by asdf
Thu Sep 1st, 2005 at 03:34:51 PM EST
According to The Times, the side effects of Katrina are spreading to Europe.
"Brent in London jumped $3.55 to $68.42 when trading resumed after Bank Holiday Monday. The record prices prompted governments in France and Belgium to flag populist measures to protect consumers.
"French ministers were squabbling yesterday over a proposal to cut the national speed limit to reduce fuel consumption. Dominique Perben, the Transport Minister, had called for a 115kph (71mph) limit on motorways, down from 130kph at present, saying that it would save motorists €7 on a 500km journey and also reduce the road death rate. His call sparked fierce criticism from within the governing centre-right Union for a Popular Movement. A spokesman for the party said that the measure was "inappropriate".
"In Belgium, Didier Reynders, the Finance Minister, proposed a €75 government cheque for every household to soften the blow of expensive fuel."
One must ask what the best response to such a situation is. On one hand, a higher consumer price for gasoline, diesel fuel, and heating energy stimulates conservation and improved efficiency. On the other hand, the cost falls disproportionally on the poor, who have less "spare" cash. Presumably this can be corrected by aid targeted at the appropriate segement of the population.
In a short term disaster like Katrina, it seems reasonable to take steps to help the short term situation. This might include releasing fuel from existing reserves, temporary changes in speed limits, or rationing of fuel.
But in the long run, what steps, if any, should a government take to reduce our western reliance on oil, and move to renewable non-polluting energy supplies?
"Claude Mandil, the IEA's Executive Director, said that a much-needed change in consumer habits, required to halt the oil-price run, would not happen if governments intervened by lowering taxes on the price of fuel. He said: "It's not because I want people to be hurt, it's just because I think that market signals are useful."
http://business.timesonline.co.uk/article/0,,9072-1757943,00.html
