Just last week I week I was all a-flutter that the price of crude passed $50 per barrel—a level that some market observers felt was a major psychological hurdle.
I’m not one to predict future prices. It’s just too easy to make a fool of yourself. After all, the recent runup of oil prices has some characteristics of a bubble phenomenon, and we all know what bubbles eventually do. And there’s also a definite possibility that oil prices will settle back down over the next few years—the global economy could cool, demand growth could slacken, political instability in oil-producing regions could simmer down.
But that’s precisely the problem: because nobody knows how long prices will remain high, it’s impossible to figure out how much, or even whether, to invest in energy-saving measures. People are understandably skittish about sinking money into efficiency upgrades if the payoff could vanish once oil prices fall.
That’s why I, for one, think that more stable energy prices could actually make it easier for companies to develop a business case for efficiency investments, even if prices were lower than they are today. But that’s not the world we live in. In our world, we have to expect volatility—and that means figuring out how to make the case for curbing greenhouse emissions no matter what the price of fossil fuel does.