After the euphoria surrounding its unveiling, the Bush energy plan is experiencing the hangover of biting criticism from both free-market and anti-market interests. Hoping to deflect the attacks, Bush officials have stepped up their bargaining efforts with anti-production interests and have doggedly asserted that perfectly pleasing neither flank proves they got the plan just right.
Democrats fix blame on producers
From the left, House Minority Leader Dick Gephardt (D-Missouri) blasted Bush for failing to place the blame for the nation’s current energy concerns squarely on the backs of industry.
“In 1962 we had a president who went on television and called the steel officials into his office and berated them, dressed them down and told them they had to do something,” stated Gephardt at a specially called press conference. “I don’t see that going on. Instead, they’re having a fundraiser.”
California Democratic Governor Gray Davis took Gephardt’s scapegoating of energy companies even further. “We are literally in a war with energy companies who are gouging us,” proclaimed Davis. “Many of which reside in Texas,” Davis continued, insinuating the President’s proposal was designed to help Texas state businesses at the expense of the rest of the country.
Even former President Jimmy Carter jumped in to attack the Bush plan, decrying the proposal’s “scare tactics” and asserting that “no energy crisis exists now that equates in any way with those we faced in 1973 or 1979.” Most observers gratefully agreed.
Is conservation alone sufficient?
Anti-production interest groups argued that energy supply is already sufficient for the nation’s present and future energy needs, and that increased conservation rather than increased production would solve any potential energy concerns. “The Bush administration energy plan ignores high-tech, energy-efficient solutions in favor of increased oil, gas, coal, and nuclear production, while his budget proposal slashes funding for renewable energy and efficiency by a third,” declared a Sierra Club press release.
“The Sierra Club realizes that we can’t drill, dig, or destroy our way out of our energy problems. That’s why we’re pushing for a more honest, balanced policy that promotes energy efficiency, uses clean renewable energy like wind and solar power, and emphasizes responsible production.”
“If conservation alone could solve the problem, California wouldn’t be facing high rates and rolling blackouts,” countered Ed Gillespie, director of the Frontiers for Freedom 21st Century Energy Project. Gillespie observed that California leads the nation in energy conservation programs, yet still faces drastic energy shortfalls.
Bruce Bartlett, senior fellow at the National Center for Policy Analysis, noted that America is already “the most energy-efficient major country on Earth.” Bartlett pointed out that “for every $1 million of GDP produced here, just 76 tons of oil-equivalent were needed,” while the oil-equivalent average for other nations was nearly double that, at 151 tons.
Former New York Congressman Jack Kemp agreed that conservation alone could not solve America’s future energy needs. “If conservation and renewables were the key to energy abundance, California would be the showplace of the future, not the national embarrassment it has become where energy policy is concerned. Governor Gray Davis may try to shift the blame to Washington all he wants, but no one’s suggesting the rest of the nation emulate California.”
Kemp highlighted a key component of free-market environmentalism that often gets lost in the mainstream media’s coverage of environment issues. “Energy and the environment don’t need to be at war with each other, whether in the Alaskan wilderness, on the Outer Continental Shelf, or in siting new pipelines and transmission capacity.”
Free-marketers note plan’s shortcomings
While praising in general the Bush plan’s “balance between ecological values and surging energy demand,” Kemp nevertheless found some free-market shortfalls in the plan. “Unfortunately, they also bow to political correctness by adding to the mix a bunch of subsidies and tax credits, i.e. “incentives,” to conserve energy and produce more energy from what I call ’boutique renewables’–wind, solar, biomass–all of which have failed to demonstrate market viability despite massive government subsidies since the so-called energy crises of the 1970s.”
Kemp’s remarks mirrored those of many other leading free-market environmentalists, who liked the plan in general but expressed concern over some of its anti-market aspects.
Observed Myron Ebell, director of global warming and international environmental policy at the Competitive Enterprise Institute, “The Bush energy plan will turn America away from the increasingly painful path of sky-high gas prices, exorbitant heating and cooling bills, and rolling blackouts. The long-range shift from forcing Americans to use less energy to allowing the nation’s suppliers to produce more energy is good news for America’s working families.”
CEI President Fred Smith agreed. “The administration should be congratulated for not giving in to the all-too-common idea that using energy is a sin, something to feel guilty about.”
Even so, “While the structural reforms being proposed for utility regulation are extremely encouraging, not every aspect of the plan is compatible with free-market ideas. The proposal to increase subsidies for inefficient fuels and research designed to benefit particular industries are both the least effective and the most costly aspects of the plan,” stated a CEI press release.
“A successful energy plan must concentrate on removing barriers to production across the board and leave the relatively expensive alternatives to those Americans willing to pay for ineffective, feel-good toys,” said Christopher C. Horner, CEI policy analyst.
Who needs a national plan?
Wall Street Journal columnist Thomas Bray wondered whether a national energy program was necessary at all. Addressing the growing market share of foreign oil in U.S. consumption, Bray wondered why this is any more undesirable than American consumers importing other products that can be produced less expensively abroad.
“While the U.S. imports 52 percent of its energy, it’s not clear why that’s a problem either. The producing countries will always have an incentive to sell the oil somewhere, and in a world market, the U.S. will always be able to buy its portion. Moreover, foreign producers also tend to be the low-cost producers. Why make U.S. consumers pay higher prices to drain domestic reserves?”
Bray also addressed the Bush plan’s subsidies for inefficient fuel sources. “The administration wants to offer $4 billion in tax credits for vehicles using hybrid gas-electric or fuel-cell technologies. . . . Hybrids do get better gas mileage. Unfortunately, they aren’t price-competitive with ‘conventional’ autos. Moreover, such technology takes space. The Honda and Toyota models simply dispense with the trunk, which isn’t a great selling point.”
Bray’s observations were similar to those made in a June 2000 policy study released by The Heartland Institute. In “The Increasing Sustainability of Cars, Trucks, and the Internal Combustion Engine,” Heartland President Joseph Bast and Science Director Jay Lehr demonstrated the performance, pricing, and efficiency problems with alternate fuel technologies.
Bast and Lehr showed that hybrid gas-electric cars are more expensive, have a more limited range, offer less horsepower, reduce passenger safety, and provide less passenger and luggage space in comparison to gasoline-powered vehicles.
Jerry Taylor, director of natural resource studies at the Cato Institute, asserted that a national energy program is no more necessary or desirable than Al Gore’s “comprehensive national Internet strategy,” former Clinton Labor Secretary Robert Reich’s “comprehensive national industrial strategy,” or Hillary Clinton’s “comprehensive national health-care strategy.”
Noted Taylor, “Energy prices after adjusting for inflation have been plummeting more or less for 15 years.” Asserting that the current “crisis” is nothing more than a temporary blip in the trend of ever-more-affordable energy, Taylor pointed out that the free market was encouraging greater energy production and lower prices even before Bush unveiled his proposals.
Taylor additionally observed that the Bush plan includes expanded federal power to seize private property for the creation of new transmission lines. “Having the feds step in and force private property owners to cut deals they don’t want to make with power companies seems antithetical to an administration that likes to talk about its commitment to private property rights,” asserted Taylor.
Administration hoping for compromise
Secretary of Energy Spencer Abraham, speaking May 24 at the CEI Annual Dinner, attempted to deflect free-market criticism of the Bush plan. “Our plan is defined by a lack of faith in the capacity of government to pick and choose the best fuel or the best technology for the future. Ultimately, the market will answer that question.” But even as Abraham was speaking, Bush and his inner circle were considering more compromises with anti-market interest groups to deflect criticisms from the left.
Abraham’s defense of the Bush plan’s overall desirability, despite various anti-market proposals, has to date been sufficient to sustain the backing of most conservatives and free-market environmentalists. “The President has given us a bold and sound energy plan, not a perfect one. But for now, let’s give the administration two thumbs up,” said Kemp.
Pete du Pont, chairman of the National Center for Policy Analysis, agreed. “There can be no doubt that the U.S. needs a new energy policy. California is the best example why,” he stated.
Testifying before the House Science Committee on May 23, William Martin of the Alliance for Energy & Economic Growth commended the Bush plan for its environmental and energy-supply balance. Martin observed that just as conservation alone cannot meet America’s future energy needs, neither can reliance solely on alternative energy sources. “We simply can’t afford to put all of our eggs into one basket,” Martin asserted.
For more information . . .
Heartland Policy Study No. 95, “The Increasing Sustainability of Cars, Trucks, and the Internal Combustion Engine,” is available on the Internet at http://www.heartland.org/studies/automobility-ps.htm.