The effect of rising energy prices for the economic wellbeing of Essay

The effect of rising energy prices for the economic wellbeing of households - Essay Example A significant economy reform program was announced by Australian government for securing the future with relatively clean energy. It is a transition plan that will transform the economy of the country gradually; it will be implemented by taking initiatives in four key areas namely carbon pricing, non-conventional sources of energy in place of conventional energy, enhancing the efficiency of energy consumption and management as well as land reforms. But the foremost component of this transition plan is the carbon price mechanism and several complementary measures along with the assistance plan for the household and large emitters of the pollutants in the current economic structure. As the time passed by, the business as well as household focused on the relevant details of this plan and researchers forecasted the consequences and impacts of this plan extensively. The current essay models the impacts of the proposed mechanism of carbon prices on the household economy by discussing the consumer behaviour theories and keeping in view the fact that proposed plan promises to return most part of the revenue generated through carbon price mechanism to the household. A package of measures also came along this plan; these measures outline the policy of the Government to curtail the instantaneous effects of carbon pricing mechanism on the household economy.... $ 23, $ 24.15 and $ 25.40 for first, second and third years respectively. The second phase will commence on 1st July 2015 and carbon price remains flexible during this phase. The determination of the prices will be based on the Emission Trading Scheme (ETS) along with the transitional cap as well as floor implementation. It is also determined in the proposed plan that carbon permits will be sold to the pollution emitters and the revenue generated through these sales will be invested for encouraging the production and consumption of clean energy. It will also ease the cost burden coming up with the transitional phase. Various direct and indirect methods will be devised to assist different sectors of the economy including the household1. In light of this brief introduction of the carbon price mechanism, the following section of this essay discusses the continuously rising prices of the energy during the first phase and their impacts on the economic well being of household with special emphasis on various theories of consumer behaviour. The effect of rising energy prices for the economic wellbeing of households It is evident that the increasing carbon prices will definitely flow through the consumer as household is one of the largest users of the conventional energy. The increase in prices of the fuel will disturb the household budgets; the prices change in the prices of the essential goods like food, clothing, and land for shelter will take place due to the continuous rise in the carbon prices during the first phase of the implementation of this plan (Kardes et al., 2010). On the other hand, the supply demand theory suggests that the demand for carbon fuels will be discouraged due to the increasing prices of the carbon fuels. The following