Paying Too Much for Energy? The True Costs of Our Energy Choices

${image_title}$

Released: April 2012

Related Topics: Energy & Environment

Authors:

Adam Looney • Policy Director, The Hamilton Project; Senior Fellow, The Brookings Institution
Michael Greenstone • Director, The Hamilton Project; 3M Professor of Environmental Economics, MIT; Senior Fellow, The Brookings Institution

Abstract

From the Spring 2012 issue of Daedalus:

Energy consumption is critical to economic growth and quality of life. America’s energy system, however, is malfunctioning. The status quo is characterized by a tilted playing field, where energy choices are based on the visible costs that appear on utility bills and at gas pumps. This system masks the “external” costs arising from those energy choices, including shorter lives, higher health care expenses, a changing climate, and weakened national security. As a result, we pay unnecessarily high costs for energy. New “rules of the road” could level the energy playing field. Drawing from our work for The Hamilton Project, this paper offers four principles for reforming U.S. energy policies in order to increase Americans’ well-being.