Fifty Fifty: A Simple Observation on the Price of Oil and Solar

Oct 09 2013 Published by under Energy from the desert

About a week ago I blogged about a new report on the cost Germany has to pay for fossil fuel commissioned by the German Green party and written by Steffen Bukold. I noted that all renewable energy is domestic energy. Getting the transition to renewable energy done faster will save Germany trillions of dollars in costs for fossil fuel imports.

But here is another interesting fact I learned from that study. At page 17 the study tells us that in 1972 one barrel of oil cost $2 in average. In contrast, in 2012 that number had gone to over $100. Oil prices increased by a factor of 50 in only forty years.

And from the Wikipedia page on solar cells we can see that the cost of solar was $100 a watt in 1972. So if the cost of solar was $2 per watt now, solar would have gone down by a factor of fifty in the same time oil went up by a factor of fifty. That would be nice for the exact symmetry achieved. It also would make my headline correct.

However, in the real world things don’t play out quite that way. Actually solar is now at around $0.46 per watt, and it was around 0.50 in 2012. So that’s a decrease by a factor of 200 in forty years.

That of course means that the relation between prices of oil and solar has changed by a factor of 10,000 in those last forty years.

And there is no end in sight. Solar will get cheaper. And oil will get more expensive, as the low hanging fruit oil fields become depleted and new energy demand from China and India kicks in.

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