Are Energy Prices Too Low?

“Electricity prices in America are low,” stated Richard Caperton of the Center for American Progress. What he really means is that electricity prices are too low for our own good and need to be further taxed.

A recent headline on the opinion page of the New York Times proclaimed: “Pain at the Pump? We Need More.” Authors Daniel Esty and Michael Porter recommend new gasoline levies as an elixir to our budget deficit and to rectify our energy sins. Their tax would start small “[to] make the short-term burden … almost negligible” but increase twenty-fold by year twenty.

As bad as the above mindset is for consumers and the economy, the candor is commendable. President Obama will not dare say the same, although his energy/environmental advisors such as John Holdren are comrades-in-arms with Caperton, Esty, and Porter. Instead, Obama is fingering scapegoats (the oil companies, speculators)—as if the bad guys and gals had suddenly decided to get greedy and world supply/demand conditions were tangential.

Remembering Al Gore

Obama’s misdirection and hypocrisy bring to mind presidential candidate Al Gore on the campaign trail back in mid-2000 when high gasoline prices were an issue. Did the numero uno climate alarmist praise the price trend as a step toward saving a “dysfunctional” society?[1] After all, this is the man who wrote: “We now know that [the automobile’s] cumulative impact on the global environment is posing a mortal threat to the security of every nation that is more deadly than that of any military enemy we are ever again likely to confront.”[2]

And did Gore seize the moment to advocate a big tax increase given what he also penned:

Minor shifts in policy, marginal adjustments in ongoing programs, moderate improvements in laws and regulations, rhetoric offered in lieu of genuine change—these are all forms of appeasement, designed to satisfy the public’s desire to believe that sacrifice, struggle, and a wrenching transformation of society will not be necessary.[3]

Well, none of the above came to pass with Gore on the campaign trail; quite the opposite.  “I think we need to bring gasoline prices down,” he intoned.

I have made it clear in this campaign that I am not calling for any tax increase on gasoline, on oil, on natural gas, or anything else. I am calling for tax cuts to stimulate the production of new sources of domestic energy and new technologies to improve efficiency.[4]

To which his erstwhile climate ally Bill McKibben complained:

No American politician can bear to do anything to restrict our piggish use of coal and gas and oil–not to raise energy prices or legislate against the plague of gas-guzzling SUV’s. During the campaign, Mr. Gore even demanded that the Strategic Petroleum Reserve be opened to keep fuel prices down.[5]

Post-election, of course, Al Gore reverted back to his old ways. “The leading experts predict that we have less than 10 years to make dramatic changes in our global warming pollution lest we lose our ability to ever recover from this environmental crisis,” he stated eight years after his narrowly failed presidential run. Little doubt Gore would endorse a new gasoline tax à la Esty and Porter, and higher electricity prices as well.

Conclusion

Politicians do not dare repeat the performance of April 18, 1977, where Jimmy Carter interrupted the television shows to give what became known as the “malaise speech”.

“To some degree, the sacrifices will be painful—but so is any meaningful sacrifice,” the president solemnly said that evening. “It will lead to some higher costs and to some greater inconvenience for everyone.”

Sacrifice for the common good is a very bad sell to Americans—as it should be. Andrew Revkin recently blogged about how “the environmental movement … confronts a century in which mainstay messages such as ‘woe is me’ and ‘shame on you’ will have ever less relevance.” After all, as Daniel Yergin wrote 20 years ago in The Prize:

Hydrocarbon Man shows little inclination to give up his cars, his suburban home, and what he takes to be not only the conveniences but the essentials of his way of life.  The peoples of the developing world give no indication that they want to deny themselves the benefits of an oil-powered economy, whatever the environmental questions. Any notion of scaling back the world’s consumption of oil will be influenced by the extraordinary population growth ahead.[6]

Government intervention at home and abroad has made electricity and gasoline artificially scarce. An energy intelligentsia telling Americans to both double-down on government and increase their pain is a loser in every which way. A new mentality is needed that favors consumers, producers, and the general economy. That means an expansion of private property rights and free markets for energy at home and abroad, not the opposite.