Wednesday, July 21, 2010

Certainty & energy markets

Friedman's column today in the NYT reminds us that energy companies are waiting for the other shoe to drop on climate change-related carbon regulation. The writing's been on the wall for awhile about the need for government to act on limiting carbon emissions, but so far nothing's been done. Republicans like Oklahoma's Senator Inhofe (who treated Towson's Invisible Children club well last year!) have called climate change a "hoax" and South Carolina's Senator DeMint saw this February's snowfall as evidence that climate change isn't happening. And while we'll miss Steven Schneider, a climatologist and leader of the Nobel-winning IPCC research team calling attention to the phenomenon of climate change, most people still agree that something needs to be done.

It surprises me when stock prices go up after an industry gets an added burden of regulation, but that's usually the response to certainty. When they know something's coming but they don't know what, markets don't like that. Better a regulation you know than one that might be anything. That quest for certainty is what Friedman's hoping will drive Congress to give the energy sector the regulations they know are coming. The US relies on some pretty dirty energy sources, and we could be cleaning those up, but people won't until they have to. Friedman thinks that knowing they have to will be a load off their minds- I wonder if they agree!

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