House Democrats proved that change has arrived in Washington. Today, they transformed the Energy & Commerce Committee from a foot-dragging institution led by Detroit’s Dingell to a climate-friendly progressive catalyst led by California’s Waxman. Dingell was a force for the status quo with close ties to Big 3 Automakers who obstructed fuel efficiency improvements (a big factor in their terrible economic condition of late). But Waxman introduced the Safe Climate Act in 2007, a cap and trade bill to get GHG emissions to 80% below 1990 levels by 2050 (consistent with Obama’s pledge). The stage is set for great progress in the House — we will see how the Senate responds once the two remaining Senate races are decided within the next couple of weeks.
The other dramatic news of the day came from oil. Its price fell below $50 per barrel, a number I thought we would never see again just three months ago. Gasoline at the pump slid to $2 per gallon, and the wholesale market makes $1.80 a likely nationwide average before the bear run stops. China is planning to take advantage of the low oil price to add a fuel tax to their pricing system. Will US federal leaders have the courage to raise fuel taxes a couple dimes to a level that enables us to maintain our roads and bridges? I sure hope so. Otherwise, get ready for more and more bumpy rides in the years ahead and the sad potential that US consumers re-embrace the SUV before prices shoot up again when the economy stops falling.
The EIA weekly oil report showed that low demand continues to allow lower fuel supplies to suffice. Gasoline, distillates/diesel, and propane demand were down 2.8%, 11.9%, and 16.2% from last year, respectively. Relatively mild weather last week was a big part of the lower demand, so next week’s report should test the continued price drops. It’s possible that pump prices will stabilize late next week (~$1.75-$1.90) as the inventory data reflect large draws for heating oil, propane and natural gas. But continued economic deterioration could allow prices to keep sliding, like today’s news that weekly unemployment numbers rose to the highest level in 16 years.
Today’s situation shows how a cap and trade system wouldn’t hurt us if the economy is struggling. In these times, emissions naturally fall so permit prices would drop significantly. The permit price would only rise again when the economy was growing and people could afford such an incentive to lower carbon emissions. And the more efficiency we deploy now, the lower emission permit prices will be in the decades ahead.
Bottom line: Nice work, House Democrats. Now it’s time to move progressive climate legislation that can help spur economic growth in the years ahead. Also, the months ahead are a unique window of opportunity to bring fuel taxes in line with road maintenance needs since gas prices are below expectations. Here’s to politicians with spines-
Onwards in the sustainable energy transition,
Dennis
Tags: energy, gas prices, Henry Waxman, House of Representatives, Natural Gas, Oil