Conflicted on energy security and climate change
Posted May 28, 2009 at 6:50 am 
Filed in: “Rise in taxes on US petrol ‘not’ feasible - Energy secretary alters stance on fuel policy” — so ran the above-the-fold headline in today’s Financial Times. A little misleading, to be sure, as DOE Secretary Steven Chu did not appear to say that he had changed his mind about the wisdom of a gas tax, telling the FT instead that: “At this moment, to be frank, it is not politically feasible.”
Irony abounds. In the very same article, the FT reports that Secretary Chu remains “adamant” about putting a cap-and-trade system in place to reduce greenhouse gas emissions. Many characterize cap-and-trade as a hidden tax, but Chu was straightforward: “We need to begin to put a price on carbon.” Of course the distinction between a government-imposed “price on carbon”–which will raise gasoline prices along with the price of every other carbon-based fuel–and a government-imposed increase in the price of gasoline via a tax is truly a distinction without a difference.
That pricing carbon to combat global climate change is more acceptable than taxing gasoline to enhance our energy security is also troubling. We don’t advocate a gas tax, but we would like to see an honest debate about how best to fund the transition from our petroleum (and carbon) dependent economy to one reliant on clean, domestic, less volatile and more secure sources of energy. Being honest about that debate would truly be change we can all believe in.
It may be that there are better ways than a gas tax to fund a transition from (largely) imported oil to domestic, carbon-friendly fuels. And it may be that combining an effort to prevent excessive global warming (don’t let anyone tell you that we can, at this stage, prevent any increase in global average temperatures) with an effort to enhance our energy security truly is the right way to proceed. But honesty always remains the best policy.
As it stands now, every policy-maker paying attention knows that oil prices are set to rise. Yesterday, the Energy Information Administration released their International Energy Outlook 2009 (http://www.eia.doe.gov/oiaf/ieo/index.html). In it, the EIA forecast that global oil demand will rise by almost 30 percent in the next 20 years, driven by demand growth in the BRIC nations–Brazil, Russia, India and China.
At the same time, Saudi oil minister Ali Naimi opined that the world economy had strengthened enough to accept oil prices in the range of $75-80 per barrel “suggesting that OPEC no longer sees a need to support the global recovery with low oil prices. That quote is from another Financial Times article. In fact, Mr. Naimi was pictured in FT immediately adjacent to the front page headline describing Secretary Chu’s rejection of a new gas tax. He appeared to be laughing.
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