Soaring Fossil Fuel Prices This Summer Should Spur Clean Energy Transition

It will come as no surprise to anyone to hear that fossil fuel prices have skyrocketed. 

Whether it’s gasoline at the pump to go on a summer road trip or methane gas used for electricity to stay cool at home amid ever-hotter heat waves, people are struggling to pay the high bills. 

The fossil fuel industry, who is raking in record profits, and their friends in Congress want the public to think that more oil and gas production is the way out of this energy crisis, but it is our collective reliance upon non-renewable, dirty fossil fuels that is allowing the industry to gouge consumers and attempt to lock us into fossil fuel extraction for decades to come.

The right way forward is to double-down on the clean energy transition so the country is not tied to global demand for oil and gas and the schemes of a greedy fossil fuel industry. 

Why Are Prices So High?

The cost of methane gas, sometimes referred to as “natural gas,” is at its highest point since 2008, leading to an estimated 40% increase in Americans’ monthly utility bills. Meanwhile, the national average of gasoline approaches $5/gallon. 

There are a number of reasons for these historically high price spikes: 

Fossil fuels are a global commodity tightly linked to volatile global markets that are exposed to price shocks. The industry is expanding exports to take advantage of increased demand in Europe, which only raises energy prices for American consumers. 

Greedy fossil fuel executives and the politicians they finance are lining their pockets and those of their shareholders. 

Fossil fuels are dangerous and volatile so leaks, explosions, and other incidents can impact price. 

Extreme weather events driven by the climate crisis drive up prices.

  • Summers in America are getting “hotter, longer and more dangerous.” This means we are using more and more electricity to cool our homes and businesses to safe and comfortable temperatures. According to the EIA, 61% of this electricity generation was from fossil fuels in 2021. 
  • FERC’s Summer Assessment 2022 predicts higher electricity prices due to, “hotter temperatures, slightly increased demand, and higher natural gas prices.” FERC also notes that drought, heatwaves, and the potential for wildfire in the western U.S. will further strain the electricity sector and reduce output from hydroelectric dams.
  • As we approach peak hurricane season we can expect to see further disruptions to fossil fuel production leading to higher prices. Last year, Hurricane Ida took Gulf Coast drilling wells offline for weeks. 

We Must Avoid Traps Set By Fossil Fuel Industry and Friends and Opt for Real, Long-term Solutions 

The Biden Administration must explore all potential tools available to bring relief to American families facing skyrocketing energy costs. But false solutions, like a gas tax holiday – which amounts to little more than yet another subsidy for the fossil fuel industry - are not the answer. 

The oil and gas industry and the members of Congress they financially support are working hard to set traps that will lock us into fossil fuel production for decades. Instead, we need to take decisive action against fossil fuel industry greed and move quickly towards a clean energy future to ease global demand and climate challenges that are fueling these price spikes. 

These steps include:

Taxing windfall profits that the fossil fuel industry is racking in at the expense of Americans;

  • A windfall profits tax is based on the idea that when a corporation makes a massive profit based on events outside of their control, a “windfall,” they should have to pay an additional tax on those profits – especially when they came at the expense of the general public. That’s what’s happening right now: Big Oil and Gas are making huge profits because of the economic recovery from Covid-19 and the crisis in Ukraine. This windfall profits tax would mean that a percentage of those undeserved profits would be taxed at a higher rate and the revenue from the tax could then be used to offset costs for consumers and support solutions that make us less dependent on oil and gas.

Ending subsidies to the fossil fuel industry;

Investing in affordable, accessible clean energy that creates American jobs: 

  • Support for an electric grid powered by 100% clean energy by locking in tax credit investments in clean energy technologies like solar, wind, offshore wind, geothermal, batteries, and high voltage electricity transmission for the next 10 years. 
  • Incentives for the clean energy industry to be based in the US and permanently set up shop to deliver the promise of family-sustaining clean energy manufacturing jobs to every American.
  • Providing tax credits for clean transportation that also makes new electric vehicles affordable for working and middle-class families.
  • Investments in environmental and climate justice block grants and other programs that will clean up pollution and create healthy, toxic-free communities, healthy ports, and climate-resilient and energy-efficient affordable housing.
  • Expansion of existing home energy and efficiency tax credits, and providing point of sale rebates for the purchase and installation of heat pumps, water heaters, induction cooktops, and other everyday household electric appliances, to rapidly enable home electrification. These investments in residential electrification will cut indoor air pollution and make American homes healthier, safer, and more energy affordable.

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