11-25-08 by dugan
There’s no doubt that the crash in oil prices has taken pressure off
of consumers and government, even though record-high energy prices did
some serious economic damage before the fall. It’s like being grateful
to the mugger who finally stops hitting you on the head with a rock.
But what if lower prices lead the U.S. and other nations to cancel efforts against global warming, and consumers to rush back to SUVs and other gas-guzzlers?
There are growing signs that both could happen, just as I fretted in an earlier post.
The New York Times reports
that governments are still talking a good game about global warming
reductions, but both the economy and the energy price crash are working
against the funding and the will to develop renewable energy sources like
wind and solar, and to pay the costs of overall carbon emission
reductions.
When Chinese workers are scavenging for coal, as in
the photo below, governments think less about wind farms
In the Los Angeles Times today are indications that
SUV buyers may soon return to car dealers, and more drivers may be
"ready to guzzle again." It will be up to governments, which are
distracted and strapped for cash, to develop the regulatory carrots and
sticks that keep high fuel economy attractive to car makers and drivers
alike.
And as Lester Lave, a professor at Carnegie Mellon
University’s Tepper School of business tells the Times, wild
up-and-down energy markets haven’t gone away:
Lave said that the oil markets would be just as volatile over the next
five years as they have been in the last five months. He said oil
prices had less to do with actual supplies and more to do with swings
in demand and too much speculation over whether there was too much oil
or too little."The supply of oil has remained relatively constant," Lave said.
"But futures markets have been overshooting on the upside when
economies are booming and there are concerns about supply. They are
doing the same now over a potential glut as the world moves into a
recession."
All the more reason for government to do immediately one thing that
won’t require infrastructure or big subsidies: Regulate energy markets
to quell some of the senseless speculation and stop the roller coaster.
Make it more expensive for speculators who don’t sell or buy
actual physical oil to enter futures markets purely as bettors. Make
energy markets more transparent, so regulators and the public alike can
tell more about who’s trading and what they’re doing. Don’t leave the
world’s energy future to the "magic of the market."