The Staton Jones Report

The Globe and Mail published a story today about the International Energy Agency's report calling for much higher prices for oil and gas to stem the environmental damage caused by its use.

"We believe that oil prices in the seventies and eighties did more to reduce emissions and improve efficiency than what happened with the policies of the nineties," says Fridtjof Unander, a senior energy analyst at the IEA and the author of the report released earlier this month. Even steep pump price increases will take years to push consumers into more fuel-efficient vehicles, the IEA warns, pointing to a painfully slow path to reducing greenhouse gas emissions in the transportation sector. "There are no quick answers to transport," Mr. Unander says.

The article contends that the only stimulus to the energy sector that reduced consumption and increased efficiency was large and long-term increases in the price of fuel. Once consumers became convinced that high prices were a permanent fixture of the economy, they adjusted their choices. The trend started with the first two oil embargos of the seventies, but reversed itself in the nineties when gas prices were kept low by the first President Bush's quid pro quo with the Saudis and Kuwaitis. The report says, in effect, that pain at the pump is the only long term way to reduce consumption.