Alternative Energy: Today’s Importance of the Question

Energy report and suggestions for subsidies to the President of the United States

Today the world is facing acute energy crisis due to the increasing consumption of energy. Studies by US Office of Technology Assessment (OTA) show that the consumption will be increasing to triple in the next 30 years. “Increasing population and escalating demand are the main factors that result in high energy consumption. It is high time we looked for alternative energy sources to overcome the energy crisis and ever increasing demand.” (Energy consumption in developing countries, 1991).

Price, demand and supply of oil

While assessing the demand and supply of oil we see that the world consumes more than it produces. Approximately 84million barrels of oil are extracted and almost the same amount is consumed. However, the price of oil shows a reverse trend from the previous year. The production cost is higher than the price of oil. Moreover, no new refineries have been built since 1976 in US. ”During 1982 there were 301 operable refineries and today there is only 149 refineries.” (Oil dashboard. 2009). As countries develop and industrialize, their oil consumption also grows with their economy. The increased usage of oil will lead the human kind to the extreme conditions of global warming and ecological imbalances which question the existence of the whole living creatures on the earth. The demand and supply of oil is highly inelastic in the short term. Even though the price goes up, we purchase oil as we cannot switch over to another fuel i.e. impact on demand is very small. In long term, the oil demand and supply is elastic i.e. increasing oil price will lead to reduction in consumption or shift from oil to other forms of energy.” (Goose, 2007).

Feasibility of alternative energy sources

All alternative energy technologies have risks and drawbacks. The best alternative energy should be compatible with the present distribution and consumption. The world’s total energy demand is about 400 quadrillion every year. Oil, coal and natural gas satisfy 88% of the world’s energy needs and in that oil is 41 %, coal 24% and natural gas 22%. Some estimates show that the energy sources will be depleted within 50 years, which others say it will be there for 100-120 years. As per the current estimate, only 7% of the alternative sources are extracted during this period. Since the fossils fuels are going to be depleted within a short period, we cannot depend more on it. Due to the devastating nature of nuclear energy, we cannot take it as a satisfying energy source. Thus the only hope rests on the alternative energy or renewable energy. An important alternative energy source is solar energy which is the most resourceful energy source for the future. It has become the second fastest growing energy source today. The total energy that we receive from the sun is estimated to be 35000 times the total energy used by the mankind. European Photovoltic Industry Association estimated that solar energy will satisfy more than one billion people by 2020 and 26% of global needs by 2040. Now more and more countries promote solar energy in order to lower the greenhouse gas emissions. The main advantage of the solar energy is that it is non-polluting. It is entirely free and is abundantly available and renewable. It is endless in supply. Wind and hydroelectric power, which have been used effectively for generations, are also other rapidly growing energy markets. Another form of hydroelectric energy is tidal power. Tidal power stations collect the energy created by the rise and fall of the tides to convert it to electricity. Biomass energy, or energy from burning plants and other organic matter, is man’s one of earliest sources of energy. Wood was once the main source of power for heat, and it is still used in many developing countries. “Roughly one to two billion people in the developing nations still use wood as their primary source of energy.” (Oil dashboard, 2009).

Role of tax subsidy for alternative source of energy

Even though alternative source of energy seems desirable and the cost for it is low as compared to the oil prices, alternative energy is not profitable. The solar energy (photovoltaic) system cost around $32,000 and the running cost is $9per week. Subsidies will help the individuals and companies to have their own alternative energy generators. Tax subsidy will lower the price of alternative energy and will encourage the over consumption of alternate energy. This can be done with the help from the governmental and non governmental agencies. Subsidies and incentives can also be used for the research and development and to educate people about the new energy sources, mainly solar energy, wind etc. Through this measure, we can assure that the coming generation doesn’t have many problems regarding the energy.


Alternative sources of energy are solar energy, wind energy, natural gas, hydroelectric power, hydrogen energy and nuclear energy. Among the alternative sources, solar energy is the most important and it is formed by a radiation by nuclear fusion. Most of the countries are now focusing on investing in solar energy. It shows the beginning of a new era and it requires active support from the people as well as from the government.


Energy consumption in developing countries. (1991). All Business: A D & B Company. Web.

Goose. (2007). The economics of oil, part 1: Supply and demand. The Oil Drum: Discussions About Energy and Our Future. Web.

McLamb, Eric. (2008). Fossils fuels vs. renewable energy resources: Energy’s future today. Ecology: Global Network. Web.

Oil dashboard. (2009). Web.

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