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Is the (Energy) Price Right? Is the (Energy) Price Right?

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Is the (Energy) Price Right?

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(Photo by Justin Sullivan/Getty Images)

Whether it's powering your car or house, what's the right price for energy?

This basic question is permeating debates happening in Washington and around the country when it comes to diverse issues like the renewable-fuel standard and forthcoming regulations controlling greenhouse-gas emissions from electric power plants.

 

Scrutiny surrounding the RFS, which requires an increasingly large amount of our nation's transportation fuel to come from biofuels, focuses in part on whether higher volumes of biofuels—mainly from corn-based ethanol—are raising or lowering the price of gasoline.

Meanwhile, critics of the Environmental Protection Agency say its new proposed rules on greenhouse-gas emissions will raise the cost of electricity since the technology—carbon capture and sequestration—that the new rules will require is not yet widely commercially available.

The issue of energy prices is more complex than just one factor, but Washington nonetheless often gets blamed for what it does (or does not do) related to the affected industries. These debates also often overlook the question of whether or not the environmental impact of energy production should influence the price of energy, whether it's the public health and climate-change effects of fossil-fuel production or the public-lands and wildlife effects of renewable energy.

 

Experts have speculated that a government-set price on carbon could help externalize the environmental and public health cost of carbon emissions that's not as easily quantifiable in economic terms. Relatedly, experts have said a higher tax on gasoline could help shift our currently gasoline-dominant transportation sector onto other forms of fuel, including renewables, natural gas, and electric.

Does Washington have a responsibility to externalize the environmental impacts of different kinds of energy production into market prices? If yes, how can policymakers balance this goal with the need to have affordable energy?

How, if at all, should Congress and the Obama administration factor in price concerns when writing regulations and other policies, such as mandates?

What can the United States learn from other countries, or even individual states or regions within the U.S., about how energy prices affect consumers' behavior, the environment, and the economy?

 

From the Energy Insiders

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