The US list of latter-day energy anxieties has a new item: labor. With Americans losing jobs faster than at any time in decades, the Obama administration proposes to make work by spending heavily on noncommercial energy. The products of this binge will be called “green jobs.”
Reasons for the recent proliferation of energy worries vary: environmental alarm; the Sept. 11, 2001, terrorist attacks; the oil-price zoom that ended last July. Earlier, energy received too little attention in national politics. Now the government acts like it wants to make up for lost time.
The concerns beget hopes that beget policy proposals that need assessment more systematic than what they’re receiving. Policy initiatives in an area as important as energy must be viewed in relation to and in combination with one another. They also need to be feasible and affordable. The sooner the country realizes that most current proposals having to do with energy can’t pass those tests, the better.
The leading anxieties
In addition to labor, the leading energy anxieties in the US are global warming, energy security, and depletion of oil and gas resources. The concerns have given rise to policy hopes that include reduction of carbon emissions, energy independence, and accelerated development of nondepleting—renewable—energy sources.
The labor initiative proceeds from the Keynesian assumption that governments can create jobs by spending massive amounts of public money. Not all economists agree with this proposition, which nevertheless propels Washington’s panicky response to the current, genuinely frightening recession.
History will judge efficacy of the Keynesian response overall. More immediately, common sense should make leaders question job creation linked to uneconomic energy. Profits create jobs; the forced use of uncompetitive energy erodes profits—or worse—for everyone except producers of the coddled energy forms. Jobs created by profligate energy spending will burden energy users and taxpayers with costs that destroy jobs elsewhere in the economy.
The attempt to mitigate global warming with carbon taxation disguised as a cap-and-trade scheme might work no better. The costly cuts envisioned for carbon dioxide emissions will have little or perhaps no effect on global average temperature. The US is on the verge of adopting them because of pressure to act urgently, even if the urgency is unfounded, and even if the cost will be stupendous.
Energy independence, for its part is more slogan than meaningful policy goal. In a world of international commerce, energy independence doesn’t exist. Even a country able to produce all the energy it uses depends on internationally traded energy as long as its trading partners do. This is a fact of modern economic life to which the US, which has no hope of domestically producing all the energy it needs, must become comfortable. The potential to waste public money in futile pursuit of energy independence is great. What good is energy independence to a fiscally feeble nation?
Worry about exhaustion of nonrenewable oil and gas represents another weak peg on which to hang energy policy. Oil and gas are finite resources. Cheaply available portions of those resources are in obvious decline. But the outer limits of oil and gas available in nature are nowhere in sight. And technological advances make growing shares of those resources economic to develop.
Growth constraint
What instead should guide energy policy is the evident inability of oil deliverability to grow as fast and by as much as the world sometimes needs it to do. The constraint, by nature more financial and political than geological, should enable renewable energy to find its economic footing. That’s the opportunity government should promote, not the premature displacement of petroleum.
Policies proposed in response to surging anxieties about energy receive attention mostly in isolation from one another. Assessment of cost therefore occurs proposal by proposal, increasingly in line with the mystifying notion that all government spending is somehow stimulative. In total, however, the costs of subsidies and mandates envisioned to address global warming, energy security, depletion, and now labor are incalculable. But they surely would be staggering—and exactly what a staggering economy doesn’t need.
