Reducing Reliability and Increasing Prices of Our Energy Supply


Vaclav Klaus was the President of the Czech Republic in 2003. I have a copy of his book, “Blue Planet in Green Shackles” with the sub-title, “What is Endangered: Climate or Freedom”

As I was straightening up my book case, I found this interesting insight from nearly 20 years ago. I started paging through the book and one quote by Klaus caught my attention.  “As someone who lived under communism for most of my life, I feel obliged to say that the biggest threat to freedom, democracy, the market economy and prosperity at the beginning of the 21st century is not communism or its various softer variants. Communism was replaced by the threat of ambitious environmentalism.”

Klaus’ book reminded me of my friend Tom’s experience as a Charlotte, NC,  City Ambassador during the 2008 Democrat Party Presidential Convention. Tom, like me was also employed in the energy industry for many decades. So, when energy issues were discussed, his antenna went up.  He heard influential leaders of the Democrat Party strategizing on how to wage the war on coal. Their reasoning was, If they could craft policies to increase coal generated electricity prices, then solar and wind power will become competitive.  Obviously, President Obama won that election and the war on carbon accelerated during his eight years.

These two examples of green policy intentions on two continents are the inspiration for this article. My last post was a reminder that in America we depend on (including the Btu equivalent of renewable generated electricity) about 100 Quadrillion Btu’s each year to fuel our economy. Over 85% of that energy is used in heat engines. So called, because steam turbines, reciprocating gasoline or Diesel internal combustion engines, jet engines and stationary gas turbine generators are all Heat-Engines. Heat-Engines convert the chemical (or nuclear) energy of fuel to heat that is then applied as shaft horsepower, motive force or jet thrust for producing electricity, transportation or industrial production. 

Reasonable cost and reliable energy are important for us to continue our high standard of living.

Below is the Lawrence Livermore Laboratory Sankey Diagram which shows the energy flows from 2019. This was a more normal year of economic activity. The total energy used was right at 100.2 Quadrillion Btu’s. If you study the energy flows, you can verify the conclusion that most of our energy is used in heat engines. Heat engines such as; steam turbines which are used to generate electricity from coal, natural gas, nuclear, geothermal, biomass and petroleum. Gas turbines that are used for stationary power generation, ship propulsion, turbo-prop aircraft propulsion. Diesel engines for trucks, buses, farm tractors, railroad locomotives and backup electric power generation, jet aircraft engines, gasoline for automobiles and trucks.

You get the point I am trying to make. To power our high quality of living, we use about 100 Quadrillion Btu’s equivalent of energy. American citizens take energy for granted and many, especially the current Congress and President assume that the existing forms of energy can be substituted in the next 15 years with Renewable forms of energy such as windmills, solar panels and Hydrogen. This is the path our elected officials have us on. So, let me ask you to check the chart below and then visualize replacing the nuclear (8.5%), natural gas (32%), coal (11.4%) and petroleum (37%) with Renewables.  The total of these four sources of energy is 88.66 Quadrillion Btu’s or right at 89% of our total energy used each year. Note solar and wind was 1.04 and 2.74 Quadrillion Btu’s, totaling 3.78 Quadrillion Btu’s. Right at 3.8%.

Hydrogen is a medium that can be used for storage and is therefore zero on the chart below. Hydrogen is planned to be a large part of America’s future fuels, but it should be pointed out, hydrogen requires more energy to produce it by electrolysis than it will produce in a fuel cell or by combustion in an internal combustion engine.

Current Energy Costs for Various Fuels

I have never liked the word “Cheap” and try not to use it. However, when referring to fuel to produce power or motive force, cheaper energy is better. Example, electricity  produced by a gas turbine requires Capital cost to purchase the equipment, construction cost to build the power plant, employees to operate and maintain the plant and spare parts to keep the turbine and all of its auxiliary equipment in top condition. Would you be surprised if I said a gas turbine, combined cycle power plant of say, 600 MW may cost about $ 720 million dollars? The going cost today for a GTCC plant is about $1,200/kW installed capacity. Now, think about the cost of electricity produced by the GTCC plant. It would likely be about $0.02 per kWh if the natural gas fuel was $3.00/million Btu (British Thermal Units). Over 90% of the production cost of a modern high efficiency GTCC plant is for fuel. The raw natural gas fuel is the single most expensive component of electricity production cost. Not the amortization of capital cost, or labor or spare parts. It is fuel cost that governs the production cost of electricity. So, if the natural gas price doubles, so does the production cost of electricity.

Thanks to Hydraulic Fracturing, the War on Coal has not caused a dramatic increase in the cost of electricity because natural gas prices have been very low since about 2012 or so. 

Here is a chart of natural gas prices 2006-2012 from EIA data of Henry Hub spot prices, as recorded by the EIA. The war on coal has been going on since the Bill Clinton Administration but accelerated during Obama’s Presidency. The lower cost coal plants equipped with flue gas cleaning Baghouses, Electrostatic Precipitators, Selective Catalytic Reactors and  Sulfur Scrubbers were the lowest cost generators. Then came Hydraulic Fracturing and cheap natural gas. The low production cost of electricity production by natural gas made competition by coal nearly impossible. Remember, fuel is 90% + of the electricity production cost for GTCC plants. Thus, cheap gas equals very reasonable cost electricity. America has had a good run of reasonable cost electricity up to now.


The current natural gas prices have increased from $2.00/million last year, to nearly double the price of 2012. Therefore, if this trend continues electricity prices will have to increase or electricity from lower cost producers, such as coal and nuclear will be needed to keep power costs down.

Here below is the natural gas price as reported by Business Insider Commodities.

The figure below illustrates production cost for the fuel component only when comparing a clean coal plant with a gas turbine combined cycle plant:


When fuel cost per million Btu’s increases, so does production cost.  Hydrogen cost if you can find it (California prices)  is about  $142.23/million Btu’s as compared to the comparatively less expensive natural gas at $4.00/million Btu.

Typical Fuel Costs Today

The above is my attempt to explain the fundamental costs of Thermal Power Generation of electricity. Because coal plants have many other costs of flue gas cleaning reagents, more O&M personnel and more maintenance requirements of a solid fuel power plant, the fuel cost component for a typical coal plant is about 75% of production cost. Fuel is still the major cost component for electricity generation for gas, coal and oil fueled thermal power plants. 

Gasoline, Regular Octane at               $3.00/gallon   116,000 Btu’s/gal.       $25.86/million Btu’s

Diesel Fuel                                          $3.00/gallon   135,000 Btu’s/gallon  $22.22/million Btu’s

Jet Fuel Jet A   (IATA airline cost)       $1.93/gallon   119,000 Btu’s/gal.      $16.22/million Btu’s

Natural Gas at Henry Hub (July 27, 2021)                                                      $ 3.97/million Btu’s

Coal delivered at SC Power plant estimated                                                  $ 2.00/million Btu’s

The above shows traditional energy costs for “Heat-Engines”. There is a push by the Democrat’s in government to change to “Green Renewable Power”.  Autos, airplanes and trucks  cannot be run on windmills or solar. But, the technology to power these heat engines with Hydrogen is technically possible. The amount of power output is conversion of hydrogen into either electricity through the use of fuel cells or by combustion in an internal combustion engine. The cost to operate will be commensurate with the energy contained in a given unit of hydrogen, usually expressed as Btu’s. The equivalent cost of hydrogen is about $16.51 to replace a gallon of gasoline. Perhaps some day the cost of hydrogen will come down to compare with gasoline prices for a given energy output? 


Net Zero Carbon will come at a very high cost and the high cost will harm our current Freedoms.

Dick Storm

August 5, 2021


  1. Natural Gas Prices from Business Insider commodities:
  2. Storm Technologies Seminar information on economics of power generation.
  3. “Blue Planet in Green Shackles” by Vaclav Klaus Competitive Enterprise Institute, 2007
  4. IATA Jet Fuel Prices:
  5. Chevron Aviation Jet Fuel specs:
  6. Coal Costs by EIA Coal Markets:
  7. California Hydrogen Fuel Council:
  8. Lawrence Livermore National Laboratory Sankey Diagram of Energy Flows: 

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