Since I moved within biking distance of campus more than a year ago, I haven’t been fueling up my car that much. So I was a bit shocked when I visited the pumps yesterday and discovered just how far gas prices had fallen. Less than $3.50 a gallon? Had I just been transported back to Massachusetts?
No, my trusty old Honda Accord and I were still in Silicon Valley: We were merely witnessing the local consequences of falling oil prices worldwide.
For the first time in four years, the global price of a barrel of oil – precursor to gasoline, among many other things – has fallen below $82. That’s a 20 percent price drop since oil was selling for $110 a barrel back in June. It seems that rising production in the United States and falling demand in Europe have caused prices to drop, in spite of geopolitical uncertainty surrounding oil producing regions in the Middle East.
You’d think, as someone about to swipe her credit card at the pump, I’d think this price drop was good news. A dollar of gas now, literally, goes further than it did a month ago.
But short-term savings on the consumer end only foreshadow long-term costs in our economic and environmental future. That’s because when oil prices fall, people tend to start using more oil.
Remember when oil prices hit $147 per barrel back in 2008 and gas prices were at an all-time high? Most American consumers don’t seem to, either. Last month, as gas prices fell, we started buying less efficient cars again: SUV sales soared while hybrid sales sank, and average vehicle gas mileage made its biggest drop since 2011. The efficiency of our vehicles seems to neatly track gas prices, and “savings” at the pump quickly evaporate into larger fuel tanks.
When oil prices fall, we also tend to forget that oil is, in fact, a limited commodity. We forget that eventually we will run out of this magical, energy-containing substance that someone has transformed into the fuel for our vehicles, the materials that make up our belongings, and even the food that we eat. We forget that oil (which takes millennia to form from the bodies of tiny animals and plants) is the very definition of a non-renewable resource.
Because we forget, we don’t think about alternatives. We don’t think about how we will fuel goods and services when oil prices inevitably climb (again). And, even though there’s only a small direct economic tie (the electric car market) between the oil market and the renewable electricity market, people tend to be more dismissive of wind and solar when they perceive fossil fuels as cheap. Falling oil prices stifle innovation and trap us in the status quo.
It’s also much easier to ignore the environmental costs of oil when using it just seems so economical. Despite the scientific consensus linking human fossil fuel use to carbon emissions and, in turn, those emissions to a changing climate, companies (and politicians) still have to convince stockholders (and voters) that dramatic, immediate changes to their bottom line are worthwhile. That’s a tough sell unless oil’s expense is so high that its use becomes cost prohibitive.
Still, the current drop in oil prices gives us a unique opportunity to transition our economic system into one that more realistically captures the environmental impacts of our fossil fuel use. Though our politicians won’t dare broach the subject, why not institute a carbon tax now? Fill in the gap between the recent relatively high gas prices and the falling prices now with a tax margin that goes, in part, back to consumers as a rebate. Use the rest of the revenues to encourage groups like Transition U.S. to keep envisioning and preparing for a world without oil.
As an environmental scientist, it’s easy for me to be drawn to the ecological reasons for transitioning away from fossil fuels. Not only do I worry about the long-term and frighteningly unpredictable effects of climate change, but I’m also all too aware of the short-term, local costs of oil spills, drilling accidents, and the like. And I know I’m not alone in worrying about the geopolitical consequences of buying oil overseas.
But my greatest worry stems from the fact that I am a human living in a time of energy wealth and who knows that that era is coming to a close. We will run out of oil: It is merely a question of when. And allowing short-term price drops to suck us back into our comfortable fossil fuel addiction is so foolish that it may prove lethal.
Contact Holly Moeller at hollyvm ‘at’ Stanford.edu