Homeowners’ interest in energy efficiency measures waxes and wanes. During the 1970s, when oil prices repeatedly spiked upwards, everyone wanted to save energy. However, in the 1980s, when oil prices collapsed, Americans forgot about saving energy, and most of us reverted to our usual wasteful habits.
By 2008, oil prices were high again, and green builders were receiving lots of phone calls from homeowners who wanted lower energy bills. But between June 2014 and now, oil prices have collapsed again, tumbling from $115 to between $37 and $40 a barrel. This raises several questions:
New Year’s Day is a good time to make predictions for the year ahead. I’ll attempt to answer the questions I’ve posed with a list of ten points.
Before going through these ten points, though, it’s worth emphasizing the fact that the world oil market is fairly responsive to changes in supply and demand. When the demand for oil exceeds the supply, prices rise. When the supply of oil exceeds the demand, prices fall.
Right now, oil producers are pumping lots of oil out of the ground — at a time when efficiency improvements (for example, improvements in vehicle fuel efficiency) have slowed the rate at which demand is increasing. The predictable result: prices have fallen.
1. Interest in green building is down because energy is cheap
Let’s face it: most Americans don’t care too much about saving energy when energy is affordable. Compared to your cell phone bill, Internet bill, and cable TV bill, your electricity bill may seem reasonable. So why worry about it?
When energy prices drop, the payback period for energy-efficiency measures increases. Some homeowners are happy to spend $6,000 on attic insulation if the payback period for the investment is 10 years. Once the payback…