True cost of oil & gas

This payback depends very much on the price of natural gas. Right now the "price of gas" is very very low. $5.84 per GJ on a latest gas bill. Sounds cheap? Try and work out the payback on a renewable energy system using this cost for gas. Its a very hard?   The quoted "price" has increased on average about 10% per year for the last 10 years and reached about $13 per GJ not too long ago.

However what is the true cost?

The actual payback you see on your system will vary greatly depending on where you live in Canada and what you use to heat your fuel. The worst payback right now is probably in Alberta due to the very low gas prices. However if you live in PEI and are likely heating your water and home using electricity then the payback on a solar hot water system is amazing and could pay for itself in a year or so.

The True Cost of Gas

The cost of gas is not the only thing on your bill, add up all the other items you get charged for on a monthly basis which is never normally considered.  We reviewed the last couple of years of gas bills for a small residential home.

  • Total "Cost of Gas" on the bill = $39  for 6.66 GJ
  • Admin Fee =$5.34
  • Delivery Charge - Fixed = $16.93
  • Delivery Charge - Variable = $6.58
  • Rate Rider = $1.17
  • Municipal Franchise Fee = $6.07
  • GST = $1.54

Total $78.85 for 6.66 GJ of Gas.

$78.85 divided by 6.66 (amount of gas used) = $11.84 Per GJ.

This is the data just for the past month.  Looking at the past 18 months Gas bills the Cost Per GJ ranged from a minimum of $10.5 / GJ UPTO $38 / GJ $38 Per GJ doesn't sound so cheap now.

If we run Retscreen to compare accurately Solar Water Heating with Natural Gas using these numbers then it would be like putting money into your RSP when the RSP is offering returns of +50% per year.

This is a much fairer and accurate way of measuring comparing Solar Heating with Natural Gas.

By only quoting the current spot price of gas hides the fact that we really pay many times the cost you think you are paying.

Taxes and Solar Water Heating

Not only with a Solar Hot Water System is your cost per GJ = ZERO but this is money you don't have to pay out at all. When you normally pay utility bills you are paying it out of money you earned and have paid income taxes on. Depending on how much tax you pay this could be like adding another 40% onto those prices.

Now we are up to between $15 per GJ and $53 per GJ

If you can do away with your gas bill entirely you can save a huge amount of money. This can be done in Canada, visit the NetZero House in Edmonton. This house was built and is not connected to any Piped Natural Gas. It is designed and built using standard building materials (2x4 stick frame) and uses no natural gas, it is connected to the Electricity Grid but feeds more electricity into the Grid than it consumes.

Green Energy Subsidies and Hidden subsidies

Would you pay $1000 to fill your truck with fuel?

Everyone already complains about the cost of Gas for their cars and trucks aswell as heating costs. Here are some facts to help you determine how expensive oil and gas are?

  • One Gallon of Gasoline does the equivalent of about 12,000 Man hours of labour. Would you work for 12,000 hours for the cost of one gallon of petrol, about $4 ?
  • Cost of war in the middle east - add this to your energy bill.
  • Tax Breaks for Oil and Gas - trillions of dollars in incentives

How many $$ get added to the "true cost" that you dont think about. When comparing subsidies on OIl and Gas versus "Green Energy" subsidies the "Green Energy receives only about 7 cents on the dollar compared to what the oil and gas industry receives. Click here for Source - Green Party of Canada.

Jim Harris Discusses Oil Subsidies from Corporate Knights on Vimeo.

Add this to the cost of your fuel and the price at the pump would be huge, probably well above  $100 PER LITRE of Petrol or a few hundred dollars per GJ Natural Gas.

For a nice picture showing the scale of the problem, look at this picture, its too big to put on this page.

Environmental Costs

I'm sure you have been reading on the news about the sinking of the Transocean Deepwater Horizon. Prior to embarking on a Solar Energy adventure, the founder of "Latitude51 Solar" worked as a consultant Drilling Supervisor on offshore exploration oil and gas wells, including deep water drilling projects for the past 18 years. 

The BP Macondo Exploration Well that just blew out will turn out to be a tragedy that will be globally unparalleled. Most people have no idea of the seriousness of this disaster, they are in uncharted waters trying to repair the BOP. Its very rare for the BOPs to not function correctly. There are so many backup systems on them and they are function tested daily. That well could flow for years before they can plug it.

Until we recognize that the true cost of Oil and Gas is not $5 per GJ of Natural Gas and $1 per litre of gasoline but several magnitudes higher, then the massive human and environmental damage that has already hit the coast of the US will occur over and over again.