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Will high oil prices solve global warming?

Posted by Richard D North in Global Warming / Green / Money on 31 May 2008

Why we posted this: Here are some possible answers to a crucial question. Do high oil prices send better signals on climate change than governments ever could? The answer’s mostly yes.

The original story:
FSA chief heats fuel debate
Fiona Harvey and Jean Eaglesham
Financial Times
31 May, 2008  
Summary of the story:
The new chief of the UK Financial Services Authority, and chair of the UK government’s official climate change committee, the widely-admired Adair Turner, told the FT that higher energy prices are a “legitimate” way to cut greenhouse gas emissisons. Remarking that there “are huge opportunities for energy efficiency”, Lord Turner seems to be arguing that it would be a mistake for governmts to attempt to ease the high energy prices the market has brought about. Poor people, he said, should be given intensified support to meet the high prices.

livingissues comment:
The recent high oil prices have increased the price of energy to conumers by very much more than any government would dare to attempt with “green” taxes. So they are a “good thing”, at least if you believe that weening people off energy use matters. Of course, you may worry that damaging economic growth is also a bad thing. But even then, it’s not clear that modern economies need cheap energy.

Of course, energy prices may not stay high. So it may be a bad idea for governments to get people into the habit of thinking that green taxes are redundant.

There seems to be good evidence that in the short term (months and years) people are stuck with using a fixed amount of energy, and will pay through the nose to get it. If prices stay high, they have lots of ways of reducing their energy take. The Economist had an exceptionally clear article on this subject. 

 Indeed, it is very uncertain that governments have really bothered to “punish” energy use as much as they pretend. Energy taxes have been high enough to be good earners for the exchequer (taxman) but not high enough to alter our behaviour much.


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