Warming
First published: 25th July 2007
While criticising the "a touching, and often wildly optimistic, faith in so- called renewable energy", Tony Latter ("Cold water on the warming debate", July 25th) has his own touching and wildly optimistic faith in Market Forces. Market forces are effective at balancing the economic factors driving them, but they are incapable of balancing factors that mainly affect third parties: externalities. You derive the benefit of a speedy journey when you burn oil in a vehicle, and you pay the market rate for getting it out of the ground and refined to the supplier. You don't pay for the (tiny) effect that has on global warming, pollution, or exhaustion of an irreplaceable resource. To bring these factors into the marketplace, we need governments to impose costs to reflect (the best estimate) of those costs: a carbon tax, a pollution tax and a non- renewable resource tax.
Tony is right, eventually market forces will force fuel prices to rise, but markets are mainly reactive. Hitting a brick wall is effective at stopping a car using Newtonian forces, in a catastrophic manner. However, exactly the same Newtonian forces can be applied, using foresight, via the brakes for a happier result.