Sometimes a politician can be on the right track, even if she doesn’t get things exactly right. “Under President Bachmann you will see gasoline come down below $2 a gallon again,” Rep. Michelle Bachmann recently told voters in South Carolina. “That will happen.” Bachmann says she wants to expand supply by reducing restrictions on drilling for domestic oil.
Maybe. But probably not. Experts note that the price of oil is set by global markets, so no American president could unilaterally drive prices down.
Greater supply might lead to lower prices, although it might not; global demand is expected to increase and that would tend to increase prices. Still, there’s no question that energy drives a virtuous cycle. “It’s energy that gets the increasingly mobile worker to the increasingly distant workplace, and energy that processes material and powers the increasingly advanced machines that shape and assemble it,” note Peter Huber and Mark Mills in their book “The Bottomless Well.”
Americans sense this, of course. When we’re paying $3.50 (or more) for gasoline, we have less to spend on food, entertainment and so forth. This has a ripple effect down through the economy. On the other hand, increasing supply might drive down prices and that would likely lead to economic expansion.
In any event, Huber and Mills argue planet will never run out of energy, even though we keep using more.
How’s that possible? Because as our machines become more efficient, they allow us to find and tap into new sources of energy. The first steam engines, they write, were used to mine coal, which ended up making more coal available at cheaper prices. That allowed humans to develop better and faster machines. Eventually these spawned the internal combustion engine and the industrial turbine.
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“No government edict, no ‘energy policy,’ played any role at all in this history,” they write. “These things happened because humanity hungers for power, speed and range; because the technologies of power were invented; and because raw materials were then somehow found to fuel them.” In other words, a market for energy developed, and humans developed energy to fulfill that market.
Basic market economics also explains why the government’s push for “green” energy and “green” jobs has been a failure. “Despite decades of subsidy and government promotion, “renewables” (other than conventional hydro) now generate barely 0.7 percent of our electricity,” Huber and Mills write. “No conceivable mix of solar, biomass, or wind technology could meet even half our current energy demand without (at the very least) doubling the human footprint on the surface of the continent.”
As for “green” jobs, they’re heavily subsidized by Washington, but seldom seem to develop on their own. “There are no sound economic arguments to support an assertion that green energy policies will increase the total level of employment in the medium or longer term when we hold macroeconomic conditions constant,” notes Gordon Hughes, an economist at the university of Edinburgh who used to be with the World Bank.
Then there’s bureaucracy, which ends up acting like friction does in a machine -- getting in the way and slowing things down, even when it’s trying to improve things.
“It rarely makes any sense for regulators to try to promote ‘more efficient’ technologies, because given the fecundity of technology, there’s no reason to suppose that regulators will reliably choose the right technologies to promote, or the right time to promote them,” Huber and Mills write. Thus, while federal policies try to promote CFL light bulbs that consumers aren’t wild about, capitalists are developing better and cheaper solid-state lights.
“When radically more efficient technologies do emerge, they are quickly embraced by paying customers without any need for government mandates -- embraced not just to displace old ways of doing things, but to do all sorts of new things that previously hadn’t been done at all,” Huber and Mills conclude.
We cannot say what the future will hold. But if the past is prologue, humankind will enjoy a brighter future.
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