We received a lot of responses to Friday’s newsletter on fossil fuel supply limits, one of which said “Absolutely No” in the subject line. It was from an economist named Benjamin Ho, who always wrote to me saying he liked my newsletter and said, “But, well, you went off track today.”
I believe that a ban on fossil fuel production would shut down the economy if enacted immediately, but that bans and strict restrictions can also be completely derailed if phased in as part of a long-term plan. “I’m not saying it’s true,” he wrote. Reduce greenhouse gas emissions to zero. ”
I want to touch on readers who liked this idea as well as readers who hated this idea, but I’ll start with Ho. Because his challenge was strong. He is a professor of economics at Vassar College and was the chief energy economist on the White House Council of Economic Advisers in the George W. Bush administration.
Since the United States is a major producer of fossil fuels, a sudden ban or restriction on production would reduce supply, raising global oil prices and suppressing demand. That’s the good point. The bad news is that “fossil fuel bans in the U.S. only increase profits and encourage oil extraction for OPEC countries that do not comply with the ban,” Ho wrote.
A better solution, he argued, would be to tax the carbon content of fuels, regardless of where they were produced. That would “enable America’s efficient low-cost producers to continue competing and operating, leading to significant tax revenue that could be used to compensate low-income families who cannot afford expensive goods.” he wrote. fuel.
He agreed that there is little appetite in the United States for a carbon tax or a similar system of tradable emissions permits. However, he wrote, “I do not believe the ban will become any more prevalent.” Neither solution is popular, which means it’s better to choose the economically better one.
I asked the two people I quoted in the newsletter for their responses to Mr. Ho. They said the aim should be to reduce demand for fossil fuels, alongside measures to limit their supply. Emily Grubert, a civil engineer and environmental sociologist at the University of Notre Dame, said, “How will phasing out both oil supply and demand in the United States affect oil produced elsewhere?” It’s not clear to me that there will be significant new demand.”
Mark Pohl, an economist at Rutgers University’s Bluestein School of Planning and Public Policy, said he, like Ho, is a “big fan” of putting a price on carbon, but added, “We’re not just trying to put a price on carbon emissions. We simply need to consider a much wider range of policy tools to reduce them.” Facilitate rapid decarbonization. ” He wrote that if the United States does not reduce its demand for fossil fuels while simultaneously curbing their production, an oversupply will occur, causing a fall in world prices and an increase in external demand.
Mr. Frederick Hewett of Cambridge, Massachusetts, mentioned possible solutions to the problems raised by Mr. Ho. He wrote that 12 countries and 103 subnational governments already support the Treaty on the Non-Proliferation of Fossil Fuels initiative, which calls for a binding plan to manage the global transition away from fossil fuels. He acknowledged that the treaty faces “strong headwinds.”
Marvin Berkowitz of Needham, Massachusetts, also liked the newsletter, but took up the arson analogy I used, writing: It’s not just about arranging the furniture; you also need to put out the fire. ”
A reader, a former Texan living in Washington, D.C., writes: “We wear, look at, sit and look at products made from fossil fuels. Oil is too valuable as a manufacturing raw material to waste by burning it in chimneys and tailpipes. ”
On the downside, Christopher Brandow of Pasadena, California, wrote that the oil and gas industry as well as the general public will be outraged by the supply restrictions. “The polls showing support for action on climate change are a mile wide and inches deep,” he wrote.
Steve Andrews of Florence, Colorado, wrote that energy-saving technologies such as electric cars and heat pumps “will be penalized for those in this country who don’t have the financial wherewithal to adopt them early.” “You’re saying we can develop policies to overcome that problem,” he added. “I’m not convinced at all.”
Larry Misau of Victoria, British Columbia writes: “As a former chemical engineer with a long career in oil and gas and a strong interest in energy, I can confidently say that the problem is not the oil industry lobby. It is the simple fact that oil is our He said ordinary people could improve the situation by driving smaller cars, eating less meat and living in smaller homes. .
Elsewhere: Reducing recession risk
The business-backed research group said Tuesday that the Conference Board’s Leading Economic Index shows a decline in recession risk. The index fell in January for the 23rd consecutive month, but for the first time in two years, the majority of index components were more positive than six months ago. “As a result, the leading indicators do not presently signal a recession,” Justina Zabinska La Monica, senior manager of business cycle indicators, said in a statement. One factor that has improved over the past six months is the leading credit index, which measures the ease of borrowing. However, the organization still expects economic growth to slow to near zero in the second and third quarters of this year.
quote of the day
“It’s an interesting thought exercise to imagine what would have happened if the United States had been colonized from the west rather than the east. We might have decided to make Manhattan a national park.”
— Eric W. Sanderson, then senior conservation ecologist at the Wildlife Conservation Society, quoted in The Times (May 13, 2020)