Monday, January 05, 2015

Low oil prices offer an opportunity for an effective carbon tax -- But....

Lawrence Summers is advocating an enhanced carbon tax, given falling oil prices, on p. A13 of the Washington Post today, “The right tax now has the right time”, link here.  Online the title is “Oil’s swoon creates the opening for a carbon tax.” 
Vox has produced a lot articles on the Jekyl and Hyde battle about oil prices, but the drop has to be good for Americans, here.  One of the biggest causes of instability in the past was the idea that the US economy – Americans personally – had taken resources out of other countries for their own self-indulgence.  Remember the oil shocks of the Nixon, Carter years?   Now, oil seems almost out of the equation, and raw religious ideology is back.

Reducing carbon emissions, from a moral point of view, is largely about leaving a better world for future generations, of people not yet even conceived, let alone born.  It’s also about the fact that floods and violent storms, sometimes associated with climate change, affect low-income people disproportionately.
I do see the possibility of a denser, urban lifestyle again in my own future.  It would be nice to be get to most things with 24-hour public transportation.  If that sounds like New York City again, so be it.  I can’t be productive in an isolated, planned “retirement” community forty miles from most things.   Down the road, after I get my latest batch of work done, the idea of going back to urban “anti-exile” may come back. 
The video above, from Texas, recalls the mood in the late 1980s, before the Savings and Loan collapse, when middle eastern countries started to produce more oil (after pressure from Reagan’s policies), and oil prices fell, meaning home prices fell in the oil patch.  I returned from Texas in June 1988.

Update: Jan. 7

A downside of lower overseas oil prices is that US companies have a lot of debt and higher extraction costs.  Saudi Arabia, which has lower costs, can try to undermine USD energy independence by flooding the market temporarily.  Defaults on bonds could happen and harm investors, as well as result in many layoffs of employees.  The lower prices may affect the pipelines issue, too. Wall Street Journal story by Erin Ailworth, Russell Gold and Timothy Puko, here

First picture: Oil rig in Kermit, TX, my trip, Nov. 2011

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