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Climate Change Is Important: Energy Conservation is the First Step


April 21, 2010

Energy Prices on the Rise (Again), Oil Over $80/barrel (Again)

Category: Economics,Policy – Tom Harrison – 8:00 am

Volatile Natural Gas PricesIn the last month, oil prices have been over $80 a barrel — prices were over $86 twice, fell, and are now back on their way up.

Gasoline prices are around $2.80/gallon, up from around $2.00/gallon a year ago and rising a little each week over the last month.

Heating oil cost has risen over the year from $1.40/gallon to around $2.20/gallon.

Natural gas is also up year over year, rising from around $3.50/MMBTU to around $4.00, and volatile, closing over $7 for a few days in the winter.

However, domestic US Coal prices are about even, down a little, this year (from $2.21/MMBTU to $2.14) — I guess the energy we produce at home can be less expensive. Too bad burning coal releases about 2x the CO2 of natural gas (and a great deal more than wind and solar).

How We Respond To Energy Price Changes

But it appears that only energy prices drive our behaviors. We tend to over-react in some ways (markets, producers, consumers), yet have remarkably short memories, and seemingly weak abilities to identify coming changes.

I do understand that many people are negatively affected by high energy prices (and that higher prices disproportionately affect low-income families), but I would argue that price volatility, leading to uncertainty is the more painful element of energy prices. Adding renewable energy sources to the mix only helps this, although at today’s levels, we’re not producing enough to really affect the market.

Will Higher Prices Cause Us To Act On Climate Change?

But my real concern is climate change. But climate change is mostly abstract and distant (unless some great chunk of ice slides into the sea). I believe that meaningful legislation for climate change will be wrapped in the more immediately accessible concerns of energy security and green jobs, but those are not enough. It may sound callous, but high energy prices also bring the problem home, even if they create some pain.

Perhaps this time we can plan in advance a little. But I doubt it.

I am cheered and hopeful that the Obama administration does seem to have the courage and skill to act on issues that people are confused about, like health care.

Sources:
Weekly U.S. Retail Gasoline Prices (US DOE)
Last year’s DOE Price Projections
Oil and Gas Spot Prices

1 Comment

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