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--By George Mason |
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Wall Street Journal columnist Gerald Seib calls it the perfect storm. Citing a current WSJ/NBC News poll, he says that energy versus environment questions bring together all the emotions necessary to divide the country precisely along party lines. Respondents were asked to state whether their first priority was producing energy even if that meant compromises on protecting the environment or vice versa. The result was 44 percent for energy, 44 percent for environment and 12 unsure but wanting both. The two political parties were mirror images of each other, six of ten Democrats favoring the environment and six of ten Republicans favoring energy. To add balance, another recent poll asked what importance the public placed on various issues. Last place went to campaign finance reform at a little under one percent. Second last was the environment at two percent. The top three double digit concerns were education, energy and jobs. That brings us to California this summer. Estimates of blackouts range from 100-300 hours. California is approximately 1/6th of the U.S. economy. The state is the largest processor of fruits and vegetables, says columnist Jarret Wollstein. It is the epicenter of America’s high tech microchip and computer industry. It is the hub of trade with the Pacific. The effect of an unplanned power disruption is that traffic lights, elevators, air conditioning, refrigeration and computers are stopped cold. A few hours without power can disrupt food processing and manufacturing for days. Individuals on fixed incomes and businesses without long-term power contracts can be thrown into immediate bankruptcy. One nursery owner, says Wollstein, shut down his business when his electric bill of $20,000 in December of 2000 rose to an estimated $310,000 for December of 2001. The causes of the energy crisis are found in over-regulation, blocked construction of new power plants and local opposition to the construction of plants near their communities. Clinton Secretary of the Interior Bruce Babbitt, observed "Environmentalists resist any change, fearful of giving opponents any opening." The summer battle lines are forming. Republicans will argue that the nation is short of energy and needs more. Democrats will insist that we should use what we have more efficiently. The left will propose price caps and countervailing subsidies. The right will propose letting price do its job. The truth is that publicly controlled transmission and distribution of centrally dispatched power is being rendered obsolete by market forces., according to Jerry Taylor of the Cato Institute. Advances in micro-turbine technology make self-generation a viable alternative to access to the grid. There are no longer significant economies of scale in the electricity business. Spot and futures markets have eroded the chance for monopoly. In the meantime, over on the government side, the ill-considered regulatory systems are protected into the indefinite future. According to California Energy Commission economist Manny Alvarez, expensive renewable energy mandates are chiefly responsible for abnormally (plus 50 percent) high state power rates yet are firmly protect by law. Expensive and demonstrably unproductive energy conservation subsidies are also protected, as is energy research and development grants, low-income assistance and an endless supply of special rates for the politically astute. All of this, of course, is paid by the taxpayer. There is one nexus between the new economy and the old. That, says columnist Duane Freese, is electricity. The new technology companies are huge consumers of it. Many New Economy companies operate 24/7 and can’t simply sit out an afternoon. They are seriously considering investing billions to generate their own power, at least on standby. The same can be said for other industries, the resort industry included. As the Bush administration pursues a reformed national energy policy these next few months, it will become readily apparent that a couple of thousand new power plants will have to built. As a nation, we will have to see the Kyoto-minded global warming advocates for the frauds they are. There is no physical evidence supporting the global warming theory. In fact, the NASA Tiros weather satellites (the most accurate measurements available) show that the earth has actually cooled slightly since 1979. For the foreseeable future, the world’s economies are 95 percent dependent on nuclear power plus power-generating facilities that burn fossil fuel, such as coal, oil and natural gas. The politicians and bureaucrats, as always, have failed to keep pace. While the EPA and its state counterparts have been busy erecting roadblocks to new facilities, the Energy Department has spent $5 billion to develop clean coal technology. Coal represents 94 percent of our nation’s proven energy reserves and currently provides 53 percent of our electric power. Fossil fuel plants produce carbon dioxide and water vapor. Neither are pollutants as defined by the Clean Air Act. The Democratic plan was to use the Clean Air Act as a regulatory hammer to force compliance with the Kyoto Protocols, according to Physicist Gordon Prather. Compliance would require that we build no more coal or natural gas plants and shut down all plants built since 1990. He continues. Why the fuss about arsenic? A coal-fired plant releases heavy metals – mercury, uranium and arsenic. The Green backdoor to a Kyoto defeat is to force the shut-down of remaining coal-fired plants. Were that to occur, the only alternative left is nuclear. If the Greens succeed in deliberately driving up the cost of electricity generated by fossil fuel and nuclear plants, they can eventually destroy the economy. When the lefty elite has a rollicking good time pillorying supporters of increasing energy supply, remember what their preposterous overstatements and phony claims mean. Absent the fully-funded energy police, windmills and low-wattage bulbs are a five percent solution. Nationwide, utilities have spent more than $20 billion since the mid-1980’s subsidizing efficiency programs. They have experienced exactly no reduction in electricity demand compared with utilities that avoided such subsidies. The same is true for automobile fuel efficiency, Taylor points out. Gains in fuel efficiency result in increases in the amount of driving. Fuel consumption goes up whenever fuel efficiency goes up. Politicians who impose their limited visions on a market fail every time. The free market works. The right price is found at the intersection of supply and demand, not in the halls of government. Price controls insure the excessive use of electricity and require tax subsidies to boot. High price is a signal to increase supply. High tech allows us to do it in an environmentally safe way. When the demand has been met, the price will decline. The Wall Street Journal sums it up this way " if good people with good ideas withdraw from government, their place will be taken by people in politics whose bad ideas will make life worse for everyone." Happy Tax Freedom Day.
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