According to a new federal report, Americans will likely continue to experience record-high levels of inflation for at least the foreseeable future. The Bureau of Labor Statistics published the following: New dataWednesday’s data showed that inflation of consumer prices declined slightly in April but remained at a high of 8.3 per cent, which is close to the 40-year mark.
For many people, that means they’ll continue to pay more for things like housing, groceries and transportation. According to AAA, gasoline prices hit a record high of $4.37 per gallon. But exactly what’s causing the inflation and the solutions for addressing it remain part of a heated debate, with many Republicans and industry leaders blaming President Biden’s focus on transitioning to renewable energy to tackle climate change as a primary factor.
On Thursday, the Biden administration announced it was canceling oil drilling lease sales in the Gulf of Mexico and Alaska’s Cook Inlet, saying it was mainly due to a “lack of industry interest” and complicating legal factors. But that didn’t stop conservatives from Renewal of their accusationsAmericans are experiencing an increase in inflation due to anti-fossil fuel sentiment.
However, a growing number of economists believe that mitigating the effects of climate change is a long-term solution to tackling inflation. This idea was made more evident after Russia invaded Ukraine, which caused a fuel shortage worldwide.
“If we wish to control inflation, we must address climate change now,” David Super, a professor of law at Georgetown Law who has also served as the general counsel for the Center on Budget and Policy Priorities, wrote in A column for The Hill from earlier this week.
Inside Climate News spoke with Super about what’s driving inflation today and why he thinks addressing the climate crisis is a necessary step in bringing prices back down over the long run.
This interview has been edited to be more concise and clear.
David, thanks for the opportunity to chat. You’ve had a long career working in law and economics, and I’m sure you have spent a lot of time thinking about inflation. Wednesday’s U.S. Bureau of Labor Statistics data on consumer prices was released. What did the data reveal and what does this mean for us?
Super: Well, the data shows that inflation is slowing but it’s still well above recent historical levels, prices are continuing to rise, and that—although the purchasing power of the average American has also been rising—the prices are going up. They’re going up fairly broadly, but a few areas are particularly affected, including energy costs and shelter.
There’s been a lot of debate about inflation being transitory or more long term. Do we get any signals from the latest data regarding this debate?
Super: It’s not really going to be resolved until we see the transitory factors changing. The pandemic has been the most obvious transitory element. The impact of the pandemic is only getting worse as a large part of China is in lockdown and Chinese industry is offline. That’s damaging supply chains for a wide range of goods. And until that changes, and those supply chains get untangled, we’re not going to know for sure whether the inflation is transitory.
The other transitory factor is Russia’s war on Ukraine, which has driven up both food and energy costs around the world and in this country, and we won’t know how much of a transitory factor that is until that war ends.
What about climate change? Your latest op-ed in The Hill highlights many factors that are affecting inflation today. But you point particularly at climate change, which you said is “largely ignored as an inflationary driver” and must be addressed. What role does global warming play in inflation and what’s so important about addressing it?
Super:It plays many roles in inflation. It has a direct impact on the production and transportation of all the things we need. Droughts, floods and extreme weather events like storm damage can all affect the ability of crops to grow or to be processed into the products we need or to get those items to market.
Climate change is also driving a lot of spending that would otherwise not be necessary to reduce the impacts of rising sea levels and extreme storms. All of this is driving up prices and increasing demand. Instead of spending money on nice things for your family, you’re spending money on putting the roofs back on your house after the hurricane tore it off, or retrofitting the roof you already have to make it more hurricane resistant.
Your op-ed uses the example of trying buy a loaf bread. Let me walk you through that. How can that help folks who maybe haven’t studied economics better understand global warming’s impact on inflation?
Super: Thinking about how all the ingredients in a loaf of multigrain bread, and how they’re affected, shows how profound the impact of climate change on our environment is. Maybe the wheat is grown in an area that’s subject to wildfires, and a lot of it is. With the extreme temperatures that we see in summers from climate change, and reduced rainfall in some areas, they’re more wildfires. So a lot of this crop will just get burned. It’ll never get close to being harvested.
In other areas, climate change leads to increased flooding. This can again destroy crops or prevent them from going to market. Other stuff may be silos that are damaged by tornadoes that—again—are more common because of climate change. Because roads are flooded or washed out, crops can be more costly to transport to the market. All of these shocks can have a greater impact on the bread’s price.
Instead of what might have been the case in the past, where the baker raised the price of bread because of a particular price shock, they may just do it now. If they find that there are so many shocks going on, that they’re always having to deal with something, they may just raise the price of bread permanently. Inflation will also be caused by other sellers of goods or services.
This analogy applies to other industries, too, doesn’t it? I think of insurance and housing costs as examples. A viral video was posted this week on Twitter about a North Carolina beach house that is listed for over $380,000. The waves are literally knocking it off its stilts, and sweeping the house into the ocean.
Super:Everything is affected by climate change. When those roofs get ripped off those houses, when houses fall off eroding cliffs or get burned in wildfires, a lot of that’s insured. Insurance companies pay for these claims by increasing premiums for everyone. These insurance costs are included in the prices of virtually everything.
Same goes for transportation. Goods must be transported to market. Climate change is increasing energy prices. This will also mean that products will have to be transported to market at higher costs.
Housing is one of the biggest factors in the consumer price index lately, it’s one of the areas where inflation is most entrenched. When people realize they can’t live in areas that are prone to floods or to wildfires, then there are more people seeking housing in the rest of the country. That drives up the price.
Some people argue that the solutions for climate change are also the solutions to our inflation problems. Others say the opposite, blaming the efforts to transition away from fossil fuels for adding to rising costs of things like gasoline—especially after the Russian war in Ukraine made everything worse. What solutions and how should people think about inflation after the Ukraine war?
Super:Right now, all of our eggs are in one basket: fossil fuel. Everything, including our economy, our personal and industrial consumption, is overwhelmingly powered by oil, gas, or coal. When something goes wrong, such as an oil embargo, Russian war in Ukraine, or political instability, we are immediately exposed to price increases.
Instead, we could get some of our energy from solar, some from wind, and not as heavily on fossil fuels. If one of these factors goes up, we could switch to the other and rely more heavily on them. And we wouldn’t be subject to the huge price increases we are seeing now.
Another factor is the fact that most alternative sources of renewable energy are not concentrated at unstable locations. Wind is everywhere, solar is everywhere. North Dakota is reputed to be the Persian Gulf in terms of wind energy’s potential. Geothermal is everywhere. If you look at the map, the majority of oil and gas is extracted in dictatorial areas of the world that are subject to political instability. While the Canadians and Norway have stable democracies they are not like other major oil and gas exporters. So, as long as we continue to use one form of fuel that is so unstable around the world, we are always at their mercy.
That’s it this week for Today’s Climate. Thanks for reading, and I’ll be back in your inbox on Tuesday.
That’s how many people face water scarcity today, in part because of climate change, According to the United Nations. This number is expected to double in 2050.