There’s an energy crisis. President George W. Bush wants to move America towards energy independence. Legislators of both parties want to impose new regulations and taxes on the energy industry and create new mandates and subsidies for alternative fuels. To quote Yogi Berra, it’s deja vu all over again.
President Richard Nixon was more responsible than anyone else for creating an energy crisis by imposing oil price controls. But in 1973 he proclaimed: “In the year 1980, the United States will not be dependent on any other country for the energy we need.” Further, he supported federal subsidies to produce “an unconventionally powered, virtually pollution-free automobile within five years.”
President Jimmy Carter declared that achieving energy independence was the “moral equivalent of war.” He proposed new subsidies, created new agencies, promulgated new regulations, and imposed new taxes.
President Ronald Reagan instead freed the energy markets of many restrictions. But President George H.W. Bush offered a national energy strategy for “reducing our dependence on foreign oil.” Both he and President Bill Clinton pushed subsidies for more fuel-efficient cars; the latter advocated a hefty BTU tax on oil.
Early in his presidency George W. Bush made the usual call for energy independence, backed by subsidies for a hydrogen car. In his 2006 State of the Union he proclaimed: “America is addicted to oil.”
The president proposed a sizable increase in “clean-energy research.” His objective was to “move beyond a petroleum-based economy and make our dependence on Middle Eastern oil a thing of the past.”
With the subsequent rise in gasoline prices, Democratic and Republican lawmakers alike have stampeded to “do something.” They have waxed indignant over price “gouging,” proposed a windfall profits tax, and advocated dumping more taxpayer dollars into research on wasteful alterative fuels.
Despite the generous claims of national security by most everyone, these new energyprograms look decidedly unserious. Even White House aides acknowledged that oil is traded internationally, so the U.S. cannot target imports from just one region.
Moreover, subsidies would go to industries largely irrelevant to oil imports. Complains Gal Luft of the Institute for the Analysis of Global Security, “The president’s initiative ties an oil saving target to a basket of energy solutions for homes and businesses, which have nothing to do with our energy problem.”
In fact, the president’s program mostly means handing out more money to companies already on the federal dole. For instance, there’s $148 million for solar power and $44 million for wind power, both of which remain minor energy sources despite having benefited from Washington’s largesse for years. And there’s $335 million for research on coal — a multibillion dollar industry with its own incentive to develop “clean” technologies. The Democrats are a little different, though they seem to prefer to further subsidize such already heavily subsidized fuels as ethanol.
Moreover, sprinkling a few dollars on selected companies, laboratories and universities yields more political than economic benefits. Federal energy subsidies have been a constant of federal policy, but to what end?
Certainly not energy independence. If the U.S. faces a dire energy emergency, then Washington should take a far stronger hand in redesigning the energy economy: the equivalent of a new Manhattan Project or Apollo program.
For instance, last year former New York City Mayor Ed Koch called for an effort to develop fusion power akin to that used to develop the atomic bomb. Rep. Roscoe Bartlett, R-Md., responded to the president’s recent speech by calling for “a national energy conservation program with the commitment, breadth and intensity of the Apollo moon mission and the Manhattan Project.”
Whatever the details, if the federal government is committed toachieving energy independence, it should undertake an omnibus, government-controlled program. For instance, at its peak, the Manhattan Project utilized more than 30 research sites across the nation and employed 130,000 people, as many as worked in the auto industry.
The Apollo program was no less a government-run show. The federal government devoted roughly $135 billion in today’s dollars over eight years to reach the moon. Count all of NASA’s costs during that period, and you’re over $220 billion.
Of course, even such an energy program would be unlikely to yield cost-effective results. Ultimately, the best federal energy policy is hands off the marketplace. Rising prices are a powerful signal to producers and consumers alike, and will be the primary motivation for moving the U.S. away from heavy reliance on oil.
Doug Bandow is the Bastiat Scholar in Free Enterprise at the Competitive Enterprise Institute and the vice president of policy for Citizen Outreach He is author of “Leviathan Unchained: Washington’s Bipartisan Big Government Consensus” (forthcoming, Xulon Press). This article is adapted from a study for the Institute for Policy Innovation.
