Gas prices have dropped below $4.00 a gallon for the first time in several years. Every one-cent drop in gas prices means a $1 billion annual decline in energy spending by Americans. Consumers can use the savings to eat out more often, buy more goods or pay down debt. That's good for US motorists and consumers, but that's not the whole story. Part of the story has to do with the fact that solar energy is getting as cheap as coal and natural gas for the production of electricity. As solar prices drop even further, electricity costs for homeowners should come down. That would mean that electric cars powered off of home outlets should have a greater comparative advantage over gas powered vehicles. These developments, which could phase out the use of fossil fuels in general, will reduce the emission of greenhouse gasses (GHGs)
Another reason that prices at the pump are coming down is that US oil production, which is currently at 8.7 million barrels a day, has increased dramatically in recent years so that there is a glut of oil on the market. US oil production is the highest it's been in 27 years. OPEC, in an attempt to maintain its market share, has lowered prices. Gas will become even cheaper as competition between the US and other oil producing nations drives down prices. As gas becomes cheaper, so will solar. Decreasing costs for the purchase and fueling of electric vehicles will provide an even greater incentive for switching from oil powered to electric powered vehicles. This will drive oil prices down even further. A gas tax with the proceeds going to provide incentives for the purchase of electric vehicles could facilitate the lessening of carbon dioxide emissions into the atmosphere.
An article in Bloomberg, While You Were Getting Worked Up Over Oil Prices, This Just Happened to Solar, says it all. As solar becomes cheaper, solar will replace coal, gas and oil in the production of electricity. Solar will be the world’s biggest single source of electricity by 2050, according to a recent estimate by the International Energy Agency. More than a quarter of the world's electricity demand could be met with solar power by midcentury, surpassing generation from any other single source, including coal, natural gas, oil, wind, hydro and nuclear, the International Energy Agency has determined. So there will be competition between solar and fossil fuels for the production of electricity which means that in order to preserve market share OPEC will lower their prices even more.
Going all out to maintain production is not good for the environment because fossil fuels really need to be left in the ground, but neither the Saudis nor other oil producing nations including the US are going to sit idly by and let solar take over the market. They will try to outcompete solar based on price alone regardless of what this portends for carbon dioxide emissions and global warming.
There are several solar projects in the Mojave Desert which are already supplying energy to southern California homes. These new solar developments could also be supplying energy to electric vehicles as well. As the US converts from gas powered to electric powered vehicles, the need for oil and gas will diminish. A solar thermal system is operating at the Ivanpah Solar Electric Generating System (ISEGS) in California’s Mojave Desert. The Ivanpah Solar Power Facility is a 370 MW facility which consists of three separate solar thermal power plants just off interstate highway 15 on the Nevada-California border.
Ivanpah, which began commercial operation in 2013, is delivering power to PG&E and Southern California Edison. The project is currently the largest solar thermal power plant in the world and it doubled US production of energy from solar when it went online. Ivanpah was constructed by Bechtel and is operated by NRG Energy of Carlsbad, CA, one of the project's equity investors. Google is also a partner in the project.
The Ivanpah plant is not without controversy however. Birds flying through the area have been killed by the intense heat. A proposed plant is on a flight path for birds between the Colorado River and California's largest lake, the Salton Sea - an area that is richer in avian life than the Ivanpah plant, with protected golden eagles and peregrine falcons and more than 100 other species of birds recorded there. The toll on birds has been surprising, said Robert Weisenmiller, chairman of the California Energy Commission. "We didn't see a lot of impact" on birds at the first, smaller power towers in the U.S. and Europe, Weisenmiller said.
If we really want to maintain a livable climate, and prevent global temperatures from rising more than 2˚ Celsius, then no nation, anywhere, can burn any oil, gas, or coal at all after 2050, according to a striking new analysis of the latest climate science. Stanford University’s Mark Jacobson has a detailed state-by-state roadmap for 100 percent replacement of coal, oil and natural gas with wind, water and solar energy by 2050. This transformation would dramatically reduce air pollution, preventing an estimated 59,000 deaths a year and saving the country billions of dollars, Jacobson says.
These developments - increased oil production in the US, increased competition between the US and OPEC, and increased competition between solar and oil - should drive down all energy prices, both for homes and vehicles. As long as this increases the use of gas and oil for transportation, cheap gas prices will be bad for the environment. If a gas tax were implemented with the proceeds going to build out solar and give incentives for the conversion from gas to electric vehicles, this would ultimately be a good thing.
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