The reports of the death of renewable energy are greatly exaggerated.
The crashing price of oil is driving some to predict the death of renewable energy, again. Oil costs less than half what it did just a few months ago, falling from $147 a barrel at its peak in July 2008 all the way down to $65 a barrel as of October 22. The price of natural gas has also declined. For the many families strapped for cash these days this provides welcome relief, particularly with the rest of the economic news so downbeat, but this relief is not without a downside.
Environmentalists have been saying for decades that we should drive smaller cars in the US with little to show for it. But when the price of gas hit $4.50 a gallon we were all environmentalists, driving less, connecting errands, carpooling, and buying smaller cars. In the first half of 2008 the US decreased oil consumption, something not seen for years. If the price of gas drops and we go back to our old habits, the danger is that we will wait until the next crisis before taking action again. The next time the price of oil goes up it might keep on going, as some thought it might this time.
With the price of oil and natural gas dropping, and the economy in the grasp of the credit crunch, some say that the booming renewable energy industry will slow or halt its growth. As natural gas became more expensive, it helped make wind and solar more competitive for power production. As the price of oil and natural gas falls, renewable energy is looking more expensive.
I don’t think renewable energy will be abandoned though, and here’s why.
For one, even at $70 the price of oil is still high compared to historical standards. It’s only low compared to where things were earlier in 2008. And OPEC is moving to cut production and stabilize prices, halting the slide.
Another factor is that the price of oil will not be this low forever. I’m not going to predict when it will happen, but I can easily predict that the price of oil will rise again. I haven’t a clue what the price of oil will do tomorrow or next week (nobody does), but it’s a virtual certainty that given time the price will move upward again.
You don’t need a crystal ball to tell what will happen to oil over the long term. The world’s oil reserves remain finite. Oil won’t last forever and it’s a question of when, not if, oil demand will outstrip supply and what will happen to the cost.
Another predictable long term trend is continued global development. While the US and other economies have slowed dramatically, the world economy will pick up again in the months and years ahead. Some expect China’s economy to continue growing steadily, if at perhaps a slightly slower pace at the moment. With this growth will come increasing oil use.
Given the size of our reserves, or the lack of it, the US cannot drill its way out of the current situation no matter where it drills, even if oil rigs are lined in ANWR, Miami and Malibu. As it turns out the rest of the world cannot drill its way out of the situation either.
We can breathe sigh of relief for now and worry about other things, putting the energy question off until the next time the price of oil and other fossil fuels spike. We can worry about climate change later, with the next catastrophic storm. Or citizens and government can work together to create and implement a sensible energy policy that we can all live with and that creates a healthier economy and environment for the long run. The extension of the tax credits for renewable energy is a big step in the right direction. Renewable energy will be an increasingly important and economically viable solution, helping both our economy and the environment.