Gas Price Fantasy

Picture from http://photos.nj.com/njcom_photos/2015/01/your_pics_of_new_jerseys_lowest_gas_prices_13.html
Picture from http://photos.nj.com/njcom_photos/2015/01/your_pics_of_new_jerseys_lowest_gas_prices_13.html

No one who drives a car that uses gas can ignore the HUGE drop in gas prices over the holidays this year. In retail, “we had Christmas for the first time in 4 years” as my boss at The Sojourner in Lambertville told customers. She attributed everyone’s open purses to the drop in gas prices, giving people a little wiggle room in their budget.

Starting my holiday season with a trip to Lima for COP 20, I had this day dream in my mind when conversations would shift to gas prices coming under $2 in Flemington. The basic laws of economics attribute a price drop to an increase in supply relative to demand. What if demand dropped because COP 20 was so successful? What if so much progress was made with countries’ reducing carbon emissions that oil companies got scared and dropped their prices, hoping to sell supplies before countries drastically decrease their fossil fuel demand. This was the kind of change I pictured we’d need in order to make even a two-degree goal like discussed in Lima.

The realistic me knows that such a change is ridiculous but optimistic me could not bring myself to research the real reason prices kept sinking. CNN Money attributes the drop to OPEC refusing to drop production related to demand because of slowing economies in Asia and Europe, increased U.S. domestic oil production, better fuel-efficient vehicles, and a stronger dollar (Isidore).

With Isidore’s reasoning, the COP 20 was not only less productive than I had hoped, but emission targets run into a new danger. With low gas prices predicted to keep dropping, the financial benefits of more carbon-neutral technologies like electric cars and solar heating disappear. If economically it is so cheap to run on gas, those less environmentally-conscious will have little reason to lead a more carbon-neutral life.  I had hoped that high prices would push U.S. consumers to move away from fossil fuels even if the country’s UNFCCC record is poor, but now this seems impossible. We can only hope renewables will drop quickly as well to increase their competitiveness, because whether we like it or not, people are consumers first and foremost, and thus are driven by prices.

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