DEMAND FOR OIL CAN DECREASE DESPITE LOW GAS PRICES
Oil companies’ share prices tumbling. Fracking and oil exploration projects cancelled. Environmentalist dreams? No, these are today’s headlines caused by falling oil prices.
But what about the demand side? Will low gas prices cause consumers to use more gas and emit more carbon? While the supply-and-demand curves of economics textbooks and some survey evidence suggest that they will, it is hardly a foregone conclusion that gasoline demand and usage must increase if gas prices remain low. For example, bus ridership in King County, Washington is up, despite service cuts and gas prices well below last year’s. Nissan Leaf sales in December 2014 were up nearly 20% over a year earlier.
A fundamental challenge for climate activists is to find a way to continually depress gasoline demand in the face of low prices. Reducing gasoline demand in a low-price environment represents a different challenge from the one climate activists thought they would be fighting. For most of the past decade, high carbon prices caused by carbon taxes and/or “peak oil” were viewed as the key motivators for consumers to embrace renewable fuels. Now, with gas prices around $2 a gallon, carbon taxes politically infeasible, and vast new supplies of fracked oil depressing prices, a new non-price-based strategy is required.
Price is only one of many motivators of consumer decisions. For example, Apple smartphones are both the most costly and the best-selling phones in the market, because Apple’s products represent the person that many of us want to be and the lifestyle we want to have—clean, elegant, and powerful.
The same logic can be brought to bear with respect to gasoline cars and gasoline usage.
As evidence of global warming becomes more pervasive, the use of gasoline becomes more morally questionable and undesirable. Pope Francis recently said that “man has slapped nature in the face” by causing climate change. If Francis’ statement can somehow be personalized and internalized—such that we feel each of us are personally giving an unkind “slap in the face” to nature when we buy gasoline-powered cars and use gasoline, then consumers will embrace alternatives. If climate activists do our job well, the clean, elegant, and powerful person will not want a gas-powered car or to be seen pumping gas.
Translating the moral argument into a consumer argument against the purchase of gasoline-powered cars and gasoline is feasible, but it will require a different moral approach and vocabulary than we presently use. We need to move away from an analysis of the relative costs of conventional versus green technologies, and instead emphasize an approach to consumer choice based on our personal values.
While a values-based argument to consumers relating to energy choices must be made with subtlety and care, it must nonetheless be made, even if consumer and industry sensibilities are ruffled. Unnecessary burning of carbon is, as the Pope says, a slap against nature, and such violence should not be condoned or ignored. This is particularly so as new technologies, such as the long-range electric car, become widely available over the next several years, making the unnecessary burning of carbon all the more indefensible.
There are many forms that a values-based consumer-oriented campaign against gasoline can take. One nice example is an emerging campaign to put climate-warning stickers on gas pumps. Messages against gasoline purchase can be spread through social media, places of worship, and ballot measures. Theater and other arts can undermine our deep psychological dependence on oil. The main thrust of these campaigns is to confront consumers and convince them that filling their gas tank is antithetical to their own values and unnecessary.
Low gasoline prices are in many respects a consequence of our success in limiting demand for oil. The more success we have in limiting energy demand, the lower we should expect those prices to go. We need to find new pathways to the consumer’s sense of self and values, and then work with those values to power the transition away from fossil fuels.