A Commission’s Messy Energy Policies
The group’s name? The National Commission on Energy Policy.
The title of the commission’s recently released report? “Ending the Energy Stalemate: A Bipartisan Strategy to Meet America’s Energy Challenges.”
It all sounds very official, doesn’t it? But this is no White House appointed panel, for example. It is assorted individuals from the worlds of business, academia, nonprofits and government brought together by a variety of foundations. That’s fine. But do these folks have anything interesting to say about energy? Well, yes and no. There are a few positives, and some huge negatives.
On the plus side, the commission wisely advises the U.S. to use diplomatic pressure to get nations with underdeveloped oil reserves to allow for greater foreign investment in their energy sectors. In addition, the commission calls for addressing hurdles and reducing barriers to siting and building liquefied natural gas terminals and other energy infrastructure.
The negatives, however, are substantial. For example, the commission is extremely long on proposals for spending billions of taxpayer dollars on various subsidies or providing special tax breaks for a wide array of energy-related endeavors they deem worthy. But why should the taxpayers be saddled with the costs of such corporate welfare?
Higher CAFE standards are called for as well. But government fuel efficiency mandates have three basic problems. First, they raise the costs of vehicles for consumers. Second, higher CAFE standards translate into smaller and lighter vehicles, which, as physics informs us, means reduced safety. And finally, CAFE mandates mean that politicians and government regulators effectively overrule the needs and demands of consumers.
Of course, a commission like this also is going to be concerned about so-called “global warming” or “climate change” supposedly being created by man-made carbon-dioxide emissions. Costly regulation would come through a CO2 cap-and-trade system. Contrary to what is reported by most in the news media, though, man-made global warming is not an agreed upon fact in the scientific community, and even among those who believe global warming is occurring, man’s contribution is in doubt.
Then there are some that believe global warming is real and caused by rising CO2 levels, but do not see the benefits of draconian government action. Writing in The Sunday Telegraph (December 12), Bjorn Lomborg, author of The Skeptical Environmentalist, noted: “The trouble is that the climate models show we can do very little about the warming. Even if everyone (including the United States) did Kyoto and stuck to it throughout the century, the change would be almost immeasurable, postponing warming by just six years in 2100.” Lomborg goes on to note that the cost of complying with Kyoto would be at least $150 billion per year, and that those resources would be far better used elsewhere.
The misguided suggestions by this energy commission point to the basic problem with energy policy, that is, too much government involvement. Many believe that government needs to be intimately involved in energy policy, particularly to advance the cause of conservation. However, that is not the case. The free market is far better equipped to promote conservation, and to provide incentives for seeking out new energy sources. It’s called the price system.
Government’s job should be to set basic protections for people and the environment, deal with fraud and other lawbreaking, defend property rights wherever they might be infringed upon, open up international markets, keep taxes low, and maintain a minimal regulatory touch. Such an environment does not require any special subsidies. Instead, entrepreneurs, investors and businesses would be free to explore, produce, innovate and serve the economy well. That’s a straightforward, sound energy policy.
Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.
