Posted: 02/09/2006
Bush's Call For Energy Independence Unattainable
NCPA E-Team Scholar Says President Should Apply Free Market Concept to Energy Policy
DALLAS (February 9, 2006) - An unfettered market rather than President Bush's call for energy independence is the best solution to America's energy crisis, according to NCPA Senior Fellow H. Sterling Burnett.
"Energy independence is a myth," said Dr. Burnett. "And it is ironic that throughout the State of the Union address, the president stressed the benefits of open markets and derided calls for economic isolationism and protectionist measures except in the area of energy production."
Burnett cites two key drawbacks to government subsidies for domestic, renewable fuels. First, if a renewable fuel cannot survive in the marketplace without a subsidy, then producing it wastes scarce resources. A study from scientists in New York and California, for instance, has shown that it takes as much or even more energy to make ethanol than the energy it produces. In other words, burning ethanol could actually increase our need for oil and gas imports.
In addition, when government dedicates funds to particular technologies, it stifles innovation because private capital often follows government dollars. Thus the public is denied technological innovations which might have occurred without government interference in energy markets. Improved energy technologies, fuel sources, combustion or delivery systems which might have produced cheaper, cleaner energy than current technologies go undiscovered or wither from lack of funding.
"In the 1990s government promoted natural gas as the fuel of choice while doing nothing to reduce barriers to new development," said Dr. Burnett. "This resulted in increased demand, decreased supply, and high prices consumers are suffering under today."