prices

Watt’s Happening: High energy prices – a good thing?

Tuesday, February 11th, 2014

By Don Pettit

As someone wiser than myself once said: “If we don’t change direction, we’re likely to end up right where we’re headed.” When it comes to paying for energy, I think we are about to arrive where we are headed.

After decades of dirt-cheap energy and fuel, prices for oil, gas and electricity continue to inch up and are beginning to reflect their true worth. Its about time. Keeping prices artificially low may be seen as a way to “help the economy” but in the real world of the 21st century, nothing could be further from the truth. It’s going to be a little pain now, but A LOT of gain later.

There are two basic ways of encouraging conservation of natural resources: willingly because it is the right thing to do (and usually saves money), or unwillingly, because we are forced to through government regulation or very high market prices. It looks like we are moving from the willing to the unwilling phase of energy conservation.

BC Hydro estimates we have about 35 years of natural gas left in BC. Much of that is frack-gas, expensive to recover, both financially and environmentally. Frack boom, gas floods the market, prices drop. Frack bust, prices jump. Overall, fossil fuel prices inch up, as use around the world grows while reserves become more difficult to extract, process and deliver. Controversy rages, uncertainty prevails, but always, prices move up.

The good news, as I have discussed in previous columns, is that we are merely in a difficult, yet inevitable transition stage. Every energy transition (old-tech renewables to coal, coal to oil and gas, oil and gas to high-tech renewables) has both pain and gain. The end of fossil fuels is in sight, for many good reasons (pollution, climate disruption, the threat of spills, more and more expensive and risky to produce, not to mention dwindling reserves) while pollution-free, inexhaustible renewable energies like wind and solar become mainstream, and less and less expensive to harvest.

It would seem that the role of government during this era of transition should be to encourage conservation of existing fossil fuel reserves, provide subsidies and grants to individuals to generate their own renewable energy, and encourage Canadian clean-tech industries and innovation. In other words, ease the transition for Canadians, and build on these new opportunities.

If corporations are not smart enough to invest their massive fossil-wealth in clean energy technologies (providing long-term security for their shareholders), then governments may have to help them do so by taxing their carbon emissions and putting the money where it is needed.

Ontario was the first province to grasp the potential of the global energy transition. They are creating tens of thousands of new jobs, harvesting the largest and most bountiful energy sources ever discovered: wind and solar. Seeing the light, other provinces are following close behind, while other nations, like China, are scrambling to capture the largest and fastest-growing energy market in human history.

Things are changing quickly. We will indeed continue to see higher prices, but with government and corporate leadership (I still have hope) the pain of this transition can be modest, and opportunities for renewable energy jobs and growth embraced. If price increases and carbon taxes are re-invested to help this transition move forward, then it’s a bit of pain now for a lot of gain later.

On the other side of all this, perhaps 30 years from now, fossils will be rapidly fading and renewables will be mainstream and widespread. Then energy prices WILL fall. Pollution will be a small fraction of what we put up with now, energy conservation will be a no-brainer, climate change will be slowing, the need for conventional fuels will be tiny, and the need for complex and fragile distribution infrastructure will be much less (renewables are diverse and widespread . . . who needs a grid when everybody makes their own power?).

When it comes to the price of energy, we’re ending up right where we’re headed. And that’s a good thing.

Don Pettit is a director of the board of Peace Energy Cooperative.