The War on Cheap Electricity

Since taking office, the Obama administration has waged a war on coal. In 2008, coal made up a little over 48 percent of U.S. electricity generation. By 2013, this was already down to 39 percent and falling fast. As of the latest data from March 2014, residential consumers in the states where coal generated at least 60 percent of the electricity paid 10.57 cents per kWh. By comparison, the same consumers in states where coal generated no more than 10 percent of the electricity paid 14.98 cents per kWh, or 42 percent more.

On an all sectors basis, the situation is more dire. The average all sectors March 2014 electricity price for the states getting at least 60 percent of their electricity from coal was only 8.76 cents per kWh, more than 50 percent lower than the cost in the states that generated less than 10 percent of their electricity from coal. Here are the current relationships between how much electricity each state in the continental USA derived from coal and its corresponding residential and all sector average electricity prices. Coal equals cheap energy, and cheap energy equals mobility, freedom, and economic prosperity. The war on coal by the political left was never really about pollution; it was always about quenching the socioeconomic opportunities derived from cheap energy. And the states that currently rely most on coal for electricity have seen their average electricity rates increase the most since Obama took office and began the war on coal – at rates up to five times faster than the states that are least dependent on coal. If you want to understand why the rates for American real per capita economic growth are flatlining, this data helps explain much of the problem. These facts shouldn't be surprising. If we look at current average electricity prices for various industrialized nations and compare that to their corresponding economic growth over the past few years, a clear trend emerges. Higher-priced electricity correlates with much lower economic growth. Carbon capture and sequestration (CCS) for coal-fired power plants is also not part of the solution. CCS dramatically and needlessly increases the costs of coal-derived electricity compared to the non-CCS alternative, as the Canadian province of Saskatchewan is currently in the process of finding out firsthand. The dismal economic path ahead for nations who artificially raise energy costs is unavoidable. The war on cheap energy taking place in the United States, Canada, and other nations – even under supposedly conservative governments – is the war on prosperity, and it is a very stupid and unnecessary war.