There were three reported news stories last week that taken together point to clear trend lines.  In a court ruling, the state of Vermont won the right to set auto emissions and MPG standards that are stricter than those of the Federal government.  The dollar reached an all time low against the Euro and oil crossed over the $80 a barrel price barrier. 

Vermont is one of twelve states where the state government is going to court to gain the right to institute lower emission standards.  Most of these initiatives are patterned after a policy already signed in California. This points to the continued lack of any leadership whatsoever regarding energy in Washington D.C.  The states are where the leadership is to do what is necessary regarding energy.  Neither the Federal government nor the auto makers are leading the way toward lower emissions in any meaningful way.  This case precedent will most likely affect the court battles in the other states.  [Note: since the Vermont decision, there was a court decision in California where a suit blaming automakers over emissions and requesting damages was thrown out.  In that case, the judge ruled that it was not a proper task for the courts to rule in this area, therefore sending it back to the other two branches of state government to institute laws regarding damages due to greenhouse gas emissions].

The long term trend in oil prices is up.  In early 2006 and again in 2007 I predicted that oil would continue to climb in price and could in fact approach or exceed $100 a barrel in the not too distant future.  $80 a barrel oil is just the latest marker or sign post on this path.  No surprise there at all.    We are going through peak oil, global demand is increasing and the price will continue to rise.

The dollar reaching a new low against the Euro is just the latest new low and part of a trend that has been going on for the past 5 years.  Now that the Fed has lowered the interest rate, the dollar will drift even lower.  Since oil is priced against the dollar, that means that oil will be relatively more expensive in the U.S. than in Europe. 

So let’s think about this.  The dollar is losing value when measured against other currencies, the price of oil is and will continue to rise, and it is the state governments that are showing leadership in energy policy since the federal government cannot seem to do so.  We are entering a perfect storm of non-action and stupidity and the consequences will be painful for the U.S. 

Regular readers of this column know that I have been very supportive of the auto companies’ efforts to introduce cars with lower emissions, particularly GM and their commitment to their electric car the Chevrolet Volt.  Saturn is going a great job of expanding their hybrid offerings.  These efforts and those by other companies, notably Toyota and Honda are addressing the clear need for more fuel efficient cars.  The problem the companies have is that it takes time to bring new technology to market.  They are, in effect saying that they want to be green sometime in the future but don’t make us do so before we are ready.  What they need to do is anything they can to lower emissions and perhaps offer carbon offset credits until the new battery technology for cars is in place.  If they want to continue to make large profits on SUVs and trucks, then provide an offset for them. 

 The companies are not the only ones that need to change their ways, it is time for the consumer to end their love affair with monstrous vehicles they don’t need to drive.  If we refuse to buy gas guzzlers, it will affect the market.  If you buy one then buy a carbon offset from a company like Planktos so that you have a carbon neutral footprint.

We need leadership in Washington D.C. that will see the near future landscape of ever higher priced oil that we need to import and pay for with ever cheaper dollars.  The citizens are speaking through their state governments.  Who is listening?