Why We Can’t Just Stop Oil

this video is sponsored by War Thunder fossil fuels today are almost universally understood as a major problem for our world for whatever reason individual people think is most pressing a Reliance on fossil fuel has put the balance of power into the hands of a very small group of not necessarily the most Savory governments it's a major contributor to global climate change it causes direct health issues in areas most impacted by emissions and of course it's ultimately non-renewable eventually one day the world is going to run out of this energy Supply even for the people who

don't particularly care about or believe in that fossil fuels are expensive the price of extracting refining and transporting fossil fuels either directly or indirectly represents a significant portion of household budget for billions of people around the world that expense is not helped by the overwhelming Market control that that same group of operations has on this essential Global industry now fortunately this is all happening at the same time that alternative renewable energy sources are becoming cheaper and more reliable so whatever the motivation a switch to Alternatives has theoretically never been easier but despite all of this

Global fossil fuel usage has never been higher and outside of a brief pause in 2020 when the world went into lockdown it's showing no signs of slowing down unfortunately there are some very simple economic factors standing in the way of what looks like a logical transition away from these resources and understanding them will help to show that not only are none of us truly blameless but that it will also take a lot more than an electric car and paper straws to reverse this curve so why is the world using more fossil fuels than ever despite

now knowing the problems they cause and having seemingly better Alternatives is there a realistic economic solution to this problem and finally even from from a completely cold-hearted macroeconomic View at what point does the economic Damage Done by fossil fuels outweigh the benefits we receive from this energy source while there are lots of ways to mitigate the use of fossil fuels in the consumer sector one place where this is really hard is in military hardware we don't yet have energy efficient electric Jets or tanks and the US M1 ABS tank only gets 0.6 m to the

gallon thankfully you now sponsors game War Thunder your digital tanks don't use any fossil fuels at all War Thunder is the most comprehensive vehicle combat game ever made available on PC PlayStation and Xbox and since it's free to play you can get all of your friends to join you with minimal resistance once you start playing though you won't need to convince them to join you you get to choose to fight on land in the air or sea and while I started with the aerial dog fighting mode I quickly found that land battles with tanks were

so much fun the game engine has a very satisfying damage model where hitting specific parts of the vehicle will damage it in different ways so pting the tracks of a tank will disable its movements so you can dispatch them more easily as you play games you get points to using your Tech Tree to research and unlock more vehicles and get customizations so you can try all kinds of different armaments for each of the 10 factions with new PL tanks or ships and then you can just paint them all like a hot rod play War Thunder

for free on PC Playstation or Xbox now by using the link in the pin comment or description new and returning players that haven't played in 6 months will also receive a massive Bonus Pack including multiple premium Vehicles the exclusive vehicle decorator Eagle of Valor 100,000 silver lines and 7 Days of a premium account before we get into it we must as always give the big disclaimer the team here at ee are not environmental scientists so in addressing things like the negative side effects or negative externalities of fossil fuel use we're going to fall back on

Publications from people who are are experts in this area and instead primarily focus on the economic dynamics of this issue for a more comprehensive analysis of what these negative externalities could do Beyond just they are bad and we should avoid them there's no shortage of more qualified people discussing that particular issue with that out of the way there is a common misconception that no matter what we do as individuals our impact on fossil fuel usage and the subsequent externalities that come with it are basically irrelevant compared to the scale of industrial operations around the world

the common joke is that using a paper straw while BP dumps millions of liters of oil into the ocean rather poignantly highlights this understandable feeling of insignificance and a lot of research does back this up one of the most often highlighted reports found that just 100 of the world's largest companies were responsible for over 71% of industrial carbon emissions globally so even if as individuals we all behaved perfectly and cut out carbon emissions entirely we would only achieve a 29% reduction at Best in a problem that is getting exponentially worse every year this has been

reported widely by even very reputable economists and commentators but unfortunately or perhaps fortunately it's also wrong the research itself is fine just misunderstood for starters it only measured industrial carbon emissions so it didn't count emissions from things like agriculture forest fires and regular natural decomposition although if anything that just highlights that the problem is bigger than any one industry and now look this is not to defend the actions of these companies but the even more important thing to understand here is that all of them are producing carbon emissions to make stuff for us there are

three types of goods and services that can be produced in an economy capital goods intermediate goods and and consumer goods capital goods and services are things like Machinery tools and training that are used to produce other Goods a metal press a factory is a capital good the metal panels that it stamps out though would be counted as an intermediate good which are things that aren't an end product in their own right but get used as Parts in either capital goods or consumer goods that metal panel might end up on another Factory machine or in something

like a personal car which is a consumer good consumer goods are probably the simplest to understand they are products that are sold to Consumers for them to use to improve their quality of life in some way the ultimate end goal of any economy is to provide as many consumer goods and services to its participants as possible and that might sound very shallow but remember consumer goods and services are not just fancy clothes the latest iPhone and an anti-socially large SUV they also include things like food Medical Services education and adequate housing this broad definition of

what count as a consumer good or service is particularly important as it relates to the economics surrounding fossil fuels so make sure to remember that for later the point for now though is that even though 100 companies did produce 71% of the world's industrial emissions they were only doing It ultimately to produce consumer goods for regular people China Cole which was the largest single contributor directly responsible for 14.3% of all Global emissions During the period the study measured wasn't burning coal because it hated the atmosphere it was burning it primarily to produce electricity for China

to use in its factories to produce cheap consumer goods that every single person watching this video has benefited from the carbon emissions were means to an end for these companies to produce Goods that are ultimately consumed by us so while it's perhaps cathartic to handwave this problem onto these companies they wouldn't be doing this if the people weren't there to consume the things that were using fossil fuels to produce now if that being said it would be greatly beneficial to have someone or something to point the finger out for this problem because that would make

economic policies that address this issue far easy to implement but unfortunately even that is difficult the use of that coal in China has also produced energy to fuel the domestic development of the Chinese economy which has led to the eradication of poverty for hundreds of millions of people the consumption of energy is almost perfectly correlated with income because not only do wealthier people enjoy more energy dependent luxuries like electric appliances air conditioning personal transportation and the consumption of more goods and services they also need more energy to produce their higher incomes in the first place

but the higher incomes that come from higher energy use which in turn still primarily come from fossil fuel use and not always paid to the people in the exact location where those fossil fuels are consumed this is where the blame of fossil fuel externalities become as much a question of philosophy as it is economics the production of modern Goods has become far more complicated with even basic items pulling components and raw materials from dozens of countries before being assembled and shipped to their own destination where they're ultimately consumed even beyond that there's the process of

disposing of or recycling Goods once they have been consumed every step of a modern supply chain involves the use of fossil fuels and even if some part of this process can Source energy from Renewables there are things like shipping either by land sea or air that just don't have any available nonfossil fuel Alternatives this lengthy process makes it difficult to trace back who is truly benefiting from fossil fuel use and who who's really paying the price for it and that's an important thing to get right not only because it makes it possible to point a

cathartic finger but because it makes it easier to create policy around developing countries like China and even New Caledonia produce two to four times the carbon emissions per capita of advanced European economies like Switzerland but people in Switzerland produce nearly an order of magnitude more wealth every year the simple explanation for this is that countries like China and new calonia are doing a lot of the world's Dirty Work their Industries produce less economic value per person overall but they are operating business businesses like big crude factories or strip VES that take a lot of power

normally provided by outdated power stations or diesel generators compare that to Industries in places like switzland where most of their economic output and value ad comes from people working in offices where the most energy intensive machine they'll use in any given day is the air conditioning to keep the place warm or cool wealthy countries like this also have more money to put towards investments into renewable energy sources than poor manufacturing based economies which are frequently using very outdated power plant now the thing here is that since they earn much more money by doing this work

they can produce more and are ultimately the endc consumers of a lot of that stuff that manufacturing based economies produce so the question is are they more responsible for the negative externalities caused by the fossil fuels than the people actually burning them it's an important question because a lot of countries have started to implement or seriously consider trade restrictions and tariffs based on how much carbon the countries they are importing from emit so if a country hypothetically produced all of its goods using totally renewable and Emissions free processes it wouldn't pay anything to import its

products into the country with this carbon tariff but of course a country that still uses outdated cied power plants to power inefficient factories would pay a tariff to import its goods theoretically this would make the goods from the dirty country more expensive and therefore less competitive in that market which would incentivize especially export Le economies to invest into cleaner Manufacturing in reality most Manufacturing in the world today despite improvements is still pretty carbon intensive and that's disregarding the bunker fuel powered cargo ships that transport these Goods all these systems really do is make things more

expensive for consumers in the economy implementing these trade restrictions because importers are going to pass those costs along to end consumers now this hit to consumption in the end consumers pocket by itself isn't necessarily the worst thing if the only goal is a reduction in fossil fuel use because an increase in price will all other things been equal lead to a reduction in consumption which means a proportional reduction in carbon emissions of course an economy must also consider factors like living expenses and that's the true trade-off at the heart of this issue nobody really wants

to consume less stuff so companies struggle to compete based on their environmental efforts policies that increase prices to offset EXT alities are rarely popular and investments into alternatives are rarely made where they're needed the most but now that energy production from Renewables is cheaper than fossil fuels does this change the economics hot take alert here but from a macroeconomic perspective it's counterproductive to just assume that fossil fuels are bad and any alternative is going to be better the reason that fossil fuels despite their drawbacks are still so commonly used today is that they have a

lot of advantages that we have built our economies around they may not be renewable but they are highly abundant and fears of things like peak oil and no longer a concern at least for the immediate future fossil fuels are also relatively easy to transport to provide an energy source anywhere in the world something like hydroelectricity and geothermal energy are amazing options where they are available but they're not available everywhere and they can't be transported beyond the reasonable range of electrical transmission lines fossil fuels are also energy dense which means especially things like commercial transportation relies

on fossil fuels because equivalent battery packs are at least currently so large and heavy that they take up too much space to make things like electric trucks or container ships possible another inherited Advantage is that the industrial world has effectively been built around energy from fossil fuels even if the technology was there to Electrify the cars trucks planes and ships that drive our global economy it would be a significant investment into rebuilding the infrastructure that surrounds these operations all of that infrastructure also takes a lot of energy to create which means the benefits especially in

already highly developed countries that don't originate a lot of these emissions are hard to fully realize now this would be almost impossible if fossil fuels still had the advantages that set them apart for long time which is their relatively low cost now the final cost of producing energy from any source is broken down into the uprint costs and the ongoing costs energy sources like natural gas have consistently been very cheap because the plants that burn them to generate electricity are relatively simple well understood and easy to scale they do however have ongoing variable costs because

the natural gas needs to be continuously pumped in these facilities to make them operate a similar direct alternative like nuclear energy has lower input costs thanks to how little fuel reactors actually use but the price to construct these facilities to Modern standards and and ensure adequate precautions are taken around waste safety means that over their lifetime they are still an expensive alternative that being said hypothetically if a highly energy dependent industrial economy already had operating nuclear power stations it would make sense from an ecological and economic perspective to make sure that they stay operating instead

of relying on fossil fuels from a neighboring country with not the greatest geopolitical track record hypothetically of course something like Photo takes on the other hand are cheaper to operate once installed since Beyond basic maintenance they don't have any input costs but creating the same capacity with them is for now at least much more expensive the panels themselves are more expensive for the same energy output and they require more land to be set up on adding to The Upfront costs they also work best in places that get a lot of sun and without even more

expensive Storage Solutions they're useless at night fortunately the price of panels has come down so much as Technology and Manufacturing has improved that once factoring in those fixed and variable costs over the life of the two electrical sources solar panels are now on average cheaper which is great but the important qualifier here is over the lifespan of these installations an investment that pays itself off over decades is palatable for an advanced economy with modest growth and a lot of excess wealth to put towards this kind of return but the regions of the world that are

producing the most carbon emissions are developing economies that either don't have the money to make those Investments or have other more pressing things to spend it on if an undeveloped economy is growing at 5% every year fueled by industrialization most of that economy's attention should be reinvesting back into that industry to hopefully improve the lives and living conditions of its people making large upfront investments into Renewables at the expense of making other investments into industrial infrastructure to further push compounding economic growth is a hard thing to ask developing economies to do when advanced economies have

already benefited from taking advantage of exactly the same energy sources a demonstration of just how unfair this is might actually touch on a surprisingly viable solution if economies are effectively going to be trading money for a reduction in emissions either through taxes on polling Goods polluting companies tariffs on polluting countries or subsidies on things like EVS or solar panels then it makes sense that that expenditure to be directed to where it's going to do the most good spending a billion dollars of taxpayer money on modernizing coal plants in a foreign country would reduce emissions more

than spending a billion dollars on domestic EV subsidies but it would understandably be far less politically popular amongst those same taxpayers so just like it would be difficult for a high emissions developing manufacturing economy to sell the idea of slowing down economic progress for the benefit of the world it would be just as difficult to sell the idea advanced economies making the same trade-off of spending money to reduce emissions in other countries where that spending would the highest marginal benefit a solution that is fair economically viable politically popular and not vulnerable to exploitation by Bad

actors is clearly elusive which is why despite a keen awareness of the drawbacks of fossil fuels and massive progress in making Alternatives more viable the economics of hundreds of countries all looking out for their own best interest on a global issue is why this chart still looks like this and don't forget to play War Thunder now on PC Xbox or Playstation and claim your welcome goodies like the eagle of Valor 3D decorator 100,000 silver lines and 7 Days of a premium account now in this video we threw a bit of shade at Germany who has

recently made exactly the wrong decisions and somehow ended up more dependent on fossil fuels for less of an economic benefit we didn't want to go too far into that particular example because we made an entire video on it just a few weeks ago which you should be able to click to on your screen now thanks for watching mate bye