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Lagniappe
Daniel Akst/NYT: On the contrary
the good news about oil prices is the bad news
THE bad news about energy just keeps coming. Oil prices have fallen sharply since July. Nuclear tensions with Iran and Alaskan pipeline troubles haven’t caused an upward spike. A weakening real estate market and other possible harbingers of recession suggest that oil demand — and therefore prices — could erode even further.Finally, in something like the coup de grâce, Chevron and its partners announced a new oil discovery in the Gulf of Mexico, one that could increase America’s oil reserves by as much as 50 percent.
What’s that you say? You think this sounds like good news rather than bad? You figure cheaper oil would boost economic growth while slashing the income of such lovable oil exporters as Iran?
Don’t kid yourself. Anything that reinforces the role of fossil fuels — particularly oil — as the industrial world’s primary energy source is bad, not good. Anything that prolongs the life of the internal combustion engine is a negative, not a positive. Anything that makes it cheaper to pump greenhouse gases into the atmosphere is cause for mourning rather than celebration.
What we need is not lower oil prices but higher ones — significantly higher, enough to deter consumption and make us look seriously at alternatives.
Of course, it would be nice not to have to rely on cartels and circumstances to make us moderate our consumption. Hefty taxes on carbon-based energy, the proceeds of which could fuel research into nonfossil alternatives, would be a much better approach, since then at least we’d be paying ourselves instead of our friends at the Organization of the Petroleum Exporting Countries. As a bonus for saving the planet, we might even undermine the intolerance and autocracy that are abetted in many places by oil money.
The sad fact is that just as oil is the lifeblood of Western economies, oil revenue often is the lifeblood of tyranny. Oil-rich regimes that trample the rights of women, finance terrorism and preach intolerance are sustained by what we spend on gasoline and heating oil. The unfortunate paradox is that moderating oil prices, while they may reduce the earnings of despots in the short run, will only support our harmful addiction — and the power of those same despots — in the long run.
If that were the only bad thing resulting from lower oil prices, it would be sufficient. Ah, but there’s so much more. Lower oil prices would promote more driving, for instance, a dismal outcome that would increase air pollution and, in all likelihood, highway fatalities. More than 43,000 people were killed on United States roads last year, and 2.7 million were injured. Many thousands die annually from airborne pollutants as well.
Then there’s sprawl. Cheaper gas will mean more far-flung, automobile-dependent communities. That will bring more driving still, which will result in even more pollution and accidents. This is to say nothing of the health effects associated with driving everywhere instead of walking.
All that driving brings us back to global warming. Fossil fuels are implicated in what appears to be significant human-induced climate change. Everyone I know professes to worry about this, but let’s face it: nothing but drastically higher prices will deter most of us from consuming more carbon-based energy. Meanwhile, oil prices remain distressingly low. Adjusted for inflation, remember, prices peaked some 25 years ago.
HIGHER prices have worked wonders before. Today, Americans can generate a dollar of gross domestic product using just half the energy required in 1973, that watershed year of the oil embargo and lines at gas stations. In countries where energy is more expensive, a dollar of G.D.P. requires considerably less energy still. Unlike a tax, moreover, higher prices have the advantage of applying all over the world, to everyone.
The burden of higher oil prices, unfortunately, will fall most heavily on the world’s poor — but then again, so would the burden of climate change. And surely the poor would benefit from technologies that provide alternatives to fossil fuels.
The good news, meanwhile, is that many of the world’s poor are joining the middle class, so that they too can drive everywhere and enjoy air-conditioning when they arrive. Perhaps their newfound affluence will do us the favor of driving up oil prices before it’s too late.
Daniel Akst is a journalist and novelist who writes often about business.
(culmoney@nytimes.com).Petroleumworld not necessarily share these views.Editor's Note: This article was originally published by the New York Times on Sept. 17, 2006. Petroleumworld reprint this article in the interest of our readers.
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Petroleumworld News 09/26/06
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