|
9/9/08 An Energy Free Market (with a little help from the Government) |
|
By Peter Forman
As a general rule, free markets are more effective than markets with excessive rules, tax subsidies, or taxes. But that is a general rule.
If you want to catch up on the news, for example, you can turn to the radio, TV, internet, newspapers, magazines, or any other choice from the variety of news sources. These media duke it out in a close to free-market battle, spurring innovation and price competitiveness.
If you want to fuel your car, you can use anything you want—as long as it is gasoline.
We need to consume our energy the way we consume our media. Congress needs to intervene, but as little as is required, to restore competition to the vehicle energy marketplace.
So how do we walk the legislative tightrope between an uncompetitive free market and oppressive intervention?
The government has a bevy of tools at its disposal:
- Research and development support to specific industries. Examples: · Grants for battery research · Grants for clean coal research
- Tax policies and incentives, such as: · Tax incentives for oil companies to explore · Tax incentives for farmers to produce specific crops for ethanol · Tax incentives to encourage people to purchase efficient cars · Tax credits for the installation of energy-saving equipment or alternative-energy generating plants · The overall tax policy to the extent that it encourages or discourages investment in business and new businesses
- Administrative policies and mandates that can discourage businesses inappropriately, on the one hand, or protect some, on the other hand. · Where companies can drill · Where windmills can be placed · Right-of-ways for energy transmission lines around the country · Requirements for new vehicles to be flex-fuel compatible
These are just a few examples that demonstrate the breadth of Congress’s power to influence any marketplace.
If these tools are used in too interventionist a fashion, Congress can stifle growth in a marketplace.
But if left completely to the whims of the free marketplace, we risk dependencies like we now have on OPEC, a cartel designed to undermine global competition.
We have narrowed down these tools to two key initiatives that will reintroduce competition to the vehicle energy marketplace:
1) Flex-fuel legislation, such as the Open Fuel Standards Act of 2008, which would require (at the modest interventionist cost of $100/vehicle) that cars could run on any mix of gasoline, methanol, butanol, and ethanol, thereby introducing some competition at the pump. (Legislation is required because of the chicken and egg problem. Dealers won’t install other fuels at the pump until cars run on those fuels and vice versa.)
2) A move to electric vehicles. The production of electricity is already a competitive marketplace. In the United States, electricity is produced with a mix of coal, nuclear, natural gas, hydro, wind, solar, and surprisingly, only 2% by oil. The electric grid is already a competitive, diversified source of energy that is not dependent on oil. And it is virtually 100% produced domestically. Both Presidential candidates have proposed a tax credit of between $5000 and $7500 for the purchase of low/no emitting vehicles—and that’s a good thing.
America now imports 4.5 billion out of the 7.5 billion barrels of oil it consumes annually. Despite repeated price shocks, beginning in the 1970s, and despite America’s now overwhelming dependence on hostile countries that repress their own citizens, the U.S. has only grown more addicted to oil.
For the first time, Congress is seriously considering legislation to address that dependence.
It is time for Congress to act—as little as possible, but no less than required.
It is time to strike a legislative balance and to move beyond oil.
MoveBeyondOil.org |
|
Copyright 2008. MoveBeyondOil.org. All rights reserved. |
|
MoveBeyondOil.org |
|
Home | About Us | Facts | Support & Contact |
|
Printer-Friendly Version |
