Andrew Merecicky, assistant editor
In economics, the euphemistic term “externality” refers to the “hidden” cost of doing business. When talking about the true cost of harvesting energy sources, externalities usually refer to the environmental costs associated with spill clean ups, carbon emissions, and damage to animals and their habitats.
No doubt these costs all deserve the attention they receive since, after all, someone has to foot the bill. That is, “external” simply means “paid in sometimes nebulous ways.” However, not all externalities are as estimable as the impact on coastal economies and ecosystems as in the case of the Deepwater Horizon spill in the Gulf of Mexico a few years ago.
Consider international military conflicts spurred on by fossil fuels. Admittedly, it’s difficult to establish a clear cause and effect to military action, but the circumstantial evidence is enormous. These conflicts carry the calculable costs of infrastructure damage (and the military budgets necessary to inflict this damage) along with the incalculable cost of human casualties. However, as incalculable as these costs may be, they must still be included in the discussion of externalities.
The intention here is to propose that the struggle over energy resources compounds international conflicts that result in heavy collateral losses. To discuss the costs of hydrocarbon fuels versus renewable energy and focus solely on the fiscal bottom line is to argue in bad faith. I mean that it is willfully misleading to say “all else being equal, fossil fuels are the better investment,” because all else is not equal. And better for whom?
For example, in the most current Russia-Ukraine conflict, a long-term dispute over gas prices led Ukraine to make a deal with Russia for a discount on natural gas in exchange for a 25-year lease extension on a naval base on the Crimean peninsula. Many in Ukraine saw this as a selling out of national interests, contributing to the social unrest, civil war, and eventual annexation of Crimea by Russia. And since the clashes in Ukraine, Putin has again shut off gas exports to the country.
The matter is further complicated by fossil fuels when taking into account the Black Sea’s known reserves of trillions of dollars worth of oil and gas, which provides an enormous incentive for Russia to seek control of the region.
Or, consider the most recent Israel-Gaza conflict, Operation Protective Edge. No question the root cause of the mutual hostility between the two states has more to do with historical rights to land and endless border disputes; ideology is obviously the strong force stirring up public outrage and animosity, but fossil fuel and energy security is also a noteworthy variable in this equation.
In 2000, British Gas discovered natural gas reserves worth an estimated $4 billion off the coast of Gaza and mostly in Gazan territorial waters. Israel has since set up a blockade by sea to isolate these reserves. However, if the reserves that lie in Gazan waters were developed, Hamas would necessarily receive a share in the revenue.
The red highlights overlapping the yellow “Offshore Gaza” territory represent the location of the gas reserves discovered in 2000 by British Gas.
Regarding the prospect of the Palestinian Authority’s involvement in the development, Israeli Defense Minister Moshe Ya’alon said in 2007:
“A gas transaction with the Palestinian Authority will, by definition, involve Hamas. Hamas will either benefit from the royalties or it will sabotage the project and launch attacks against Fatah, the gas installations, Israel—or all three . . . It is clear that without an overall military operation to uproot Hamas control of Gaza, no drilling work can take place without the consent of the radical Islamic movement.”
In 2008, shortly after the statement was made, Israel initiated Operation Cast Lead, resulting in at least 1,400 total human casualities. In light of the defense minister’s comment, specifically the language bolded above, you would be forgiven for thinking that the military operation that soon followed was closely related to the gas reserves.
In cases like this, the fact that oil and gas reserves don’t always fall neatly within sovereign borders is more than a mere inconvenient complication. The conflict between Israel and Palestine that followed shortly after Ya’alon’s comment doesn’t have to be solely or even primarily motivated by the acquisition of valuable resources to count the ensuing violence as an externality of fossil fuel development.
It’s common knowledge that fossil fuels are increasingly expensive to locate and extract, but the threat to human life is an additional cost often left out of the equation when one speaks of “cheap” fossil fuels.
In contrasting with renewable energy development, it’s hard to imagine how a country might leverage it’s wind farms to strategically weaken a neighbor, or a defense minister calling for “an overall military operation to uproot” a democratically elected government because of its ability to harvest solar energy.
This is another way to define energy independence: having access to sufficient energy resources that do not further incentivize violent conflict or lend itself to one country belligerently leveraging its resource control over another country. In this way renewables should become integral in forming a nation’s foreign policy not just its energy policy.
The electricity that runs through your home outlet is the same regardless of the energy source, and the desire to get that electricity for as cheap as possible is a reasonable pursuit. However, the consequences of how the electricity got there are not equal. When we compare the costs of energy sources, we can’t afford to myopically focus on the price per kilowatt-hour that appears on the electric bill. There are too many external (but nevertheless real) costs that aren’t included in that calculation. It’s worth thinking about the kind of country and world we want to live in when deciding how we generate power. Such consideration is the point of a democracy, that the good of the people prevails and is sustained.
The United States is at a crossroads. We can take a different kind of global leadership role by developing energy from natural, abundant energy sources that don’t run out, that won’t incentivize or spur military conflict, that will put many Americans back to work, and that will help preserve long-term sustainability (energy and environment) for future generations. Or, we can continue to pursue energy and foreign policies as though we aren’t a nation in economic decline (we are), as though the economic, environmental, and geo-political realities of the 20th century haven’t radically changed (they have), and as though there are no quantifiable or significant differences between the external consequences of the fossil fuel and renewable energy sectors.
The geographical limitations alone of hydrocarbon fuels prevents them from ever being a part of the solution for a more peaceful world, not to mention the inevitable global depletion of these resources, which leads to a more expensive and unstable market in the long run. Renewable technologies, on the contrary, are deployable almost anywhere in the world and its energy sources are impossible to divide up and own. Yes, the renewables option currently appears more costly when looking solely at the bottom line, but the costs of fossil fuels are immeasurably more expensive. Their costs are just mostly external.
—Andrew Merecicky
Filed Under: News
