A new report by the federal government suggests that Americans will continue to experience record high inflation, at least for the near future. The Bureau of Labor Statistics has released this report. 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 seeing an increase in inflation because of their 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. After Russia invaded Ukraine, which exacerbated a global shortage of fuel, this idea became more apparent.
“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 This column was written by The Hill earlier in the 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 was edited for clarity and length.
David, thank you for your time. 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 was the U.S. Bureau of Labor Statistics’ latest data on consumer price trends. What were the results and what does it all mean?
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 is most directly involved in the inability to produce all kinds of goods and hinders the transport of all of them. Droughts and floods, severe weather events, storm damage and other factors can all impact the ability or ability to grow crops, or the ability or ability to process those crops into the products or get those products to market.
Climate change is also requiring a lot more spending than would be necessary to mitigate the effects from rising sea levels, extreme storms, and so forth. All of this is driving up demand, which in turn is pushing up prices. 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 will use the example that you tried to buy a loaf. I’d love to hear your thoughts. 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 is going to be burned. It’ll never get close to being harvested.
Climate change can also lead to more flooding in other areas. This will again result in the destruction of crops and prevent it from reaching market. Other stuff may be silos that are damaged by tornadoes that—again—are more common because of climate change. It may be that crops are more difficult to transport to markets because roads are damaged or washed away. Add all this up and you will see that there are more shocks that can affect the bread price.
Instead of what might’ve happened in the past when the baker increased the price for bread due to a particular shock to the prices, this is what they will do 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 beachside home that is currently listed at more than $380,000. The waves are literally knocking it off its stilts, and sweeping the house into the ocean.
Super:Climate change has an impact on everything. 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 incorporated into the price of almost everything.
Same for transportation. Goods must be transported to market. Climate change will increase energy prices, which will result in increased product 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 argue that the solutions to climate changes are also solutions for 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:We have all our eggs in one basket right now: fossil fuel. Everything, including our economy, our personal and industrial consumption, is overwhelmingly powered by oil, gas, or coal. We are immediately affected by price increases when something bad happens, whether it is an oil embargo or the Russian war in Ukraine.
If we got some of our energy instead from solar, some wind, and some from geothermal, we wouldn’t be as dependent on any one of them. We would be able switch and rely more on the other factors if one of those factors went down. And we wouldn’t be subject to the huge price increases we are seeing now.
Another factor is that many of the alternative sources of energy are not concentrated within unstable areas of the world. Wind is everywhere, solar is everywhere. North Dakota is reputed to be the Persian Gulf in terms of wind energy’s potential. Geothermal is also abundant in the area. You can see that most oil and natural gas is extracted from dictatorial regions of the globe where there is political instability. While Canada and Norway have stable democracies respectively, very few large oil and gas exporters have such stable democracies. As long as we stick to one type of fuel from such unstable parts, we are at the 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.