The US government too often errs on energy by using policy as a sword with which to slay dragons. It overdramatizes problems—nearly always having to do with price or the environment—in isolation from larger systems. And it overreacts, sometimes creating crisis where none existed before.A favorite dragon in some quarters of government is "dirty oil"—bitumen or synthetic crude from the vast oil sands and heavy oil deposits of Alberta. The production and processing of bitumen require the use of energy at rates beyond those typical of conventional oil. Usually, combustion of hydrocarbons fills the need. So an extra increment of greenhouse gas enters the atmosphere,...