Best energy policy? None
NOW FOR some good news: Over the past four years, every high-profile energy policy championed by the Obama administration has failed. The “clean” coal promised during his first campaign? Sent back to the primordial swamps from whence it came. Five million green jobs? Never happened. Electric cars? Sales have faltered for the over-hyped and over-subsidized Chevy Volt, causing GM to shutter the plant for weeks at a time. And don’t get me started on the billions taxpayers lost on bankrupt firms like Solyndra, A123, and Evergreen Solar.
But back in the land of competitive markets, where honest investment and innovation still matter, something very interesting has happened. According to the US Energy Information Agency, America’s natural gas reserves logged their biggest gain ever last year, reaching record levels. Oil production increased in 2012 for the fourth straight year, and America became a net exporter of refined petroleum products, including gasoline. Last August, the agency projected that by 2020 the United States will surpass Saudi Arabia and Russia to become the world’s largest producer of oil and natural gas liquids.
So as you might imagine, a collection of think tanks, do-gooders, and policy scolds are now swarming Capitol Hill with a solution to this “problem”: they want to empower a team of Washington’s best bureaucrats to fix things. Really. And like anything unnecessary in our nation’s Capitol, it comes with a self-important title: the National Energy Strategy Council. Scratching the veneer, however, quickly reveals the failed policies of the past.
No doubt, proponents of the council, which would develop a national energy policy, have convinced themselves that their ideas are unique and bold. They are sure that we never had a national energy policy in the first place. In fact, America has had energy policies — lots of them — and they all stunk. Dusting them off, rolling them into one ball, and handing it off to a newly formed council won’t change that history. But perhaps reviewing the history will change a few minds.
Modern energy policy begins with the creation of the Department of Energy under President Carter in 1977. On its first great crusade, it spent a billion dollars trying to perfect the production of synthetic oil from coal. Undeterred by this total failure, the department’s brain trust chased one white rabbit after another in the decades to follow. Solar tax credits were created in 1978; in the 1990’s the Partnership for the Next Generation Vehicle spent billions on high performance diesel combustion; by the early 2000s hydrogen cars were all the rage.
In 2005, with the passage of the biggest, fattest energy policy bill ever, tax credits for electricity production were extended to all forms of renewable energy, loan guarantees were offered to builders of nuclear power plants, and the government mandated that drivers purchase 20 billion gallons of ethanol by 2015. That may not be good energy policy, but it was a national energy policy. When Cabinet secretaries, White House staff, members of Congress, and “councils” develop energy strategies, this is what they come up with.
The fundamental problem with a national energy policy is that it’s an abstract idea that politicians of all stripes can love. Oil advocates see a chance to get access to eases; wind lovers get tax credits extended; environmentalists keep alive their dreams of a world powered by the sun, tide, and unicorn tears. They all close their eyes to what is happening every day despite their sage guidance, and they ignore the disasters they’ve given us in the past. This time, they say, it will be different.
A different list, maybe, but a list nonetheless — of incentives, subsidies, gimmicks, initiatives, and promotions. At best, such measures are ineffective. Usually, they work against one another. Always, they cost you money and ignore reality: Markets allocate resources and improve efficiency far better than bureaucrats. Today, the economy uses 40 percent less energy than in 1980 to produce a dollar of goods.
Government did not create the shale gas boom. Government did not turn North Dakota’s once languishing Bakken oil fields into one of the country’s largest. (North Dakota now produces more oil than Alaska.) Government did not subsidize the rigs, provide tax credits for the refineries, or chant “drill, baby, drill.” And with natural gas consumption up and coal consumption down, emissions of carbon dioxide have fallen 15 percent below peak levels of 2007. As a more policy-minded Grinch might say: “It came without taxes, it came without bans . . . it came without protocols, mandates, or plans.” And it came without a National Energy Strategy Council.
John E. Sununu, a former Republican senator from New Hampshire, writes regularly for the Globe.