High oil prices encourage clean and dirty alternatives alike.
Apparently the dramatic increase in oil prices over the past few years has, in addition to spurring massive investment in alternative energy sources, also caused many individuals living in colder climates to switch from gas to wood for warming their homes.
This is an interesting trend because it has often been assumed that the rise in oil prices will cause the market to find cleaner alternatives. Unfortunately, this is not always the case, as seen with this increase in wood burning. Similar to coal power plants that are not governed by carbon regulations, wood burning also fails to accurately price in the externality of air pollution.
In reality, the cost of burning wood to heat a home costs a lot more than just the price of the wood. The cost of having dirty air to breathe in a neighborhood that uses widespread wood fires is not accounted for (nor is the environmental damage caused by the harvesting and delivery of the wood). While many local governments have imposed “no burn” days when air quality is exceptionally bad, the biggest cost of the wood fire is still borne by others. While there is clearly a big difference in the overall damage caused to the environment from a single wood burning boiler or heater than that from a coal power plant, both are similar in that they are incorrectly priced due to unaccounted for externalities.
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