Townhall
Finance...
End the Federal
Monopoly on Energy
By John Ransom
Let’s get to the truth about energy security.
The biggest problem with our energy policy in this country isn’t the
lack of direction by the federal government. Nor is it speculation.
Sure loose money policies by the Fed have pushed prices up this year
substantially. But that not our biggest problem either.
No. Instead, it’s lack of free markets for energy. We lack free markets
because the federal government gets involved in our energy decisions.
The feds, in short, act as a kind of monopoly for the energy supply.
Let’s start with OPEC.
OPEC is a cartel, not a monopoly. Yet, OPEC engages in behavior that US
Congress would never tolerate by monopoly sports leagues that enjoy
anti-trust exemptions.
At cartel is, by definition, anti-free market. A cartel engages in
activities, which, were they to happen in the US by any industry group,
would be deemed illegal. OPEC fixes prices, regulates supply and acts
in concert with their members to control the market for oil. While
Congress wrings its hands over AT&T and NFL anti-trust matters,
they ignore the anti-trust implications of our OPEC allies have on 5
percent of our economy as measured by GDP.
Our involvement in several wars because of oil isn’t a dirty secret,
but a geopolitical reality. In the larger context, however, free
markets for oil in the Middle East must be one of the reforms the US
demands from our Middle East partners. A free people can not exist
without free markets. For years, regimes in the Gulf States have clung
to power by clinging to manipulated markets in oil. The oil money has
allowed them to paper over a lot indiscretions, including the
indiscretion of shutting out the modern world.
But all of that seemingly is coming to an end for regimes from North
Africa to Persia. And our substantial investment in the region in money
and blood demands that we get free markets for oil in return for our
commitment to the security of the region.
Or we leave.
We have more energy in shale oil and gas under the Rocky Mountains
states of Colorado, Utah and Wyoming than Saudi Arabia has proven
reserves. However, the markets don’t work because the US owns much of
the land in the Rockies under which that energy is found.
Even before Obama became president the national government was hostile
to our most abundant source of energy, coal. Obama openly bragged about
bankrupting the coal industry if he became president.
It might be time to take those boasts seriously.
“Coal is a dead man walkin’,” Kevin Parker, global head of asset
management and a member of the executive committee at Deutsche Bank
told the Washington Post. “Banks won’t finance them. Insurance
companies won’t insure them. The EPA is coming after them. . . . And
the economics to make it clean don’t work.”
Despite this, the administration still earmarked $800 million from
stimulus dollars for the Department of Energy to experiment with “clean
coal” technology.
Like so many things when the government gets involved, the right hand
has no idea what the left hand is doing. It’s likely willful blindness
though. The DOE stimulus money is exactly the type of frivolous
pork-barrel expenditure that those favoring earmark reform point to as
wasteful and irresponsible.
Some think that recent discoveries of immense natural gas formations in
the US will provide a bridge to a distant, future day when the federal
government will discover a cheap, clean alternative to our energy
problems.
The Department of Energy requested $28.4 billion for fiscal year 2011
to pursue such a chimera.
Until the monopoly of power the feds wield on energy is broken up,
that’s not just a waste of money, it’s a waste of energy too.
Read it at Townhall Finance
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