Falling costs raise risk of relapse on energy use

November 15, 2008|By JAY HANCOCK | JAY HANCOCK,jay.hancock@baltsun.com

David Martinez fought back when energy prices soared two years ago.

He put extra insulation in his attic for $750. He installed an $1,800 "tankless" heater that warms water as you draw it. He put in a super-efficient furnace and air conditioner, insulated his basement and lined his attic with foil that repels summertime heat.

In all, he spent about $15,000 cold- and heat-proofing the tidy, two-story house in Odenton he shares with wife Iris and daughter Isabella. His home energy use has fallen by about a third, and he has the Baltimore Gas & Electric bills to prove it.

"I actually pay less for utilities now than I did before the BGE hike," which sent electricity prices up 70 percent in 2006, says Martinez, a Web developer. "I was hoping that by proving this could be done, it would be a way of saying, 'This isn't as expensive as you think.' "

It's not. But now that energy prices are falling, the incentive for others to follow Martinez's example is shrinking, too. The country is in danger of reacting the same way it did after the 1970s energy bubble burst, by skimping on insulation and reinvesting in gas guzzlers.

We can't let that happen. Washington's next fiscal stimulus, which sounds like it's getting bigger every day, needs to include major dollars and tax incentives for energy upgrades. And Americans must keep investing in clean and efficient energy after the economic crisis is over.

"Finding the new driver of our economy is going to be critical. There is no better potential driver that pervades all aspects of our economy than a new energy economy," President-elect Barack Obama told Time magazine in late October. "That's going to be my No. 1 priority when I get into office, assuming obviously that we have done enough to just stabilize the immediate economic situation."

Promoting clean energy isn't just about growth or reducing dependency on foreign sources. It's about preventing environmental degradation. Skeptics of climate change "are beginning to sound like the people who for so many years, in the face of compelling evidence, denied that cigarette smoking had serious adverse effects on health," conservative federal appeals Judge Richard Posner wrote on his blog last year.

If the $2 gas flashback enables our continued oil and gas addiction, our grandchildren will suffer.

There is a question, of course, of how cheap energy will become and how long it will last. Even at $57 a barrel, oil is 40 percent more expensive than it was four years ago.

The natural-gas price decline brought it back only to year-ago levels. Electricity hasn't fallen by as much, even though the price of coal, which powers generators, has plunged. In any event, BGE and other utilities have already locked up megawatt supplies for next year, so the dip won't help households anytime soon.

Still, there is reason to believe energy will stay less expensive than forecasters believed only a few months ago. It's not just the weak global economy, which reduced demand. The bubble spurred exploration and summoned new supplies, just as the 1970s boom did.

A stimulus bill should include substantial tax incentives for building retrofits and energy research as well as measures to promote solar and wind energy and upgrade the rickety electrical grid. A rescue for automakers needs to set strict mileage standards and commit companies to hybrids and electric cars.

Ultimately, though, the key to avoiding a dirty-energy relapse is to set a proper price on the carbon dioxide spiraling up from our houses, cars and businesses.

Obama (as well as rival Sen. John McCain) pledged to pass a "cap-and-trade" program compelling business to cut carbon emissions or buy credits from those who have. Much of the developed world is already on this course. Maryland and a consortium of Northeastern states auctioned their first carbon emissions permits in September.

Cap-and-trade systems or a carbon tax will make energy more expensive than it would have been otherwise. But doing nothing will eventually be even more expensive.

A properly managed energy future will include solar panels, windmills and hydrogen cars. But as the Martinezes have shown with their 40-year-old house, enormous gains can be made with low-tech modifications available to everybody.

In July 2006, before the changes, they burned 2,237 kilowatt-hours of juice. In July 2008 - remember how hot it was? - they used only 1,547 kilowatt-hours, or 31 percent less. Martinez hasn't calculated how long it will take to recoup his investment, although it will certainly take years. He doesn't plan to move, so he has time.

At any rate, lower energy prices aren't changing his style. The family recently bought an extra-efficient washer and matching dryer. They see a hydrogen car in their future.

Now that fossil energy is cheap again, it's more important than ever to make sure we get off the stuff for good.

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