John Baird thinks it’s a bad idea to save money on gas

Today John Baird attacked Bill C-288, the opposition bill to force the government to meet its Kyoto requirements. As the National Post reports:

Electricity bills, heating and gas prices would soar, businesses would have to scale back or cease production and that would lead to job losses for Canadians, according to Baird’s report.

He predicted that electricity bills would jump by 50 per cent after 2010, prices at the pump would shoot up by 60 per cent and natural gas prices to heat home would double.

The opposition immediately criticized the report:

“This minister has put forward no analysis on the related, positive economic benefits. In fact, he deliberately ignored those benefits that come from better energy efficiency, lower energy use and jobs related to the benefits of emissions reductions,” said Liberal environment critic David McGuinty at a press conference to respond to the report.

“Why did he do so? Because that story is too positive, too positive for Canadians to know.”

He also said the government is ignoring the costs of not taking action to significantly reduce greenhouse gas emissions.

The Liberals further criticized the report saying its analysis is based on false assumptions about what Bill C-288 requires.

But let’s, just as an intellectual exercise, assume that John Baird is correct. Over the last 5 years, natural gas prices have roughly doubled, but have varied by as much as four times their low price. So a doubling over the next 5 years would be business as usual or possibly better.

I looked up electricity prices in Ontario for last month and May 2002, the earliest month available online. Over this roughly 5-year period, electricity prices have risen by 88%, whereas John Baird predicts a mere 50% increase if we meet our Kyoto obligations.

And finally, gas prices at the pump for the last 5 years have risen 87% whereas John Baird predicts a more modest 60% increase if we actually save the planet.

None of this is actually all that surprising. Energy is a commodity. Demand and price are intrinsically related. So if we allow demand to rise, prices will continue rising. If we raise the price now and force people to take measures to decrease energy use, 5 years from now they are likely to demand less, so energy prices may increase more slowly. That’s not an entirely fair assessment because natural gas prices are continental and oil prices are determined globally, so our own demand won’t shift the price so much. Still, it is widely known that higher fuel efficiency standards on US cars could in fact cause dramatic price decreases at the pump. So what I’m hearing from John Baird is that he doesn’t want to save us money.

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