RE: Cost of generating renewable energy drains juice from bills by Ben
In this article Sen. Brian Kanno’s remarks typify the complete and
utter lack of any knowledge of resource economics common to almost all
politicians, bureaucrats and radical environmentalists.
He also reveals
the widespread ignorance of just how markets work and why government
interference is the problem and not the solution.
His justification for
government coercion in forcing the energy sector towards “renewable energy” is:
“Look at what’s happening with gasoline prices right now — they’re taking
off.” Of course, he is joined by a whining chorus of the usual suspects from
Joe Souki to Life of the Land’s Henry Curtis — well intentioned, I am sure,
but misguided nonetheless.
First off, the current surge of oil prices is
mostly a short run event instigated by the OPEC ministers just as was the case
in the ’70s. To respond with legislated coercion that has lasting effects to a
short run, temporary problem is ridiculous especially when the perpetrators are
unsure of all the unintended consequences that will emerge.
This is what
happened when Jimmy Carter disastrously instituted price controls in the
gasoline market. Historically, some oil cartel members have always broken ranks
with their fellows in the hope of garnering windfall profits. This has led to
oils gluts and rapidly falling prices-just as we have seen in the recent past
when price controls were abandoned and market forces were allowed to
The other part of the problem is more serious and has long run
effects that have made us more susceptible to the actions of OPEC.
past eight years the Clinton/Gore administration hand in hand with extreme
environmentalists and liberal state governments have paralyzed domestic oil
production through regulation and prohibitions on exploration here in the
Under this scheme when foreign supplies are reduced the
effect on prices is more pronounced. So, while politicians and
environmentalists cry that we must move away from our “dependence on foreign
oil,” the fact of the matter is they have caused the problem in the first
Facts are stubborn things and no matter what one’s emotions or
ideology demand, the facts remain. So it is with oil. The truth is that despite
all the doom saying and government interference, oil has become less scarce
The only accurate indicator of the relative abundance or
scarcity of oil is the long run trend of real prices-that is, prices adjusted
for inflation. Oil prices, along with all resource prices, adjusted for
inflation, have been trending downwards throughout the 20th century (the trends
actually started in the 19th century) clearly showing that resources are
becoming less scarce.
Because prices are so important, it is critical for
the government to keep out of the way of market forces. Real prices are the
critical indicators that will signal entrepreneurs and the dreaded capitalists
when, if ever, oil is actually becoming more scarce.
A rising real price
trend in oil will give them the incentive to find other sources that will
become economically viable over time.
Another fact often missed by the
Chicken Little club is that the impact higher oil prices will have on the
economy today is much less than in years past. Our economy has become much more
energy efficient thanks to the dynamic growth of technological creativity and
innovation and an economy shifting away from energy-intensive
U.S. Energy Department figures show that 25 years ago the
U.S. economy used 1400 BTU’s of petroleum to produce a dollars worth of Gross
Domestic Product. Today we use only 700 BTU’s for the same output.
Kanno and his compassionate cohorts are really serious about providing some
short run relief to rising gas prices, why don’t they roll back the state taxes
assessed on each gallon sold? They could simultaneously lobby our Congressional
delegation for federal tax relief as well.
Dream on! Remember, it’s only we
subjects, oops-I mean citizens, who are supposed to budget and do without when
necessary while government continues to sap us like some blood glutted tick on