Articles by Eric de Place

What we don’t know (but think we do) about oil prices might hurt us

Predicting the future is hard. It's so difficult that even teams of analysts using fancy models get results like this:

This isn't back-of-the-envelope stuff. This is the U.S. Energy Information Administration's official prediction for oil prices, circa 2007. According to the "high price" scenario, oil may reach $100 per barrel some time around 2030. But wait: oil was at $127 last week. So, not only was the EIA projection wrong -- it was wildly and completely wrong.

Okay, everyone makes mistakes, even energy analysts. In 2008, the EIA cleaned up its act and produced this forecast:

Easing off the gas eases gas use

A few weeks ago, Clark wrote about truck drivers slowing down to economize on fuel. It's a great story, but was it a real trend or just anecdotal?

Well, I'm here to report that there's some truth to it. Or at least some truthiness. A recent Congressional Budget Office paper examining the effects of gas prices found this: "Freeway motorists have adjusted to higher prices by making fewer trips and driving more slowly."

That's surprising to me. I mean, I don't slow down when gas prices are high; it would never occur to me. Do other folks?

Why consumer protection means selling carbon permits

One of the thorniest problems in cap-and-trade programs is deciding how to distribute the carbon permits. Should the public sell pollution privileges or give them away for free?

Some folks worry that if we make polluters pay for carbon permits, they'll just raise prices for consumers. That's a perfectly legitimate concern. Unfortunately it turns out to be true, whether we sell the permits or give them away for free. Prices rise by the same amount in either scenario. (The only difference is whether polluters reap windfall profits or whether the public earns revenue from selling the permits.) It may be counterintuitive, but it's true.

It's also very hard to explain why this is the case without resorting to a lecture on economics. So in an attempt to clear things up, Sightline has put together this easy-on-the-eyes summary. It comes in four parts:

1. A simple explanation.
2. A slightly more detailed explanation.
3. A look at Europe's carbon trading market.
4. A review of the (basically unanimous) economic literature.

Take a look and let us know what you think.

The Western Climate Initiative’s first proposal ducks biggest climate problem

The Western Climate Initiative is a path-breaking effort. Insufficient federal progress prompted seven states and two provinces to join together to reduce climate pollution by means of an economy-wide cap-and-trade program. It's a momentous opportunity, and many folks have been working hard to ensure that it's a success.

Unfortunately, there's now cause for serious concern.

Yesterday evening, WCI released its draft proposal (PDF). It proposes an initial cap that would cover less than half of the region's total emissions. Most surprisingly, WCI does not recommend including emissions from transportation fuels, by far the largest source of climate pollution in the West. [Update 3/7: The recommendation doesn't exclude transportation precisely, but rather defers the decision until further economic studies are completed.]

The proposal is at odds with WCI's own stated principles that include a commitment to cover "as many emissions sources as practical." And for an effort born of frustration with federal lawmakers, it's bizarre that the proposal is significantly smaller in scope than recent federal bills (PDF), including Leiberman-Warner.

There are no big technical challenges to including transportation fuels. In fact, the WCI admits that while there are a couple of hurdles, it's administratively feasible to include transportation emissions. So what's going on?

No one knows for sure.