Americans will probably continue to experience record-high inflation, a new report from the federal government suggests, at least for the foreseeable future. The Bureau of Labor Statistics released new data Wednesday that found inflation of consumer prices dipped slightly in April but remained near a 40-year high, at 8.3 percent above last year.
For many people, that means they’ll continue to pay more for things like housing, groceries and transportation. In fact, the average price of gasoline hit a record-high of $4.37 a gallon, according to AAA. 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 renewing their accusations that anti-fossil fuel sentiment is ramping up inflation for everyday Americans.
A growing number of economists, however, say that mitigating climate change is actually a long-term solution for tackling inflation as well. They say that idea became even more clear after Russia invaded Ukraine and exacerbated a global fuel shortage.
“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 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 for length and clarity.
Thanks for chatting, David. 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. The U.S. Bureau of Labor Statistics released its latest data on consumer prices Wednesday. What did the data show and what does it 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. Are we getting any signals from this latest data regarding that debate?
Super: It’s not really going to be resolved until we see the transitory factors changing. The most obvious transitory factor has been the pandemic. And the impact of the pandemic on supply chains is, if anything, getting worse, as a large fraction of China is locked down 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? In your latest op-ed in The Hill, you note myriad factors impacting 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. Most directly, it interferes with the production of all sorts of things that we need, and the transportation of all sorts of things that we need. So droughts, floods, extreme weather events, storm damage, all of those interfere with either the ability to grow crops or the ability to process them into the products that we need or the ability to get those things to market.
In addition, climate change is creating a need for a lot of spending that would otherwise be unnecessary to mitigate the effects of rising sea levels, of extreme storms and so forth. And all of that is contributing to demand which is bidding 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.
In your op-ed, you use the example of trying to buy a loaf of bread. Walk me 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. And so a lot of that crop is simply going to get burned. It’ll never get close to being harvested.
Other areas, climate changes lead to increased flooding. And that, again, will destroy crops or keep it from getting to market. Other stuff may be silos that are damaged by tornadoes that—again—are more common because of climate change. Or crops are more expensive to transport to market because roads are washed out or flooded. And when you add all of that up, you have more shocks affecting the price of bread.
And instead of what might have happened in the past where the baker would increase the price of bread on a one time basis because of a particular shock to prices. 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. And other sellers of goods and services will follow suit, so we end up with inflation.
This analogy applies to other industries, too, doesn’t it? I think of insurance and housing prices, for example. There was a video that went viral on Twitter this week of a beachside house in North Carolina that is currently listed for more than $380,000, and the waves are literally knocking the home off its stilts and sweeping it into the ocean.
Super: The things that climate change affects are integral to 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. And the insurance companies pay for those claims by raising premiums to everybody. And those insurance costs get factored into the prices of literally everything.
Same with transportation. Goods have to be carried to market. And as energy prices are increased by climate change, then that too is going to be passed on to added costs in products.
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. And that bids up the prices.
Some people are arguing that the solutions to climate change are also 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. How should people be thinking about inflation in terms of the Ukraine war and what solutions make the most sense?
Super: Well, right now, we have put all of our eggs in essentially one basket, which is fossil fuel. Our economy, our personal consumption, our industrial consumption, everything is overwhelmingly driven by oil, gas and coal. So when something bad happens, be it an oil embargo, the Russian war in Ukraine, political instability, we are immediately subject to price increases there.
If instead, we were getting some of our energy from solar, some of it from wind, some of it from geothermal, and not depending nearly so heavily on fossil fuels, if one of any one of those factors went up, we would be able to switch and lean more heavily on the others. And we wouldn’t be subject to the huge price increases we are seeing now.
The other factor is that most of the alternative renewable sources of energy are not concentrated in unstable parts of the world. Solar is everywhere, wind is in many places around the world. North Dakota is said to be the Persian Gulf of wind energy in terms of its potential. And geothermal is all over the place. Whereas if you look at the map, most oil and gas is extracted from often dictatorial parts of the world where there is political instability. The Norwegians and the Canadians have stable democracies, but very few other big oil and gas exporters do. So, we are constantly at the mercy of that as long as we are stuck on one form of fuel that comes from such unstable parts of the world.
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. That number is expected to double by 2050.