Imagine a world where gas and coal are no longer used for electricity, and no smoke rises out of factory buildings. If fossil fuels become obsolete, life could be like this. It is almost impossible to imagine life without fossil fuels considering that the oil and natural gas industry supports about 8% of the US GDP (API Fact Sheet). Our economy will need to thrive without fossil fuels because the global supply of oil and gas can meet the world’s demands only until 2050 (EIA). Phasing out fossil fuels will be a long and difficult task, so it will be necessary to look at its economic effects.
Getting rid of fossil fuels will have many socioeconomic impacts. Economist Mark Witte states, “It...will likely increase costs of energy for poor people...as for rich people...will likely be unhappily surprised when they find out that what they thought were valuable assets (oil fields) end up stranded.” The fossil fuel industry’s absence will impact pricing and income for US residents, creating economic uncertainty and unemployment. However, this unemployment could be cancelled out because the renewable energy industry is speculated to create at least 11 million new jobs (EESI Fact Sheet).
Changes to carbon tax and subsidies will also be essential to phase out fossil fuels. There are many subsidies, such as the Intangible Drilling Costs Deduction, which allows companies to reduce the cost of drilling new oil wells (EESI Fact Sheet). According to Assistant Economics Professor Daniel Brent, “Fossil fuels have negative externalities and therefore should be taxed, not subsidized.” Higher carbon tax would encourage the use of green energy. Carbon tax could be unpopular, but it will be vital to get rid of fossil fuels.
Because of all of the changes required to phase out fossil fuels, they will not become obsolete any time soon. Every energy source has its drawbacks, so we have to find a balance. You are still going to drive by factories with smoke rising out of them; however, the way we get energy could be very different in a few decades.