Americans face a harsh winter of fuel inflation | Columns

Americans have their hands full right now. The COVID pandemic has made a major resurgence. And at the same time, inflation has just hit 7% – the highest rate in 40 years.

Some of the biggest increases are occurring in energy costs. In December, gasoline prices were up about 50% from a year ago. And the price of natural gas nearly doubled in 2021, driving up heating costs and electricity bills.

As bad as things are, they could be worse. Energy prices in Europe have soared and European households are now paying 54% more for their electricity than two years ago, even with aggressive government help to cut costs. Essentially, the pain felt across the Atlantic could be a taste of what’s to come in the United States, if we don’t fix energy policy.

Europe’s energy crisis can be attributed in large part to a failed approach to the transition to renewable energy – with overwhelming “decarbonisation” targets for energy security and affordability. Functioning coal and nuclear power plants have been shut down across the continent, and at the same time investment in new natural gas generation has not kept pace with demand. Europe’s global pivot towards renewables – and away from a balanced, on-demand energy mix – has left it painfully vulnerable to soaring natural gas prices and Vladimir Putin’s drive to sell gas Russian.

Without the diversity of distributable fuels it once had, Europe no longer has a safety valve when natural gas prices soar and renewables don’t cooperate. There is simply no alternative available when the wind is not blowing or cloudy skies reduce solar power. In these cases of winter freezes, limited supplies of natural gas, and exorbitant prices, the optionality and fuel security provided by a now-dismantled coal fleet is sorely missed.

In comparison, the United States still has a large coal park to ease the pressure on consumers. And in markets where coal remains an option, coal-fired power plants have gained market share and helped control electricity prices by reducing reliance on more expensive natural gas.

However, in states that have followed Europe’s lead – and rushed to shut down coal-fired power plants – consumers are paying the price. New England, for example, is facing a 30% rise in electricity costs due to soaring natural gas prices. And consumers are now on high alert to save energy as the region’s grid operator warns of potential outages during a prolonged cold spell.

The return of energy-driven inflation and the European energy crisis are stark reminders that the global energy transition could take a very perilous path if we do not recognize the value of a balanced energy mix. Americans need fuel diversity to ensure consumers are protected from price spikes, fuel shortages and underperforming renewable energy generation. Maintaining fuel diversity means recognizing the coal fleet while there is still time – as an invaluable, affordable insurance policy that must be retained for American consumers and our economic recovery.

Matthew Kandrach is president of Consumer Action for a Strong Economy, a free market advocacy organization.

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