The high price of oil is beginning to effect [sic] demand for energy, according to the International Energy Agency (http://www.bbc.co.uk/news/business-13047854). Horraay!!!!! Good news finally!!!!
But hold on!! Is it good news? The IEA says it is concerned about supply shortages. And even worse: “US investment bank Goldman Sachs also warned that consumers in the US were starting to conserve energy because of high oil prices.”
Look at that word, “concerned” – you are normally concerned about bad things, so the IEA thinks that a supply shortage is a bad thing. And then “warned”. Warn usually means to tell someone about a bad thing. But it’s a good thing that US consumers are starting to conserve energy. So why is Goldman Sachs “warning” us about it?
Here’s a clue from David Fyfe, head of the IEA’s oil industry division. He suggests that if OPEC doesn’t turn up the taps, that could lead to “economic slow-down and weaker demand growth.”
Let’s get this straight. Economists (including economists from the IEA) tell us that the way to get people to cut emissions is to charge for carbon emissions. Charging for carbon emissions is economically very similar to reducing supply of fossil fuels or increasing the price of oil. So charging for carbon is good news but it’s also bad news, because it slows down the economy.
So they want to slow down the economy and they don’t want to slow down the economy. In short, they want X and not X. Now, either economists are geniuses (capable of entertaining two contradictory ideas in their heads at the same time) or there’s something very amiss. I don’t think they are geniuses.
There is a fatal inconsistency here; a piecemeal and flawed world-view which does not fit together as one, just fragments of belief, floating loosely, with no single foundation. These are the top economists and energy people in the world. And their world views are as quixotic and inconsistent as that of an adolescent. This needs to be resolved explicitly before we have a hope in hell’s chance of sorting things out.
1. For example “The International Energy Agency (IEA) has said we need a much higher carbon price” (Financial Times 10th November 2009)