So the president signs the Energy Policy Act of 2005, and on the same day, the price of crude oil jumps nearly $2 a barrel. If that doesn't make you want to hold your sides with laughter -- well, all right, it's not actually funny. It's ironic, that's what it is, and more than a little pitiful.
But also eye-opening. What the energy bill shows -- all 1,724 pages of it, oozing $12.3 billion in subsidies and tax breaks over the next decade -- is the general futility of turning over economic conundrums to politicians. That would apply to many other kinds of conundrums as well, but energy is the one on the table, and it behooves us to talk about it.
"This bill," said George Bush, in signing it, "is not going to solve our energy challenges overnight." That's to put it mildly. The Energy Policy Act seems concocted mostly to address the needs of well-financed interest groups -- and, naturally, of political figures hungering to show the public how seriously they take the challenge of tightening energy supplies: which can't be very seriously, considering what the bill does and doesn't do. Not a single legislative supporter of the bill, so far as I am informed, expects it will lower gasoline prices.
Just what will it do? It will lengthen daylight-saving time, beginning in 2007, by taking a chunk of the morning and calling it evening. The government projects a 1 percent gain in energy savings, Zeus knows why. Then there's a tax break for cars with fuel-efficient technologies. There are subsidies for the manufacture of sugar cane ethanol -- a sweet favor to the political sugar daddies of Florida, Louisiana, Texas and Hawaii. There are also subsidies for "biomass."
There is a mandate for higher consumption of ethanol and likewise $6 billion for new ethanol plants, ethanol being the corn substitute for petroleum-based gasoline. Iowa -- where the presidential nominating process commences -- happens to be the leading producer state for ethanol, with 16 plants now and 11 more on the drawing boards. The supposedly conservative Farm Bureau makes the quest philosophically unanimous. Ethanol is good for the farmers, so there!
A recent study by a Cornell agricultural specialist and a University of Colorado collaborator maintains that ethanol is a net drain on energy supplies -- requiring 30 percent more on the front end than comes out and actually gets manufactured. Most economists wouldn't call this a very good deal. Says the Cornell specialist David Pimentel: "The only reason we're doing this is because of politics and big money." Do tell.