The financial markets unraveled so rapidly last week, it’s still hard to process all the developments and likely consequences. But there’s no doubt that events on Wall Street carry serious implications for our energy and environmental future as well.
I can’t wrap my head around all the pieces yet (and I’m not sure if I’ll ever be able to), but here are some random thoughts about what the market meltdown might mean for oil prices, oil production, renewable energy development and climate change:
Writer Nate Hagens warns on The Oil Drum that the Security and Exchange Commission’s (SEC) temporary ban on short selling alone could put future energy markets in jeopardy. Now studying at the Gund Institute for Ecological Economics at the University of Vermont, Hagens knows some of this stuff from the inside: an MBA from the University of Chicago, he previously worked in asset management, pension research and commodity system trading algorithms for Salomon Brothers and Lehman Brothers.
He writes, “There will never be a year where we produce more oil than in 2008, (and if things fall fast, then 2008 still may not catch 2005). Energy and finance are critically linked. The deepening banking crisis now combined with apathy and reduced confidence in our financial system will evaporate any chance we had of offsetting oil depletion with new production and new technology. You can bank on it.”
The shrinking availability of credit also threatens efforts to cut greenhouse gas emissions in a meaningful way. Agence France-Presse reported yesterday that European businesses are invoking the current economic crisis as a reason to drop proposed fines against companies that don’t reduce their carbon footprint.
Then there are the numerous pundits who warn that the taxpayer tab for bailing out Wall Street will require “Shock Doctrine”-like cuts in government spending for … well, almost anything beneficial: Social Security, the National Park System, the National Oceanic and Atmospheric Administration, schools, transportation, you name it.
Urban planner Christopher J. Ryan writes on his The Localizer blog: “Imagine what we could have done with the public and private money to research alternative energy and build a more sustainable society. Throw in the trillion or more for Iraq and if you’re not shaking mad now like I am, you’re on a slab.”
This is all scary, uncharted-territory stuff, and it’s hard to know where things will stand when (if) the dust settles. Right now, though, the view from an environmental/energy-security perspective is anything but encouraging.