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By Robert Rapier on Jan 19, 2010 with 4 responses

Prices of Various Energy Sources

As we continue to develop biomass as a renewable source of energy, it is important to keep the cost of energy in mind, because this has a very strong influence on the choices governments and individuals will make. I sometimes hear people ask “Why are we still using dirty coal?” You will see why in this post.

Last year I saw a presentation that projected very strong growth in wood pellet shipments from Canada and the U.S. into Europe. My first thought was “That doesn’t sound very efficient. Why don’t we just use those here in North America?”

It didn’t take very long for me to find out the answer to that. It is because wood pellets are much more expensive than natural gas in North America. On top of that it takes more effort to use wood for energy than it does natural gas. That combination means that wood has a tough time competing with natural gas in North America.

When I was looking into that issue, I compiled a list of the price for various energy types on an energy equivalent basis. The price is as current as possible unless noted. I have converted everything into $/million BTU (MMBTU), and the sources are listed below.

My preference is to use EIA data over NYMEX data because the former is an archived, fixed number. I have included energy for heating and for various transportation options. For comparison I also included the cost of electricity and the cost of the ethanol subsidy/MMBTU of ethanol produced.

Current Energy Prices per Million BTU

Powder River Basin Coal – $0.56
Northern Appalachia Coal – $2.08
Natural gas – $5.67
Ethanol subsidy – $5.92
Petroleum – $13.56
Propane – $13.92
#2 Heating Oil – $15.33
Jet fuel – $16.01
Diesel – $16.21
Gasoline – $18.16
Wood pellets – $18.57
Ethanol – $24.74
Electricity – $34.03

Observations

It isn’t difficult then to see why wood pellets have a difficult market in the U.S. For people with access to natural gas, they are going to prefer the lower price and convenience of natural gas over wood. For Europe, their natural gas supplies aren’t nearly as secure, so they have more incentive to favor wood as an option.

The cost of the ethanol subsidy is interesting. We pay more for the ethanol subsidy than natural gas costs. However, if you consider that we are paying a subsidy on a per gallon basis – and a large fraction of that gallon of ethanol is fossil fuel-derived, the subsidy for the renewable component is really high.

For instance, if we consider a generous energy return on ethanol of 1.5 BTUs out per BTU in, that means the renewable component per gallon is only 1/3rd of a gallon. (An energy return of 1.5 indicates that it took 1 BTU of fossil fuel to produce 1.5 BTU of ethanol; hence the renewable component in that case is 1/3rd). That means that the subsidy on simply the renewable component is actually three times as high – $17.76/MMBTU. Bear in mind that this is only the subsidy; the consumer then has to pay $24.74/MMBTU for the ethanol itself.

Sources for Data

Petroleum – $13.56 (EIA World Average Price for 1/08/2010)
Northern Appalachia Coal – $2.08 (EIA Average Weekly Spot for 1/08/10)
Powder River Basin Coal – $0.56 (EIA Average Weekly Spot for 1/08/10)
Propane – $13.92 (EIA Mont Belvieu, TX Spot Price for 1/12/2010)
Natural gas – $5.67 (NYMEX contract for February 2010)
#2 Heating Oil – $15.33 (EIA New York Harbor Price for 1/12/2010)
Gasoline – $18.16 (EIA New York Harbor Price for 1/12/2010)
Diesel – $16.21 (EIA #2 Low Sulfur New York Harbor for 1/08/2010)
Jet fuel – (EIA New York Harbor for 1/12/2010)
Ethanol – $24.74 (NYMEX Spot for February 2010)
Wood pellets – $18.57 (Typical Wood Pellet Price for 1/12/2010)
Electricity – $34.03 (EIA Average Retail Price to Consumers for 2009)

Conversion factors

Petroleum – 138,000 BTU/gal
Gasoline – 115,000 BTU/gal
Diesel – 131,000 BTU/gal
Ethanol – 76,000 BTU/gal
Heating oil 138,000 BTU/gal
Jet fuel – 135,000 BTU/gal
Propane – 91,500 BTU/gal
Northern Appalachia Coal – 13,000 BTU/lb
Powder River Basin Coal – 8,800 BTU/lb
Wood pellets – 7,000 BTU/lb
Electricity – 3,412 BTU/kWh

  1. By Clee on March 17, 2010 at 3:15 pm

    With the blog moving, it's time to get my last responses in, even though PG&E hasn't published their 2009 power mix numbers yet.

    Kit P wrote: When I lived in the PNW, PRB supplied a large part of my electricity. Clee's too.

    Kit P keeps bringing up my name for reasons that elude me. I have never lived in the Pacific Northwest and Powder River Basin coal does not supply a large part of my electricity. The solar panels on my roof supply a large part of my electricity. Being in PG&E territory, PG&E supplies a large part of my electricity.

    Roughly 40% of PG&E's electricity comes from natural gas. Roughly 20% comes from nuclear power. Roughly another 20% comes from large hydro. Of the remaining roughly 20%, more of it comes from "Eligible Renewables" such as geothermal, biomass, small hydroelectric, wind and solar than comes from coal. Maybe Kit P thinks 2%-4% of my electricity coming from Powder River Basin coal is a "large part", but then a much larger part of my electricity comes from eligible renewables.

    I'm okay with Kit P's coal plant if it meets EPA emission standards, OSHA, etc. I don't believe in shutting down perfectly-working plants. The fact that coal (from the Powder RIver Basin or elsewhere) supplies very little of the electricity provided by my power utility has nothing to do with any views I have on coal.

    As for redwood trees in Redwood City, the last time I passed by the city hall, I noticed a half dozen or so redwood trees around it. I bet if I took the effort to look for redwood trees in other parts of Redwood City, I'd find a lot more. Though, as I mentioned above, Redwood City was not named that because it ever had lots of redwood trees.

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  2. By Andrew Adams on February 16, 2012 at 1:03 am

    Could you please add some statistics for nuclear power production?

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    • By Robert Rapier on February 16, 2012 at 3:24 am

      Hi Andrew,

      I really need to update this entire table. Lots of changes in the past couple of years since I first posted it.
      RR
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  3. By Paul Tanger on November 27, 2012 at 5:45 pm

    Hi Robert,

    I found this post as I was looking for a calculator to do this very comparison.  I’m surprised there isn’t already one somewhere!  The closest thing I can find is:

    http://www.eia.gov/electricity/monthly/update/resource_use.cfm#tabs_spot-1

    My analysis is very similar to yours.  You can check it out here:

    http://bioenergyigert.wordpress.com/2012/11/27/natural-gas-shutting-down-coal-plants/

    I’m working to create a javascript version that pulls current prices automatically.  Would you be interested in helping, or do you have any input?

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