The economic impact of fossil fuels is complex and varied. We use fossil fuels, everyday even without realizing how they impact our lives. Natural resources like coal, petroleum oil and natural gas, are the most common forms of fossil fuels available. While we mainly use fossil fuels to produce energy, including heating, electricity and transportation, we also use them to manufacture items we use everyday like plastics, paints, fertilizers, and even cosmetics. The federal government regulates and influences the use and development of the fossil fuel industry. The Department of Energy and policymakers evaluate both the short and long-term impacts of fossil fuels to help guide our energy policies by developing regulations and conducting research at local, state and federal levels. To best understand the impacts fossil fuels have on our day-to-day lives and our planet’s future, one should evaluate both their benefits and their drawbacks.
Fossil fuels have forever changed how we approach manufacturing, transportation, industrialization and energy security. Historically, they have been the drivers of economic growth and a significant contributor to the Gross Domestic Product (GDP). Due to the affordability of fossil fuels, industries like the oil and gas industries aid in job creations for millions of people here and around the world. The fossil fuel industry is also a significant source of tax revenue for the government, bringing in over $138 billion annually between 2015 to 2019, from royalties, taxes and lease sales from coal, natural gas and oil. This revenue helps to fund essential public services like healthcare, schools and infrastructure. Infrastructure development and pipeline construction are important aspects of fossil fuel extraction and transportation. It contributes to the creation of jobs and helps to stimulate the economy in the surrounding regions.
Fossil fuels are also used in many power plants. Fossil fuels like natural gas, are a key source of electricity generation here in the United States. Natural gas, a low-carbon fossil fuel, has lower emissions than oil and coal and is thought to be a step toward decarbonization. Fossil fuel power plants generate electricity by burning natural gas, oil or coal. As fossil fuel production and energy production increases, our dependency on foreign energy sources subsides and increases our energy security. Additionally, fossil fuels are cost-effective, can be found easily and they can generate large amounts of electricity at a single location. While fossil fuel use is an affordable energy source in short-term situations, renewable energy sources like solar power and wind power are becoming increasingly more affordable and environmental benefits. Fossil fuel subsidies like tax breaks can be beneficial for oil and gas companies but can cost society and our government billions of dollars annually, impacting the tax revenues when prices are artificially lowered. The full economic costs and expenditures of fossil fuels, including health and environmental impacts are not reflected in the affordable prices seen in the market, making it easy to overlook in the short-term.
The other benefit of fossil fuels is that they can are available on-demand. This means, that natural gas generating stations, for example, can be brought online to keep up with power generation demands when needed. Unlike renewable power assets, fossil fuel plants can often quickly produce electricity when and where it is needed. When electricity demand is surging on hot summer days and cold winter nights, fossil fuel plants can be relied up to produce the electricity that is needed on the grid.
Although fossil fuels are a cost-effective source of energy, their use comes with significant drawbacks. Coal, natural gas and petroleum dominate the global energy mix which accounts for almost 80% of primary energy consumption. Fossil fuel power plants generate electricity by burning coal, oil, or natural gas to produce heat, which creates steam to drive turbines connected to electrical generators. This fossil fuel combustion process releases substantial amounts of air pollutants and greenhouse gases, making these plants a major contributor to environmental degradation and climate change. Fossil fuel and gas production have a significant impact on land use through activities such as mining, drilling, pipeline construction, and the development of transportation and storage infrastructure. These operations often disrupt ecosystems, degrade water resources, and threaten biodiversity. Carbon dioxide, sulfur dioxide, nitrogen oxides and other particulate matter are several of the air pollutants released when burning these fossil fuels.
Carbon dioxide, a type of carbon emission and byproduct of using fossil fuels, is a primary contributor to climate change and global warming. With warmer temperatures come warmer oceans which fuels extreme weather like stronger hurricanes, cyclones and typhoons. The global warming effect contributes to stronger winds, heavier rain fall and increases risks of flooding for coastal regions. Greenhouse gas emissions also contribute to acid rain and smog. Fossil fuels impact human health both directly and indirectly. Air pollution continues to be a public health concern globally. Air pollution from these fossil fuels is thought to be responsible for cardiovascular and respiratory diseases and premature deaths every year. Global warming from these fossil fuels also affects water sources, increases vector-borne diseases like West Nile virus or Lyme disease, and can disrupt food production, affecting millions of people world-wide, particularly low-income communities. These types of health impacts are hard to ignore and require countries globally to unite to make meaningful changes to policies and how fossil fuels are used in the future.
In recent years, the US began transitioning towards more renewable energy sources, like solar power and wind power. This renewable energy transition is expected to impact the fossil fuel industry causing a decline in revenue. This industry receives subsidies which if removed or reduced could allow for larger investments in clean energy technologies, renewable energy sources and other renewable energy technologies, which can stimulate economic growth. New York state is one of many states, actively working to transition away from using fossil fuels, placing bans on fossil fuel equipment in new buildings and pursuing initiatives to reduce greenhouse gas emissions. These climate actions are steps in a positive direction and will require mitigating emissions, improving energy technologies that capture carbon, adapting infrastructure improvements and policy changes. Washington, DC also has a climate action plan, Clean Energy DC, which is a guideline for meeting their climate change goals by increasing clean energies like solar and wind, and improve the resilience and energy efficiency of their infrastructure. Part of their goal is to also improve their transportation sector but focusing on electrifying vehicles. Currently, 75% of Washington, DC’s emissions come from the energy used to power, heat and cool buildings.
The renewable energy transition will need to rely on metrics like Electricity Generation Capacity (EGC) and Total Primary Energy (TPE) to help pave the steps to mitigate climate change and the changes in consumption patterns, energy supply and infrastructure. This shift unfolds gradually, relying on supportive policies, technological innovation, and the expansion of infrastructure. Tools and methodologies developed by organizations like ICAT and IRENA are crucial for evaluating the outcomes of renewable energy policies, helping to ensure they are both effective and efficient.
In summary, fossil fuels remain deeply intertwined with our economy and daily lives, powering everything from transportation and electricity to the production of everyday goods like plastics and cosmetics. While their benefits are evident in modern convenience and economic development, their long-term impacts on the environment and public health cannot be ignored. Through regulation, research, and policy development, agencies like the Department of Energy aim to balance these benefits with the need for sustainable practices. Ultimately, understanding both the advantages and drawbacks of fossil fuels is essential for making informed decisions about our energy future.