1.29.2009

High Gas Prices Lead to Rational Behavior, Talking About It to Irrational Thinking

As I mentioned in a previous post, I took some flak at a recent lunch meeting for favoring higher gas prices. The fact of the matter is that some of the most rational behavior I have ever observed came from the cleansing reality of $4 a gallon gas: SUV sales plummeted, people discovered the convenience of transit and bicycles, and conservation measures took on increased importance. Now mired in an economic slump and facing rising unemployment, I fear we'll lose our gusto to do the "inconvenient" things we need to do - as individuals, businesses, and regions - to move towards a more sustainable way of life.

Speaking of the recession, I'm reading in various parts of the blogosphere that it was higher gas prices that caused our slowdown, and thank goodness for lower gas prices lest we be in even worse shape. Wrong and wrong. A freshman Econ 101 student can tell you the mechanics of how lower gas prices were caused by the slowdown, not the slowdown by higher gas prices; and economic scarcity is hurt and not helped by artificially low prices that encourage consumers to piss away precious resources rather than conserving them.

The fact of the matter is we get all worked up about all of these things that are purportedly the right thing to do - subsidize transit infrastructure, unplug our appliances, institute cap and trade mechanisms, require automakers to make cars that are more fuel efficient - and then neglect the one simple action that will more effectively get us to take those very actions: price carbon correctly. Get that right, and everything else becomes a lot easier, if not altogether unnecessary. Get that wrong, and not only are we swimming against our deepest impulses, but we jeopardize our national security, our global competitiveness, and our grandchildren's quality of life.
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