I’m sure by now, most of us have been exposed to the news that oil prices have gone up fairly substantially in the past few months. Everytime I hear a story on this, I have two competing demons in my head, the first saying something to the effect of “Well, maybe more expensive energy will make people consider some non oil-alternatives and stop buying those houseboats on wheels”, with the second chiming in that high world energy prices disproportionately hurt the poorest, while the rich will grumble a bit and continue along their marginally less merry Range Rover ways.
This leads me to wonder, if we could wish for an oil price, what would we set it to? Too high an oil price, and in addition to hurting developing nations, we might get a lot more coal, and will likely have more exploration in places which otherwise might escape the drill bit. Too low an oil price and we get a cost which isn’t coming close to reflecting the true cost to society of our energy.
Along the same lines, I read an article on cnn a couple of weeks ago, which apparently is no longer findable, where readers wrote in to express some of the sacrifices they were making with the cost of gas being above 2 USD. A lot of them were simply laughable (with the tone of the laughter depending on your level of cynicism), along the lines of the father lamenting he had to drive the 1990′s Civic the 50 mile commute to work, while his son got to drive the 3 mile commute to school in their suv, oh the horror. Weaving among those stories however, were the people who were unable to continue to afford dental insurance.
Something of a conundrum. Are there environmental economists whose business it is to balance such things?