State could roll back gas taxTo The Forum

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.

For the

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

United States.

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

over time.

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.

If Sen.

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

our backs.

R.S. Weir


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