David Strom

 

Congress has taken another substantial step toward passing an Energy bill that could spell disaster for American consumers and manufacturers, ensuring a future of rising energy costs and less economic competitiveness.

  Until recently, Republicans had stood firm on opposing the Democratically-controlled Congress’ bill, which would have imposed huge tax increases on oil companies in order to pay for subsidies to promote more “green” alternative energy sources. The original bill passed by the House also includes mandates for utilities to generate 15% of their electricity from renewable sources such as wind, solar, and biomass.

  Unfortunately, the opposition in Congress is crumbling to passage of a comprehensive Energy bill. Republicans have forced substantial changes to the bill, stripping the 15% renewable mandate and forcing the Democrats to drop their tax increases.

  The politics of this bill are pretty clear: who could possibly oppose more efficient automobiles, buildings, and appliances? And who wouldn’t want the United States to produce more energy through the application of “green” technology?

  But still, the bill is a disaster waiting to happen.

  The most striking parts of the bill include a mandate to force automobile manufacturers to increase the average fuel economy of their cars by 40%, and a mandate to increase the nation’s consumption of ethanol by sevenfold in the next 15 years. Other changes include an expansion of federal powers to regulate energy efficiency of appliances and commercial buildings.

  Unfortunately, the world outside the beltway doesn’t always work by the whim of political leaders. Simply intending to achieve a certain set of goals is no guarantee that the policies set in motion are a good or efficient way to get you there.

  Policymakers are ignoring the market—and that means you and me and the rest of us collectively—we are already responding to changes in global energy prices. As prices for fossil fuels, especially oil and natural gas, have skyrocketed due to soaring demand, people and firms are beginning to adjust their behavior to soften the blow of rising prices.

  They are already shopping for more fuel efficient cars, and as the demand for them rises, so will the supply. Past experience has shown that forcing automakers to produce fuel efficient cars didn’t make consumers want them any more, but higher fuel prices are likely to change that equation pretty quickly.


David Strom

David Strom is the President of the Minnesota Free Market Institute. He hosts a weekly radio show on AM-1280 "The Patriot" in Minneapolis-St. Paul, available on podcast at Townhall.com.

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