Energy security rather than global warming is expected to dominate the current G 8 meeting. No sensible outcome is likely given the current level of political information and debate, and the use of climate and energy to drive other political agendas.
Commodity markets tend to be similar. They are persistently susceptible to instability, shortage followed by surplus, wildly fluctuating prices, with producers earning more from short supply rather than from large output. It’s hard not to conclude that Government intervention exacerbates intractable energy policy problems. According to Paul Driessen
US crude oil output has declined 43% since 1985, as demand increased by 31% and imports have skyrocketed to 58% of the oil we use (compared to 28% just prior to the 1973 OPEC oil embargo). Meanwhile, China and India’s booming economies have intensified global demand for oil. Political unrest and muscle-flexing in Iran, Iraq, Chad, Nigeria, Bolivia, Venezuela and Russia have generated jitters and further price hikes. Additional upward pressure on gasoline prices results from air-pollution laws that mandate 16 expensive specialized gasoline blends for individual markets, highly subsidized and hard-to-transport ethanol for broader markets, and a 54-cent tariff on imported ethanol. Not surprisingly, crude oil is now over $70 a barrel, and gasoline hit a national average of $2.90 per gallon in April.
Congressional actions, including plants that provide essential backup electricity for the unreliable wind turbines that Congress and state legislatures promote, subsidize or even mandate increased demand for natural gas. So demand is up, while production has stagnated, and natural gas prices have soared from $2 in the 1990s to nearly $9 per thousand cubic feet today.
There is oil and gas aplenty off America’s Outer Continental Shelf, but legislators in thrall to environmentalists will not let them drill for it. Instead the drive is to promote dubious, expensive and unreliable energy sources which happen to be fashionable. There is no energy security to be gained from any of this.
In a few weeks, the same legislators will consider global-warming legislation that could push energy prices up another 20% for no perceptible environmental benefits. As Will Rogers famously observed, Every time Congress makes a joke, it’s a law. And every time it makes a law, it’s a joke.
Things are no better elsewhere. As Irwin Stelzer
says
Nor is there any reason to doubt that the political duplicity and irrationality that have characterized energy policies will continue. Opec’s cartelists will continue to pretend that they are willing and able to expand oil production to prevent prices from soaring. China will continue to pretend that it is not providing zero or low-cost capital to its oil companies as they compete with western oil companies for new supplies. And the environmental lobby will continue to pretend that some combination of conservation and renewable energy makes it unnecessary to build more “dirty” coal plants, or “dangerous” nuclear plants.
All this expensive nonsense is threatening the future security of our energy. Politicians don’t seem to care. They charge like Gadarene swine toward the cliff, egged on by colluding grant-seeking scientists. Energy security might dominate the G8, but it will be astounding if anything good or sensible comes from it.
From
Adam Smith InstituteTags: Libertarian, Politics, Liberty, Freedom