kWh?
In 2021, the yearly average amounts of coal, natural gas, and petroleum fuels used by US electric utilities and independent power providers to create a kilowatthour (kWh) of electricity were:1
Electric utilities and independent power producers in the United States generated the following yearly average number of kWh per amount of coal, natural gas, and petroleum fuels utilized for electricity generation in 2021:1
The figures above are based on preliminary data from the Electric Power Monthly for 2021, which was published in April 2022, as well as simple averages of national-level annual statistics for electric utilities and independent power providers. They are the annual average amounts for the majority of the electricity generated for sale in the United States, but they do not include power generated in the commercial and industrial sectors. Fuel use for useable thermal output in combined heat and power plants is not included in the fuel consumption data used for the above quantities.
Actual numbers for a particular generator or power plant may differ significantly from those listed above. The amount of fuel consumed to create electricity is determined by the generator’s efficiency (or heat rate) and the heat content of the fuel. The types of generators (primary movers), the type and heat content of fuels, power plant emission controls, and other factors all affect power plant efficiencies (heat rates).
The amount of fuel consumed to generate a kilowatthour (kWh) of electricity can be calculated using two formulas:
- Heat rate (in British thermal units per kWh) divided by Fuel heat content = Amount of fuel used per kWh (in Btu per physical unit)
- Fuel heat content (in Btu per physical unit) divided by Heat rate = Kilowatthour created per unit of fuel used (in Btu per kWh)
The following are some of the data sources available from the US Energy Information Administration (EIA) for those calculations:
- The average quality of fossil fuel receipts for the electric power industry is shown in Table 7.3. ( xls )
Appendices providing fuel heat contents, electricity heat rates, and conversion factors are included in the Monthly Energy Review.
On a national and state level, as well as at individual power plants, the EIA releases monthly and annual data on the quantity of electricity generated and associated fuel consumption by electricity producers. This information can also be used to compute fuel use per kWh of electricity generated, as well as kWh generation per unit of fuel consumption.
- Data on total power generation in the United States (Table(s) 7.2) and electricity generation fuel consumption (Table(s) 7.3).
- Historical power data files at the state level, including annual and monthly electricity generation and fuel usage.
- Data on fuel consumption and electricity generation at individual power plants in the United States, broken down by fuel/energy source.
1 In combined heat and power plants, fuel is not used for usable thermal output.
Other FAQs about Oil/Petroleum
- Is there information from the EIA on the rail movement (transport) of crude oil, petroleum products, gasoline ethanol, and biodiesel?
- A kilowatthour of electricity is generated using how much coal, natural gas, or petroleum?
- Does the EIA provide state-by-state estimates or projections for energy output, consumption, and prices?
- Is the EIA aware of any unplanned disruptions or shutdowns of energy infrastructure in the United States?
- What percentage of the crude oil produced in the United States is used in the country?
How much does it cost to create one kilowatt-hour (kWh)?
Individual wind power projects usually supply electricity for $0.04 per kWh without financial assistance, whereas fossil-fuel power plants have a cost range of $0.040.14 per kWh (IRENA, 2018).
To convert imperial gas meter readings to kWh:
- To calculate the volume of gas utilized, subtract the new meter reading from the prior reading.
- Multiply by 0.0283 OR divide by 35.315 to convert from cubic feet to cubic meters.
Who has the most affordable natural gas?
Natural gas prices in Utah are the cheapest, at $9.12 per 1,000 cubic feet. That’s approximately 8% less than second-placed Montana. For the month, the average rate was $17.57.
What does a gigajoule of natural gas cost?
- Natural gas is about comparable to 27 litres of fuel oil, 39 litres of propane, 26 litres of gasoline, or 277 kilowatt hours of electricity in one gigajoule.
- Natural gas has a wide range of energy content due to minor differences in the amount and types of energy gases (methane, ethane, propane, butane) it contains the more non-combustible gases in a natural gas, the lower the gigajoule number.
How are natural gas bills calculated?
The cubic foot is a popular unit of measurement for natural gas, and you’ll be paid in thousands of cubic feet (MCF) or hundreds of cubic feet (CCF). You could also be charged by the therm, which is roughly equivalent to a CCF or 100 cubic feet. The utility sets a meter between the incoming electric power or gas lines and the point of distribution at the house to monitor how much electricity or gas you consume.
The force of moving gas in the pipe drives a gas meter, which turns quicker as the flow increases. The pointer on the next higher value dial advances one number for every complete round of the dial with the lower value.
When reading a gas meter, read and write down the numbers from left to right on the dials (opposite of an electric meter). It’s vital to observe that the hands of adjacent dials on both types of meters turn in opposite directions.
What is the most expensive natural gas?
On the US Henry Hub index, the price is US$3.87/MMBtu ($13.2/MWh) as of January 20, 2022.
In January 2005, the highest peak (weekly price) was US$14.49/MMBtu ($49.4/MWh).
The boom of fracking oil and gas in the United States in 2012 resulted in decreased gas prices in the United States. This has prompted conversations in Asian oil-linked gas markets about importing gas based on the Henry Hub index, which was the most frequently used benchmark for US natural gas pricing until recently.
What is the most cost-effective energy source?
And there’s some good news for the environment: solar and wind power are now the cheapest forms of energy at the scale that a big utility will deploy them. They are slightly less expensive than natural gas-fired power plants and significantly less expensive than coal and nuclear power plants.