In fact, low oil prices are good for the environment for three simple reasons. First, cheap energy will inspire cheaper alternatives. Fundamentally, new technologies replace old ones over time when the new ones are better. Second, cheap energy caps inflation. Energy is the economy's single largest commodity, accounting for more than 65 percent of our total expenditures.
Low prices keep inflation in check.
Inflation not only robs savings, but prevents capital investment. Without investment in new equipment, there can be no technological progress. This single most powerful environmental factor is unpredictable in its specifics, but highly predictable in its overall effect. Third, low-cost energy stimulates the economy overall. Increased disposable income, increased tax revenues, and more money fundamentally make environmental programs affordable.