Global Warming, The Basic Economic View
Planet Earth is warming. "Earth's average temperature has risen by 1.4°F over the past century, and is projected to rise another 2 to 11.5°F over the next hundred years" according to the Environmental Protection Agency (EPA, 2015). There are more heat waves, higher temperatures for longer times, severe droughts, more floods, and more intense rain (EPA, 2015). Carbon dioxide is the most prevalent greenhouse gas and the worst offender. Methane gas is another greenhouse gas having significant effect. Greenhouse gases trap solar radiation in our atmosphere causing temperatures to rise. "The majority of greenhouse gases come from burning fossil fuels" (EPA, 2015).
Naomi Klein is a prominent researcher and writer on the topic of global warming. "In June 2014, the Risky Business project, led by billionaire and former New York City mayor Michael Bloomberg, as well as former U.S. treasury secretary Henry Paulson and hedge fund founder and environmental philanthropist Tom Steyer, warned that climate change would cost the U.S. economy billions of dollars each year as a result of rising sea levels alone, and that the corporate world would have to take such climate costs seriously" (Klein, 2014). The costs of averting climate change disaster in the U.S., and other countries will be astronomical. Klein (2014) also states that the capitalist market does not provide the incentives for correcting the problem. "Changing the earth's climate in ways that will be chaotic and disastrous is easier to accept than the prospect of changing the fundamental, growth-based, profit seeking logic of capitalism" (Klein, 2014). ExxonMobil had record profits in 2011 and 2012, while the global economy struggled to recover from recession. ExxonMobil, Chevron, BP and Shell continue to use fracking for greater supplies of fossil fuels.
Here is the basic economic view using sociology and psychology. Based on social economics, consumers, or U.S. citizens, will function according to their social group, locally and universally across the nation. These groups include friendship circles, religious affiliations, work connections, etc. Consumers will continue to behave as their social groups do. Based on the psychology of economics, consumers will function based on self-perception of success, also called self-efficacy, as well as the perception of others. The most important influences on our behaviors are what we perceive as success and what our groups perceive as success. We can add media influence as well. Media shows us what success looks like on the internet, on TV, in magazines, advertising products in ads and commercials, etc. Using these perceptions of success, consumers will not change their behavior unless the social groups tell them to or the media shows a different version of success. The media and social groups do show that global warming is a threat, so doing things like recycling should be kept in mind. But we do not see too much media and social groups saying change your energy consumption now or you are not a success!
Here is the basic economic view using markets. Supply and demand for energy, and other goods and services, determines the market price. The market price shows the value of our energy, such as $48.50 for a barrel of oil, WTI (NYMEX) price on July 29, 2015 (NASDAQ), and $120 for your monthly home energy bill. The cost of a barrel of oil has dropped dramatically in the past year, losing half its value. This is due to the increase in supply in oil and natural gas from improved fracking. Home energy bills and gas for cars have decreased marginally as well. This is good for consumers and for companies because dollar costs are reduced. However, it doesn't show the environmental impacts of burning fossil fuels. Impacts on the value of a product not shown in the price are called externalities. Global warming is a huge market externality!! Market pricing shows little incentive for consumers to change their behavior because it does not reflect the environmental costs. Companies will continue to seek profits with the same methods of production because consumer behavior isn't changing.
Markets, as well as social and psychological impacts will have little impact on consumer behavior. What will? The external shock!! When the normal lives and functions of consumers and companies are finally hit with environmental disaster, then the incentive for change will occur. The environmental shocks could be hurricanes that level homes, disastrous flooding, life threatening heat waves, lack of fresh water supply, rising sea levels, etc. Of course, by the time this devastation is affecting everyone, it will be too late to change. There will already be so much carbon dioxide and methane gas in the atmosphere that the planet will continue to heat up into intolerable levels.
It is still possible to avert climate change disaster (Klein, 2014) by using solar energy and other renewable energies. But what is the incentive to change consumer behavior? US consumers, global consumers, will have to respond to the needs of others. People around the planet will have to put the needs of those impacted first by global warming ahead of their own social status, social success, self-efficacy, company profits, low energy prices, etc.
According to Deepak Chopra (2014) most people function in the material world, fulfilling their basic physical needs with duality and the ego-personality, putting me first. But people are evolving towards the transcendent world where there is unity with others, a spiritual oneness with all others and the universe! There is hope!! But drastic change is needed in a short amount of time.
Klein (2014) cites sources showing the transfer to renewable energies is possible by 2030 on a global scale. Consumers and companies will have to make sacrifices in their standard of living now. Global citizens will have to confront the global energy corporations now. Has humanity evolved enough to put our planet and other people first?
Copyright © July, 2015 by Clint Kennedy
Naomi Klein is a prominent researcher and writer on the topic of global warming. "In June 2014, the Risky Business project, led by billionaire and former New York City mayor Michael Bloomberg, as well as former U.S. treasury secretary Henry Paulson and hedge fund founder and environmental philanthropist Tom Steyer, warned that climate change would cost the U.S. economy billions of dollars each year as a result of rising sea levels alone, and that the corporate world would have to take such climate costs seriously" (Klein, 2014). The costs of averting climate change disaster in the U.S., and other countries will be astronomical. Klein (2014) also states that the capitalist market does not provide the incentives for correcting the problem. "Changing the earth's climate in ways that will be chaotic and disastrous is easier to accept than the prospect of changing the fundamental, growth-based, profit seeking logic of capitalism" (Klein, 2014). ExxonMobil had record profits in 2011 and 2012, while the global economy struggled to recover from recession. ExxonMobil, Chevron, BP and Shell continue to use fracking for greater supplies of fossil fuels.
Here is the basic economic view using sociology and psychology. Based on social economics, consumers, or U.S. citizens, will function according to their social group, locally and universally across the nation. These groups include friendship circles, religious affiliations, work connections, etc. Consumers will continue to behave as their social groups do. Based on the psychology of economics, consumers will function based on self-perception of success, also called self-efficacy, as well as the perception of others. The most important influences on our behaviors are what we perceive as success and what our groups perceive as success. We can add media influence as well. Media shows us what success looks like on the internet, on TV, in magazines, advertising products in ads and commercials, etc. Using these perceptions of success, consumers will not change their behavior unless the social groups tell them to or the media shows a different version of success. The media and social groups do show that global warming is a threat, so doing things like recycling should be kept in mind. But we do not see too much media and social groups saying change your energy consumption now or you are not a success!
Here is the basic economic view using markets. Supply and demand for energy, and other goods and services, determines the market price. The market price shows the value of our energy, such as $48.50 for a barrel of oil, WTI (NYMEX) price on July 29, 2015 (NASDAQ), and $120 for your monthly home energy bill. The cost of a barrel of oil has dropped dramatically in the past year, losing half its value. This is due to the increase in supply in oil and natural gas from improved fracking. Home energy bills and gas for cars have decreased marginally as well. This is good for consumers and for companies because dollar costs are reduced. However, it doesn't show the environmental impacts of burning fossil fuels. Impacts on the value of a product not shown in the price are called externalities. Global warming is a huge market externality!! Market pricing shows little incentive for consumers to change their behavior because it does not reflect the environmental costs. Companies will continue to seek profits with the same methods of production because consumer behavior isn't changing.
Markets, as well as social and psychological impacts will have little impact on consumer behavior. What will? The external shock!! When the normal lives and functions of consumers and companies are finally hit with environmental disaster, then the incentive for change will occur. The environmental shocks could be hurricanes that level homes, disastrous flooding, life threatening heat waves, lack of fresh water supply, rising sea levels, etc. Of course, by the time this devastation is affecting everyone, it will be too late to change. There will already be so much carbon dioxide and methane gas in the atmosphere that the planet will continue to heat up into intolerable levels.
It is still possible to avert climate change disaster (Klein, 2014) by using solar energy and other renewable energies. But what is the incentive to change consumer behavior? US consumers, global consumers, will have to respond to the needs of others. People around the planet will have to put the needs of those impacted first by global warming ahead of their own social status, social success, self-efficacy, company profits, low energy prices, etc.
According to Deepak Chopra (2014) most people function in the material world, fulfilling their basic physical needs with duality and the ego-personality, putting me first. But people are evolving towards the transcendent world where there is unity with others, a spiritual oneness with all others and the universe! There is hope!! But drastic change is needed in a short amount of time.
Klein (2014) cites sources showing the transfer to renewable energies is possible by 2030 on a global scale. Consumers and companies will have to make sacrifices in their standard of living now. Global citizens will have to confront the global energy corporations now. Has humanity evolved enough to put our planet and other people first?
Copyright © July, 2015 by Clint Kennedy
