To Increase Costs or Not to Increase Costs On Energy Use: Increase Costs!


    Although widely unpopular, the idea that Americans should pay MORE for energy to reduce overall usage is indeed an option that requires serious consideration by Federal, state, and local governments.

    At present, the U.S. participates in one of the world’s most egregious market distortions by keeping the costs of energy down in the country. By looking at both government supports and what “policymakers are refusing to do,” a recent report by the International Monetary Fund (IMF) concluded that governments across the planet held energy costs down by $2 trillion in 2011. The U.S. was, of course, one of the worst offenders.

    While increasing the costs of energy in the U.S. may be a bitter pill to swallow at first, it’s nothing that U.S. citizens cannot cope with and it may also have the indirect effect of making Americans more aware of climate change itself, not just how much energy their using or not using.

    And herein lies the biggest challenge that any government, private or nonprofit group faces in raising climate change awareness: how do you make what appears to many Americans as an abstract “thing” that has no apparent, immediate, or direct impact on their lives into a tangible phenomenon that has real-world effects everyday in each of our lives? The pictures and stories of wild fires in the West, droughts in the Midwest, and chaotic weather in the Northeast haven’t had the desired effect on most Americans (however, there are a number of conflicting polls on this and related issues; no duh, right?!).  

    In an important way, the immensity of the problem of climate change has been a real issue and those who have attempted to raise awareness haven’t done the best of jobs conveying the simple, everyday tasks that Americans can undertake to reduce their “carbon footprint”. Or if the ideas have been proposed, they haven’t been pushed very hard on Americans reluctant to, for instance, car pool with their neighbors to work.

    The pessimists say that it will take a catastrophe for Americans to finally come around to the idea that we will all have to make some sacrifices in our daily lives. However, catastrophes have already happened and still little, if any, positive change has occurred.

    We shouldn’t throw in the towel, of course. Cultural shifts like the one many individuals are advocating to reduce America’s carbon footprint take time. But increasing the price of energy for Americans would certainly go a long way in expediting that process!  

    • pontoon

      everything we can to get off fossil fuels and I don’t know where you live, but can tell you that my energy costs have increased substantially in the last 5 years since I first moved into my current home.  The electricity bill has increased from an average $85 per month to well over $180 per month. I’m not using more.  I do everything possible to use less power, including setting the thermostat at 67 and wearing warm clothing during the winter.

      The recession has taken a heavy toll on the middle class and working poor leaving many struggling to make ends meet as it is.  Discussion by our County Board of Supervisors of additional property tax increases to sustain county government because of the drop in real estate values and reductions in state funding is another tax increase many folks who can’t afford to pay more face. Higher energy costs will only compound the difficult choices many must already make.  

      Expediting research and development, and subsidizing wind, solar and other renewable energy sources is a viable option…if you or I or anyone else could get Congress to do something, anything.

    • kindler

      …where Dems recently agreed with Repubs to lower the gas tax, while putting a punishing annual tax on hybrid cars, as the way to pay for transportation infrastructure.

      And a fair number of them are going around bragging like they just did something wonderful.  

    • on Scaling Green a few days ago.

      One key takeaway from the IMF report is the staggering size of global fossil fuel subsidies: $1.9 trillion, counting both direct subsidies and also “negative externalities from energy consumption,” in 2011 alone. However, as David Roberts of Grist helpfully points out, the IMF estimates of fossil fuel subsidies are almost certainly too low, given the IMF’s significant underestimate of the “social cost of capital.” According to Roberts:

      … if carbon were responsible for half the indirect subsidies, and the SCC were $83 instead of $25, the grand total of annual global fossil fuel subsidies would rise from $1.9 trillion to around $3.5 trillion.

      There have been many studies demonstrating the massive “market failure” going on here – the inherent inability of markets to take into account “externalities” – costs which result “from an activity or transaction and which affects an otherwise uninvolved party who did not choose to incur [those] costs.” Things like pollution and adverse impacts on health can add up to enormous numbers rapidly. For example, a Harvard study found that the full “lifecycle cost” of coal to the U.S. public is actually upwards of $500 billion a year. That’s just one fossil fuel (coal) for one country (ours). Yet the market doesn’t take ANY of that into account. Nor does it take into account the national security costs of our oil “addiction,” which include fueling terrorism and contributing to wars like the 1991 Operation Desert Storm, followed by around 20 years of almost continuous war between the US and Iraq. Those wars cost trillions of dollars, and they were fueled to a significant extent by oil, yet little if any of that is taken into account in the price of oil. Finally, there’s the whole “devil’s excrement aspect to fossil fuels – “waste, corruption, consumption, our public services falling apart.” Other than that, it’s great stuff! (snark)