Amid falling gas prices and a struggling economy green energies may take a hit, despite many campaign promises. What are the national trends and forecasts, and how will that play out locally? Welcome to today’s topic.
A Perfect Storm: Lower gas prices and a sour economy have combined, making the future of green energy uncertain. *Photo credit - George Frey, Bloomberg News
As most anyone with a car has noticed gas prices have fallen — a lot. Thomas Friedman, an op-ed columnist for the New York Times, observed, “the 2 is back.”
The “2” is most definitely back. As I type the USA Gas gas station on South Main Street in Bowling Green is selling unleaded for $2.15 a gallon. As the line of cars waiting to fill-up earlier tonight would suggest, people are taking advantage of the lower gas costs. But what’s the price to green energies?
As the New York Times put it earlier this week, alternative energy is suddenly facing headwinds.
A business news article from Wednesday states:
“Advocates are concerned that if the prices for oil and gas keep falling, the incentive for utilities and consumers to buy expensive renewable energy will shrink. That is what happened in the 1980s when a decade of advances for alternative energy collapsed amid falling prices for conventional fuels.”
Additionally important to take into consideration is the climate on Wall Street as banks refuse to loan to each other — or to anyone in general, it seems — an its impact. Without loans companies can’t acquire the capital needed for investment in green technologies, which typically require enormous initial investments. There had been incredible growth in this area, until recently.
The Times continues:
“Worldwide project financings for new construction of wind, solar, biofuels and other alternative energy projects this year fell to $17.8 billion in the third quarter, from $23.2 billion in the second quarter, according to New Energy Finance, a research firm in London. The slide is expected to be sharper in the fourth quarter and next year.”
Friedman elaborated on this point in his Thursday op-ed “Bailout (and Build up),” by painting a picture of this kind of Perfect Storm working against going green.
He wrote:
“with little credit available today for new energy start-ups, and lower oil prices making it harder for existing renewables like wind and solar to scale, and a weak economy making it nearly impossible for Congress to pass a carbon tax or gasoline tax that would make clean energy more competitive, what will become of our budding clean-tech revolution?
This moment feels to me like a bad B-movie rerun of the 1980s. And I know how this movie ends — with our re-addiction to oil and OPEC, as well as corrosive uncertainty for our economy, trade balance, security and environment.”
To that, OPEC decided this week to reduce its production of crude oil by 1.5 million barrels a day in an effort to re-inflate prices. They’re expected to meet again this week and could potentially cut production by another 0.5 million barrels a ay. However, with the exception of Saudi Arabia, OPEC members are infamous for not following their own mandates. What all of this serves to further is the idea that gas prices are likely to remain low for some time as the economy continues to weaken.
As nice as it feels to get a break at the pump, that break combined with the unprecedented economic concerns facing the country, may very well serve to weaken the green resolve of many – from utilities and states, to presidential candidates – forcing a backsliding on new energy technology as it becomes too expensive in a time where everyone is looking to save.
As the Times notes,
“after years of rapid growth, the sudden headwinds facing renewables point to slowing momentum and greater dependence on government subsidies, mandates and research financing, at a time when Washington is overloaded with economic problems.”
It concludes by stating,
“some analysts say the government supports may not be enough to propel continued growth for renewables, noting that several states have already relaxed their goals.
‘When they can’t meet their targets … they change them.’”
Now, since this is a local blog, lets steer the conversation a little closer to home. Locally, green technology has been an issue gaining a lot of attention.
Several candidates on the November ballot are running on green-tech platforms. Republican Jim Carter, running for re-election to the Wood County Commissioners, has for years been a supporter of green industries including wind technology (last week’s blog has more info on wind energy), and capturing methane gas from the county landfill.
Carter has also said he wants to encourage job creation in the county by attracting new industries — the marriage of these two ideas could provide an ideal solution.
His opponent, Democrat Joel Kuhlman, is also campaigning on the advancement of green energy. According to a recent article in the Sentinel-Tribune:
“One of Kuhlman’s goals would be to establish a reputation in the county as a place willing to grow green energy and great schools – not just be excited when they locate here, but actually push for their arrival.”
Perhaps both men have it right. Depending on the steps taken in the next few years, the economic downturn could mark either the end or the beginning of the green movement and new energy technology.
As Friedman argues,
“It has to be the latter. We can’t afford a financial bailout that also isn’t a green buildup — a buildup of a new clean energy industry that strengthens America and helps the planet.”
We know from last week that, among other things Bowling Green has set an unofficial goal of being 40 percent renewable in the next two to three years. With all of these new concerns, can that scenario still play out? Will other green efforts in the county go through?
Either way, it will be important to pay attention as this Perfect Storm plays out on local and national levels.
Until next time,
Laura
—–
Articles for further reading:
• The New York Times, “Alternative energy suddenly faces head winds”
A summary of where green industry is, how it got there and where it might go now.
• Thomas Friedman, “Green the Bailout”
An energy technology revolution is the way to save America’s troubled economy.
• Thomas Friedman, “Bailout (And Buildup)”
The return of $2 gasoline and its effects on green energy technology.
• Interesting commentary on the competition between American consumption rates and desires to go green.
• Joel Kuhlman, Democratic candidate for the Wood County Commissioner, states his new energy philosophy.
• Jim Carter, Republican incumbent running against Kuhlman, gives his green vision for Wood County
Thanks for posting the article, was certainly a great read!
Hello. I was reading someone elses blog and saw you on their blogroll. Would you be interested in exchanging blog roll links? If so, feel free to email me.
Thanks.
Nicely done. Good analysis of articles. ***