New York City must prepare for higher oil prices, not just climate change

Oil prices will go back up, and we need to prepare for that now.  The good news is that this focus will help us respond to the recession, create green jobs, slow climate change, and move toward energy independence.  Join Sierra Club NYC in calling for action. 

The recent drop in oil prices from nearly $150 last summer to below $40 is due to the economic contraction, and should not cause complacency. Higher prices and / or fuel shortages are likely in the next few years.  Even if weak demand keeps prices low in the short term, consumers and businesses still need to minimize energy, transportation and heating costs.  Low oil prices and the recession dangerously hide a looming supply problem, and the potential nasty surprise of oil supply disruptions. The energy conservation and resilience initiatives we need to accelerate will help all our challenges at the same time, and improve our quality of life. It’s a win-win solution – but we’ve got to act now.

Many observers predict that world oil production will either hit a plateau, or peak and begin permanent decline by 2010.  As the International Energy Agency warns in its recent World Energy Outlook 2008, "current global trends in energy supply and consumption are patently unsustainable" and "the sources of oil to meet rising demand, the cost of producing it and the prices that consumers will need to pay for it … [are all now] extremely uncertain…The era of cheap oil is over."  IEA, as well as reports from the US Governmental Accountability Office, the US Department of Energy, the US Army Corps of Engineers, and the Association for the Study of Peak Oil point to geological oil supply limits.  The NY Times reports that lower oil prices discourage investment in new oil production, so when the economy recovers, and energy prices rise again, it will be very difficult to maintain production levels. 

Shortfalls cannot be made up by increased domestic oil production, or economically impractical substitutes such as oil shale, tar sands, and biofuel. Instead, we must scale up mass transit, and renewable energy capacity, while maximizing energy conservation and efficiency, funding R & D, and making planning decisions that minimize future energy use. 

Potential price and supply impacts of energy volatility scenarios are not directly addressed by PlaNYC, Office of Emergency Management, or by State and Federal green economic recovery programs.  Let’s add these topics to the NYC energy conversation.  Voters may want to defer paying for climate change responses, but directing attention to these ignored economic factors will build public support for green programs.  Economic recovery efforts geared to move us beyond oil will avoid waste of taxpayer dollars, unleash private sector innovation, and build community resilience.   

Sierra Club NYC calls on City Council to plan for higher oil prices and supply shocks.
Federal agency studies expect huge fluctuations in price and availability of oil.  Potential impacts on NYC and ways to buffer them are suggested in the SC NYC report, “Sustainable Energy Independence for NYC,” endorsed by over 20 groups upon its release in April 2008.

1. Long-term budget decisions must anticipate future fuel price increases to avoid waste
Budgeting should measure, incentivize and maximize energy conservation and efficiency. Governments should avoid wasting limited recovery funds on expansion of highways or aviation, or any project that will become economically inoperable if oil prices drastically increase over the long term.