We at Worldchanging are usually bullish on the power of markets to bring a bright green future: the price of energy determines people's usage much more than their environmental consciousness or policy decisions. Another piece of evidence has come in to support that. As the International Herald Tribune described last week, a study of Germany and Belgium's gasoline consumption during the first half of this year showed that higher prices caused consumption to drop by 10%. This represents a huge amount of behavior change by ordinary consumers. The tribune contrasts this with the last ten years of international policy movements trying to push the Kyoto protocol and other oil-use reduction, and determine that "the market has achieved within a few months what international bureaucrats... have struggled to obtain in a decade." They do give a nod, however, to the importance of having policies like Kyoto in place when new market forces cause prices to fall. The key is clearly bringing policy and markets together more.
Even the Cato Institute, despite being loath to tamper with markets, has said, "although motorists don't conserve much in the short run when fuel prices go up, the experience of the 1970s and early 1980s demonstrate that motorists will turn to conservation with a vengeance if fuel prices stay high over a long period of time." Their 2004 article responding to popular outcry about high fuel prices in the US noted that "Gasoline prices seem relatively high today largely because we still have rather fresh memories of 1998 -- the year in which records were set for the lowest inflation-adjusted fuel prices in American history. However, once we adjust for the changing value of the U.S. dollar, gasoline prices are not particularly high at all if compared to the historic record" and they "admonish readers to stop whining."
"The key is clearly bringing policy and markets together more."
Clearly. The difference is that if you wait for prices to be high, you get a last minute change that probably won't be enough, or will make the problems worse.
but if policy makers had some courage and decided to use price incentives/disincentives, things would be much better.
Would it work to set a price floor on the current price of gasoline or crude oil within the US? What I mean is, would it be feasible to prepare legislation that, in the event of a price drop, retains the current high prices due to a flexible gas tax?
If it were possible to create such a system, it would provide a vehicle for the high gas prices we've needed to exact change, provide much desired revenue from the tax, and give legislators a (politically) safer way to raise the price of gasoline.
People always bitch about gas prices, while I actually hope they continue to rise in order to inspire more development to relieve dependence on oil. This is especially a problem in this country (the US), where people are notorious for driving unnecessarily gigantin cars.
No the fact is the free market works rather well in that when you need a change a TON of money comes in to quickly find new options. If we had tried this 10 years ago we would have wasted 20-30 billion for little gain as the tech simply wasnt there and still wouldnt have been. But NOW its about the right time tech wise and the free market is moblizing 100s of billions to explore every option every facet.
And we still have plenty of time. Gas costs are still not a large part of even and suv owners monthly budget.
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Yeah, gasoline consumption is down in Germany. And it is going down for over a decade in Europe. Why? Maybe because gasoline is more expensive than diesel? And is this the result of market forces or of the force of the state?
What about diesel consumption, Mr Eberhard Rhein?
The big secret is that consumers really have the power to break big oil.