Renewable energy deserves attention amid low gas prices

Oil prices haven’t been this low since the 1990s. According to The New York Times, as of Tuesday Feb. 9, you can buy a barrel of crude for less than $27—a decrease of more than 70 percent since June 2014. That may seem like a good thing at the pump, but there are a whole host of reasons why that’s actually bad. One reason is the danger this lower price represents to fossil fuel competitors.

Renewable forms of energy cannot compete with fossil fuels with the price of oil being so low. The price of solar and wind energy has dropped tremendously as investments lead to technological advancement, but many of these investments were made with the high price of fossil fuels—rather than the environmental benefits of renewables—in mind. To incentivize investment and ensure fair competition, governments should take advantage of the opportunity and cut their subsidies to fossil fuel companies, which—according to Oil Change International—add up to $1 trillion per year worldwide.

OCI statistics go on to report that fossil fuels have received four times as many subsidies as renewable energy sources. Much of the money goes toward consumption subsidies, which make things like gas and heating oil affordable. These should be cut responsibly at a pace that allows renewable infrastructure to catch up while also sending signals to the market that unsustainable forms of energy cannot expect much help from governments in the future. Developed countries should do this more quickly than developing countries, especially while the price of oil is so far below what most consumers are used to.

Production subsidies are of more immediate interest; they essentially give oil, gas and coal companies government welfare. These make up the majority of subsidies in industrialized countries like the United States and they should be the first to go.

According to OCI, subsidies for fossil fuels amount to around $37.5 billion annually in the U.S. government and the fossil fuels industry spends approximately $329 million a year on lobbying and campaign contributions, which makes their return on investment for these activities roughly 10,000 percent.

There will be costs to removing these subsidies. The New York Times reported that 250,000 jobs have already been lost due to the drop in oil prices and oil-producing nations like Norway and the OPEC countries are seeing losses to their economies. Cutting demand further by raising the price of oil would increase these pressures, but these losses are worth it in the long run. The Economist Intelligence Unit estimated that the present value at risk from climate change is approximately $13.8 trillion and—from the perspective of governments—$43 trillion if temperatures rise by 6 degrees Celsius. This would represent 30 percent of the world’s entire stock of manageable assets.

In the wake of the international accords of The United Nations Climate Change Conference, any government that supports the fossil fuel industry is hypocritically undermining its express intentions to keep global temperatures from rising more than 1.5 degrees Celsius.

The use of public funds to support the fossil fuel industry is a disgrace that cuts directly against the interests of the constituents of all governments while producing profits for the wealthy companies that lobby them. Bills such as Sen. Bernie Sanders’ End Polluter Welfare Act should be supported and politicians who refuse to discuss President Barack Obama’s proposed $4 billion reduction of these subsidies should be held accountable.

If we are to mitigate the effects of climate change, renewables must be given a chance to replace fossil fuels. The recent drop in oil prices gives governments an opportunity to do that right now.