The Comprehensive Answer to an Inconvenient Truth
Vice President Gore has been crusading against global warming for about the same amount of time that I have been promoting higher energy taxes (see also The Answer in Two Parts; Parts I and II). He is to be commended for his dedication to this cause and his movie is a terrific platform to get his message out. He is right to point out that there are solutions within our grasp for this vexing problem. However, in addition to having the solutions one has to decide how to implement them. In this regard Vice president Gore calls upon voluntary measures for the most part. However, this method has and will continue to be ineffectual. The reason for this can be found in human nature and the laws of supply and demand (see also The Economics of Oil).
Imagine (again) that there are two families living next to each other. One is Joe Thrifty. He and his family live in a maximally insulated home, have the most efficient appliances, drive their Prius as little as possible, and turn out lights and turn down thermostats as much as possible.
They live next door to Jane Spendthrift. Her family drives three hummers, lives in a 7000 square foot house, has every appliance known to man, and don’t seem to know where the off switch is on any of them. One day Ms. Spendthrift comes home and tells her son who is watching TV while playing video games and listening to the stereo to get off the couch and get some exercise. “Take the Hummer for a spin. But be sure to stop at Fred’s Exxon Mobil because Fred is having a sale.”
Why is Fred having a sale? Because Joe has been so thrifty that he has decreased demand. Prices drop as a result so it is easier for Jane Spendthrift and her family to be wasteful. When it comes to energy everyone has to save at the same time. Voluntary measures at best do nothing and at worst give people a false sense of accomplishment.
Are raising energy prices the best way to get everyone to save energy? Well the last time America did it we cut our oil consumption 20% in five years (see also Imagine the Future). There is nothing else that comes close to that kind of track record. If the savings aren’t that great it just means the tax isn’t big enough. And with a tax, the savings keep growing because the competitive advantage of conservation and alternatives is permanent.
If fossil fuels are the source of an inconvenient truth, taxing fossil fuels is the comprehensive answer to the problem.
Imagine (again) that there are two families living next to each other. One is Joe Thrifty. He and his family live in a maximally insulated home, have the most efficient appliances, drive their Prius as little as possible, and turn out lights and turn down thermostats as much as possible.
They live next door to Jane Spendthrift. Her family drives three hummers, lives in a 7000 square foot house, has every appliance known to man, and don’t seem to know where the off switch is on any of them. One day Ms. Spendthrift comes home and tells her son who is watching TV while playing video games and listening to the stereo to get off the couch and get some exercise. “Take the Hummer for a spin. But be sure to stop at Fred’s Exxon Mobil because Fred is having a sale.”
Why is Fred having a sale? Because Joe has been so thrifty that he has decreased demand. Prices drop as a result so it is easier for Jane Spendthrift and her family to be wasteful. When it comes to energy everyone has to save at the same time. Voluntary measures at best do nothing and at worst give people a false sense of accomplishment.
Are raising energy prices the best way to get everyone to save energy? Well the last time America did it we cut our oil consumption 20% in five years (see also Imagine the Future). There is nothing else that comes close to that kind of track record. If the savings aren’t that great it just means the tax isn’t big enough. And with a tax, the savings keep growing because the competitive advantage of conservation and alternatives is permanent.
If fossil fuels are the source of an inconvenient truth, taxing fossil fuels is the comprehensive answer to the problem.
posted by Geoff Berg | 11:11 AM
1 Comments:
Your wife was working very hardpassing out the pamphlets. Does she also work outside the home?
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