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When the first OPEC oil crisis struck in 1973, sending the price of crude as high as US$140 a barrel in today’s dollars, policymakers around the world — including Canada — scrambled for ways to bring the price back down. Today, the opposite is true. As the 2014 OPEC crisis pushed oil down to US$65 Monday, the major policy objective in many circles is to find a way to bring the price back up.
Consumers may like the idea of low energy prices and the inevitable boost to global economic growth, opening the door on a world of increasing prosperity and wealth distribution. But a large number of governments, climate activists and corporate interests have a vested interest in keeping oil prices high. Will they succeed?
As the world price of oil fell over the past few days, there has been no shortage of handwringing over the negative consequences.
The U.S. shale oil industry was said to be doomed. Oil-rich nations dependent on massive dollar flows would be unable to meet their budget and debt payments. Capital investment in developing countries with oil potential would dry up. Big oil companies would suffer as share prices plunged.
And there would certainly have been no cheering Monday in Lima, Peru, where international climate negotiators were gearing up for the 20th annual United Nations’ Climate Change Conference. Low oil prices equal increased demand for oil that will drive up carbon emissions.
With the price of oil down about $50 from its last peak, climate policy advocates have lost a big unofficial carbon tax. On the rough estimate that there’s a tonne of carbon in every three barrels of oil, the world has just watched a $150-a-tonne carbon price get wiped out.
As the price of gasoline falls, the pressure will rise on governments to refill the gap with a direct carbon tax. The idea has already been picked up by Forbes columnist Tim Worstall. “The fall in the price of oil means we can impose [a] sane and sensible 50-cent gas tax [in the United States] without the pain being too great or apparent.”
For the rest of this article, click here: http://business.financialpost.com/2014/12/01/terence-corcoran-why-the-call-for-bigger-and-better-carbon-taxes-is-about-to-escalate/