Perusing through an announcement from ARPA-e, I ran across this statistic: the US ethanol industry employed 400,000 people in 2010 and produced 13 billion gallons of ethanol (9 billion gallons of gasoline equivalent). Wow, that is a lot of jobs! Consider the fact that the oil and gas industry employs a comparable number of people, 415,000 (Bureau of Labor Statistics data) for extraction and refining. The output of the O&G industry was roughly an equivalent of 130 billion GGE of liquid fuels and about 24 trillion cubic feet of natural gas (ca. 200 billion GGE). Likewise, in 2010 the US electric power generation sector employed about 390,000 people and to produce 4,325 TWh of electricity. Contrast that with the nearly 100,000 employed in the wind industry that generated only 170 TWh.
As we pointed out in the CMO book, “The primary purpose of the energy industry is not to provide employment within the industry, but to make a commodity that allows many industries to flourish and employ people.” If as a nation we are really seeking to find employment for people, we have to produce more energy. Developing energy sources like ethanol or wind may be great at employing many more people, but it only means that when you have to pay living wages to all those employed; the product is naturally more expensive.
It good to acknowledge that more employment per energy output isn't necessarily a good thing because it can just mean the product/energy costs more, but not always.
ReplyDeleteWhen you look at the energy produced by a technology per person employed, you need to account for the life of the product/technology. For example a wind turbine takes x number of people to make and install, but it produces energy over 20+ years with very little employment.
Oil and gas may have similar dynamics, where exploring and drilling may require most of the effort and the wells will produce for years.
However, a mature industry like oil and gas leverages a longer history of investments in capital, so it is more likely to be more productive per employee than an emerging industry that is starting to build out it's infrastructure.
Also, this doesn't mean that the price follows the cost of the labor. Labor plus materials does provide a floor for a price, but supply and demand sets the ceiling. Oil prices continue to rise as the demand increases faster than the supply. Whereas the cost of solar and wind has dropped because the supply has grown Faster than demand plus technology improvements have improved the cost and performance.
Thanks Mike for your comment. I am glad to see that someone reads these posts. My point was just what you said in your opening paragraph. My argument applies more to biofuels where the employment numbers are going to scale with productivity, than with wind. The calculus is not as straightforward as often made in the media, and a singleminded focus on jobs alone can lead to misdirected priorities.
ReplyDeleteWind turbines do not produce energy with little employement (after manufacture and installation). They require large number of employees to maintain and repair the turbines and support infrastructure during operation. A large wind farm employs hundreds of full time staff. In fact the number of FTE employees at a wind farm typically exceeds the number of FTE employees at a fossil-fuel powered plant with the same generation capacity.
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