Economics Arjun Seth Economics Arjun Seth

Why 2014 is a big deal

The drastic drop in crude oil prices does increase the purchasing power of the public. But it also reduces the demand for healthy alternatives like electric cars. The articles talks about the radical changes 2014 brought with it including major weather alterations and important decisions for a cleaner environment. The article written by Thomas L. Friedman talks about how fracking (a modern technique to extract oil) is reducing the oil prices and intern cause greater pollution. The notes that the same people who invent various methods to reduce environmental degradation are the ones who invent techniques like fracking. After much pondering, the author comes to a conclusion that the year 2014 can be a year of both technological advancement as well as environment sustainability. 

Read an excerpt of the article written by Thomas L. Friedman: 

I was just about to go with a column that started like this: When they write the history of the global response to climate change, 2014 could well be seen as the moment when the balance between action and denial tipped decisively toward action. That’s thanks to the convergence of four giant forces: São Paulo, Brazil, went dry; China and the United States together went green; solar panels went cheap; and Google and Apple went home. But before I could go further, the bottom fell out of the world oil price, and the energy economist Phil Verleger wrote me, saying: ‘‘Fracking is a technological breakthrough like the introduction of the PC. Low-cost producers such as the Saudis will respond to the threat of these increased supplies by holding prices down’’ — hoping the price falls below the cost of fracking and knocks some of those American frackers out. In the meantime, though, he added, sustained low prices for oil and gas would ‘‘retard’’ efforts to sell more climate-friendly, fuel-efficient vehicles that are helped by high oil prices and slow the shift to more climate-friendly electricity generation by wind and solar that is helped by high gas prices. So I guess the lead I have to go with now is: When they write the history of the global response to climate change, 2014 surely would have been seen as the moment when the climate debate ended. Alas, though, world crude oil prices collapsed, making it less likely that the world will do what the International Energy Agency recently told us we must: keep most of the world’s proven oil and gas reserves in the ground. As the I.E.A. warned, ‘‘no more than one-third of proven reserves of fossil fuels can be consumed prior to 2050’’ — otherwise we’ll bust through the limit of a 2-degree Celsius rise in average temperature that scientists believe will unleash truly disruptive ice melt, sea level rise and weather extremes. ...Read more

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