Right now everyone with a car is now enjoying a low payment of around $1.50 per gallon at the gas station, and while that may initially sound like a positive for us and the economy, oil has become an extremely complex issue and things aren’t as good as they might seem.
The simplest answer to why oil has dropped so much in price is the sheer excess that is being produced. It’s basic economics, there is more supply than demand and as a result oil companies are selling oil per barrel at the lowest prices seen since the financial crisis in 2008.
Because of the drop in oil prices, oil companies are taking a large hit to their own revenues. These companies have reportedly laid off more than 200,000 jobs in the past 14 months, and have lost a lot of cash to invest in new oil rigs or technologies. Existing oil rigs have also been cut in America, in an effort to reduce supply.
Overall, while oil’s decline has hurt the economy, a bigger challenge from this issue has been noted in the recent Paris climate agreements, where several countries have agreed to reach certain benchmarks of cutting emissions and switching to renewable energy resources. One aspect of the agreement is that the governments of countries must start encouraging usage of different energy sources, which has proven difficult with cheap oil prices.
The good news is that despite the lure of cheap oil, major countries like the United States and China have continued to pursue the goals of the Paris agreements, to my surprise.
The fact that governments are still interested in pursuing these often more expensive alternatives, such as wind turbines and solar, with oil so cheap is important. Our leaders are finally starting to see the light on climate change, and understand that we need major government assistance to change our unsustainable way of life. It may be overly optimistic, but this is a good start to the new way that we have to start living in order to stay on this planet.
This may seem less relevant to our campus in particular, as many of us have a much smaller carbon footprint compared to the majority of the developed world (we bike more often, take less flights, and our university is one of the most green in the country, etc), but it is important that everyone going forward is mindful of their oil consumption.
We’ve seen in other countries when support falls away from renewable energies, those industries tend slow in growth. This has even been seen in the US, when a tax credit briefly was stopped in 2013 and the creation of new wind farms abruptly ended.
If we want to continue down this path of moving towards more sustainable and renewable energy sources, we need to watch what we consume even more closely than we normally do. If we as consumers support or take advantage of resources, such as oil, that would increase demand and show the government that we want these bad resources, then we are pushing ourselves back in time. We have a great opportunity to show the economy that consumers don’t want dangerous resources, no matter how cheap they may be. So keep biking, carpooling, taking public transit, and watching your oil consumption.
Collegian Columnist Alexandra Stettner may be reached at firstname.lastname@example.org or on Twitter @alexstetts.