Since the industrial revolution, fossil fuels have had a dominant footprint in energy production. However, the environmental concerns of fossil fuels use and their inevitable depletion have led to a global shift toward renewable energy sources. This shift raises questions about the best choice of renewables and the impact of investing in these resources on consumer costs.
In a recent study published in the journal Nature Communications, researchers at Texas A&M, including Dr. Stratos Pistikopoulos, professor and director of the Texas A&M Energy Institute, have devised a metric to reflect the average price of energy in the United States. Much like how the Dow Jones Industrial Average indicates trends in stock market prices, the researchers’ metric reflects the changes in energy prices resulting from the type of energy sources available and their supply chains.
To address this gap, researchers first identified different energy feedstocks, such as crude oil, wind, solar and biomass, and their energy products. Next, they categorized the energy end users as either residential, commercial, industrial or transportation. Finally, they identified the supply chains that connected the energy products to consumers. All this information was used to calculate the average price of energy, called the energy price index, for a given month and forecast energy prices and demands for future months.
As a potential real-world use of this metric, researchers explored several policy case studies. Most notably, they tracked a $5-per-barrel increase in crude oil tax through the energy price index. They found that around $148 billion could be generated every four years without a significant monthly cost increase of U.S. household energy.
Dr. Stratos Pistikopoulos
- Director, Texas A&M Energy Institute Dow Chemical Chair