Don’t worry: The drop in oil prices is helping the U.S. economy without hamstringing the administration’s drive to cut carbon emissions.
That’s one conclusion of a broad new Council of Economic Advisers report released Thursday morning that takes stock of the nation’s oil-and-gas boom and of policies aimed at driving up the use of green energy and reducing petroleum demand.
Jason Furman, chairman of the Council of Economic Advisers, put it like this in an interview: “You look all in at the Clean Power Plan, the fuel-efficiency standards for vehicles, and the range of other steps that the administration has taken on climate change, and they massively outweigh any change in carbon emissions that would result from changes in prices.”
“One of the important things that this does is it shows that it is not a choice between the economy or the climate,” Furman said.
The United States scarcely uses oil to create electric power anymore, so cheaper oil and gasoline don’t have much to do with the drive away from coal and toward lower-carbon natural gas and renewables. But the report also takes stock of how U.S. petroleum consumption is well below what analysts were projecting a few years ago and certainly a decade ago, something Furman calls as remarkable as the U.S. production surge.
“If you asked somebody in 2006 to predict the future, the even bigger surprise wasn’t the increased production, it was the reduced consumption and that is win-win, because that is less emissions, lower prices, less vulnerability to global supply disturbances,” he told National Journal.
Furman notes that U.S. petroleum consumption is 4.6 million barrels per day below what the Energy Information Administration had forecast in 2006, and the report notes that current projections of consumption in 2030 are 44 percent lower than forecasts made a decade ago.
The White House report takes a victory lap of sorts on that score, noting that while the drop on gasoline consumption between 2008 and 2010 was largely the result of recession and high fuel costs, the downward revision in projected 2030 consumption levels stems from policies to substantially toughen car and truck fuel mileage standards, which has been an administration focus.
More broadly, the annual Economic Report of the President states: “Although oil prices will continue to fluctuate, the energy-sector developments will have a durable impact on our economy and our climate over the longer run regardless of future fluctuations in the price of oil.”
Elsewhere, the wide-ranging energy section — a mix of messaging and data — touts the economic benefits of the U.S. production surge, while highlighting increases in renewable electricity production and jobs in that sector. It also devotes plenty of space to reiterating the White House view that failing to stem carbon emissions carries huge costs down the line.
Furman said the report could help widen understanding of the interplay between climate and economic policy.
“These tend to be read by “¦ a global economics community,” he said. “In some sense, if you can help take people whose job is not necessarily climate change, it might be fiscal policy and structural policy and financial market policy and show them some of the links between that and energy policy, I think that in itself would help pave the way for a more productive discussion.”