It is naïve or wilfully misleading to pretend there is an overall
economic benefit from higher energy costs. There is no possible
way of putting a positive economic spin on the doubling of electricity
prices in Ontario since 2002. It is a drain on household budgets and
a burden to the competitiveness of businesses.
We heard it repeated ad nauseum in the ongoing debates over Canada’s climate-change policy, this hackneyed catchphrase that our society does not have to choose between clean energy and economic growth. This makes it sound as if there are no economic risks in our choice of energy sources. Nothing could be farther from the truth.
The exploitation of energy is fundamental to economic growth. Ruth Sandwell, in her recent book Powering Up Canada, divides human economic development into two eras according to their principal sources of energy. The first was based on inefficient organic sources of energy, mostly plants and animals as well as wood, that produced a low standard of living for most of human history.
Then the Industrial Revolution harnessed mineral sources of energy, mostly fossil fuels such as coal, oil and gas. Fossil fuels have the advantage of allowing us to tap massive stocks of energy immediately, which justified large investments in its infrastructure, including transporting it in bulk to the growing concentration of users in urban areas.
As the cost of energy fell dramatically, our standard of living soared. The benefit to everyday life from more access to cheap energy is enormous; the average American household today commands 186,000 calories of energy per day, the equivalent of having 93 human beings at your service for work, transportation, household chores and recreation.
The price of fossil fuels is falling, notably for oil and gas, thanks to the fracking revolution. This should be propelling economic growth higher. Instead, many jurisdictions in Canada are raising electricity prices (Ontario, most notably) because of the higher cost of switching to renewable energy sources.
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