The U.S. spends 500 billion annually to protect oil trade routes in the Persian Gulf. Roger Stern, a professor at the University of Tulsa National Energy Policy Institute, wrote a 2010 study in which he estimated that, “the US had spent $8 trillion on protecting oil cargoes in the Persian Gulf since 1976.” $8 trillion is mind boggling. Now readjust that number in your head to include military protection for all of the oil industry’s trade routes.
One reason that the U.S. military spends so much money protecting the Persian Gulf is that we use a huge amount of oil to power the country. The U.S. has net imports of around 5 million barrels of oil per day. Since 2000, the percent of imports coming from the Persian Gulf has fluctuated between 15% and 25%. The question to ask now, does this make sense?
In 2011 the Center for Naval Analysis put together a report on the U.S. transportation sector that strongly recommended decreasing U.S. oil usage. The 13 retired admirals and generals who signed the report stated, “Weaning America from oil in substantive ways will make us safer as a nation.” This is undeniable since energy makes the United States work. Without it we would not have an economy, much less food and shelter. From that perspective, spending lots of money to protect oil resources is reasonable. On the other hand, what if we used less oil.
Using less oil, an energy source of which the US is a net importer, would decrease dependence on foreign-based energy sources. By driving electric cars, fewer soldiers would have to be deployed worldwide to guard oil trade routes. We would put our soldiers in harm’s way a smaller percentage of the time. It could also lead to a smaller standing military, which in turn would be a lower cost military. Those savings could be redirected towards national infrastructure and domestic energy creation, both of which would stimulate the economy. Locally-generated energy is a direct beneficiary of transportation fueled by electricity. Locally-based energy sources increase GDP, reduce the risk of power disruption, and decrease energy price fluctuation. Long term pricing for wind and solar is extremely stable as demonstrated by all of the multi-decade power purchase agreements being signed. One could easily replace the quote from the Center for Naval Analysis with a corollary: Increasing the usage of domestic energy will make us safer as a nation. The fact that renewable resources, wind and solar, represent the most cost effective path, even when unsubsidized, is icing on the cake.
The Cost of Foreign Petroleum in 2015
In addition to the cost of protecting oil trade routes, the US also spends large amounts of money on importing petroleum-based energy. In 2015 the average price of Brent Crude was $52/barrel. The U.S. consumed 7.08 billion barrels of petroleum products and produced 4.64 billion barrels. Just as a rough estimate, that puts the U.S. imports for consumption at 2.44 billion barrels or barrel equivalent. Assuming the approximate price as $52/barrel, $126 billion dollars is heading overseas in 2015. That’s just rough math for a time when the oil trade defect has never been lower. Above and beyond the cost of Persian Gulf security, how much more would that add over 32 years? 3.9 trillion dollars, just for the oil consumed from imports.
How Much Renewable Energy Does 8 Trillion Buy?
Bringing it all back to our initial $8 trillion, I thought it would be interesting to see what could be done with $8 trillion if it were directed toward an alternative fuel instead of protecting one oil trade route in the Persian Gulf. Let’s start by trying to understand what a trillion looks like. Here is a fun little graphic of just 1 trillion dollars. Now, let’s see what it is in solar panels.
|A Solar Array Worth 8 Trillion Dollars|
|Utility Scale Solar Q4 2015:|
|# of watts $8 trillion buys||5,194,805,194,805||watts||8,000,000,000,000 / 1.54|
|...or in megawatts||5,194,805||megawatts||5,194,805,194,805 / 1,000,000|
|Output of 1 MW solar, Phoenix Area: 1-axis backtracking**||2,196,863||kWh/year||NREL: PV Watts|
|kWh $8 trillion buys||11,412,275,324,675||kWh/year||5,194,805 x 2,196,863|
|...or in gigawatt hours||11,412,275||GWh/year||11,412,275,324,675 / 1,000,000|
|GWh/day generated in U.S. in 2015||11,198||GWh/day||EIA|
|Days worth of 2015 U.S. electricity generation from $8 trillion in solar panels||1,019||days||11,412,275 / 11,198|
|Years worth of 2015 U.S. electricity generation from $8 trillion in solar panels||2.79 years worth of electricity each year for the life of the solar array||years||1,019/365|
|** panel options selected in PV Watts: standard (15% efficient, crystalline silicon), 1-axis backtracking, 14% system losses, 30% tilt, 180 degree azmuth|
97 Years of Electricity Production
The table above concludes that 8 trillion dollars would buy nearly 3 times as much electricity production as the entire U.S. uses each year and that production would last for the life of a solar array. A new third party study shows that the average panel for the largest residential solar installer will last for over 35 years. So 2.79 years worth of capacity over a time frame of 35 years is 97.65 years of electricity. That makes for a lot of extra electricity, so I thought I’d also compare 2.79 years of electricity to total US annual energy usage. According the the EIA graphic below, electricity accounts for 39% of total US energy usage.
So instead of 2.79 years of electrical energy we could say that 8 trillion dollars of solar panels would provide… (drum roll please) 108%1 of total U.S. annual energy usage every year 35 years.
36% of the U.S. energy sector comes from oil. The U.S. imports up to 25% of its oil from the Persian Gulf. That puts a rough estimate of 9% of U.S. energy coming from the Persian Gulf.2 However, even as a rough estimate, the numbers are so extreme it’s shocking. For the amount of money the US spent protecting 9% of U.S. energy, the U.S. could build a solar array to replace 100% of U.S. energy.
I realize that this is just an interesting thought experiment. Here is a partial list of caveats:
- There might still be reasons for the U.S. to maintain security in the Persian Gulf.
- The Gulf would have to be secure, at the very least, while the solar infrastructure was built.
- Solar is intermittent so there would have to be some sort of energy storage, backup generation or renewable energy overbuild, at least once the U.S. moves to greater than 70% wind and solar or 90% total renewable energy.
- Siting 100% of solar in one of the sunniest places in the US (Phoenix) is cheating, but maybe not too badly. For instance, if the calculation were split between wind and solar, you would end up with even more affordable renewable energy. According to Lazard’s levelized cost of energy analysis, unsubsidized thin film utility scale solar costs $50/MWh on the low end and unsubsidized wind only costs $32/MWh.
- 99% of transport does not run off of electricity. We would need new vehicles.
- Most heating does not work off of electricity. We would need new heating systems.
Regardless, there is one unassailable conclusion. Eventually, just as the Center of Navel Analysis suggests, we need to head toward locally-produced national energy sources. Depending on international trade, with hostile trading partners, for one of our most important resources makes the country less secure for no reason.
Cheaper, cleaner alternatives to oil are readily available. We should be using them.
The Next Step
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Footnotes and References:
- 2.79 years of electricity x 39% =
- This assumes that 100% of that oil is consumed in the U.S. and is consumed for energy needs.It wouldn’t be, which is why this is only a rough estimate. Really only about 85% of oil is burned as fuel. If that were factored in the calculation would show that over 108% of U.S. energy needs would be able to be purchased for 8 trillion.