In his speech on Tuesday night, President Obama called for the country to move towards more renewable sources of energy and for limiting our dependence on oil. That call has a “Groundhog Day” quality to it, as every president since Richard Nixon has essentially made the same plea, and the same promise to do something about it. However, ever since the days of Nixon, our use of oil, and particularly imported oil, has done nothing but go up.
The simple fact is that we use carbon-based fuels because they are the cheapest form of energy around. Cheap if you only count the direct costs of extraction and getting the energy to the consumer. There are, however, vast costs that are not captured in the price. The recent and ongoing BP (BP - Analyst Report) oil spill disaster in the Gulf of Mexico is simply one aspect of it. The gains from drilling for oil in deepwater go mostly to the companies that drill for it, and indirectly to consumers of the fuel. The costs are largely borne by the wider society.
If the price of a gallon of gas were high enough, people would start to buy more fuel efficient cars, and the automakers would rush to build ever more efficient vehicles. If there were a significant price on carbon, you would not have to tell utility executives not to build new coal fired plants and build wind farms instead -- they would do so because it would be in the clear self interest of their shareholders.
For more: Time to Get Serious About Energy - Zacks.com
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