Daily Score Blog

Teaching old dogs new tricks? It took soaring fuel prices for old habits to shift. But they're shifting alright.  Just take a look at these poll results - Gallup finds that big numbers of Americans are making changes in their daily lives to deal with higher gas prices. Here's a snapshot:

Via Calculated Risk, USAToday is reporting that SUV resale value is plummeting.

[W]holesale prices on big SUVs such as Chevrolet Tahoes, Ford Expeditions and Toyota Sequoias are down 17% from a year ago. Full-size pickups have fallen as much as 15%...

The reason, obviously, is that soaring gas prices are souring car buyers on the big guzzlers.  When a gallon of gas was cheaper than a cuppa joe, size and power seemed like nifty luxuries.  But with gas nudging $4, the luxuries have become albatrosses.

There's absolutely no reason for "I-told-you-so's" here.  Cars are the second largest purchase most people ever make, next to their homes, so rapid depreciation will be a serious hit to a lot of families.  Still, there's not all that much to be done:  SUV owners, whether they knew it or not, were making a bet that oil would stay cheap for a good, long while.  It didn't, and they're paying the price for a bet gone bad.

The only thing that we can do, collectively, is to stop assuming that oil will be cheaper in the future than it is today.  Maybe it will be; but the experience of the last 8 years suggests otherwise.  Still, despite price hikes that outstripped most predictions, there are all sorts of decisions -- from what kind of cars to buy, to what kinds of neighborhoods to build, to what kind of transportation investments we should pay for -- that are being made under the tacit assumption that gas prices will come back to earth. 

That's a risky bet.  Just ask someone who's trying to trade in a Toyota Sequoia.

[Picture courtesy of Flickr user joguldi, distributed under a Creative Commons license.]

An economy-wide cap on climate warming emissions – our preferred climate policy  – has one enormous sticking point:  once the cap is in place, who gets the right to pollute?

That’s the core of the debate over the “allocation” of emissions permits.  Literally billions of dollars are at stake.  And not too surprisingly, just about every industry you can think of believes that, once strict emissions limits are imposed, they should get a generous slice of permits for free. 

Much of this is just money-grubbing, plain and simple.  Permits will have a market value, so giving away permits is a lot like giving away free money.  Free permits will mean big windfall profits to large emitters – an idea that shareholders and execs LOVE, but consumers and taxpayers should hate.

But in some cases, the arguments against free emissions permits aren’t so clear-cut.  In much of the US West, for example, investor-owned electric utilities can't set their own prices; instead, their rates are set by public utility commissions. And if those commissions are attentive and careful, the investor-owned utilities have a pretty hard time raising prices to capture “windfall” profits. Moreover, some utilities are actually owned by the public, or by the customers they serve – which makes the whole “windfall” issue moot.

Many utilities are arguing – in good faith, we think – that it would be better to simply give utilities permits, so that customers don’t have to pay for the cost of buying permits at an auction.  Free permits will benefit consumers, their argument goes, by limiting electricity rate increases.

Are the utilities right about this? Could free allocation to utilities be a real boon to consumers?

We don’t think so.  In fact, handing out permits to utilities for free has the potential to backfire, raising the overall cost of emissions reductions -- thereby increasing the cost that consumers pay for all of their other energy needs.