Wednesday, April 21, 2010

"The Energy Policy Morass" by Stephen Hayward


This is a long and thoughtful piece on energy policy by energy and environmental writer Stephen Hayward that takes aim at Democrats, Republicans, "peak oil" fear-mongers, environmentalist obstructionists, oil companies, coal interests, the "green" movement, conventional wisdom, et al.

Hayward's thesis is that hardly anyone understands the nuances of the energy sector, and that the confusion that reigns leads to simplistic political grandstanding by all sides.  I don't know enough about the subject to have much of an opinion, other than the fact that such a complex and thorny issue probably does not lend itself to a command and control government regulatory scheme.  The private sector and free market is best positioned to determine what technologies are viable and where capital should be directed.

This is not to eschew the necessity for a national energy policy or some amount of government regulation and coordination.  As Hayward writes, the Strategic Petroleum Reserve and the International Energy Agency provide important backstops to short-term disruptions in oil supply, as was the case during Hurricane Katrina. But history has proved that when government gets too involved in complex industrial policy it distorts the private market(s) through bureaucratization and regulation and--worst of all--politicization.  Government inevitably thinks it can pick and choose among competing interests better than the free market can, often with abysmal if not disastrous results.

To me, the most surprising conclusion of the writer comes at the end, when he endorses alternative energy projects such as algae biofuels.  But he doesn't pretend to know which project will bear fruit, preferring instead to permit private entrepreneurs to sort it out.  That is an attitude that would be welcome were it to be shared by policy makers both inside and outside of government.

Read the article here.

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