A Man, a Plan—a Waste of Time

IT’S regrettable that conservatives are rallying around the new Bush energy plan, because this whole debate is nine parts political theater to one part policy—and even that “one part” of policy is pregnant with economic and rhetorical mischief. To begin with, conservatives should not be cheering the introduction of a “comprehensive national energy strategy,” any more than they cheered Hillary’s “comprehensive national strategy” on health care; these are matters to be addressed by the free market, not government policymakers. But they insist that “energy’s different,” that excessive regulation and environmental opposition have shut down energy production and delivered us into a mess that only a “comprehensive national energy strategy” can sort out.

Really? Today, without any guidance from a comprehensive national strategy, investors are pouring billions into the energy sector. We’re in the midst of a power-plant construction boom, with some 90,000 megawatts of new electricity capacity scheduled to come on line by 2002 and a staggering 150,000-200,000 megawatts by 2004. This will not only burst the electricity-price bubble but will probably, in the near future, produce an electricity glut. Billions are flooding into the natural-gas market. High gasoline profit margins are inducing foreign refineries to enter the American market for the first time in decades, and sparking new investment in domestic refining capacity as well. Barring some unforeseen supply disruption in the refining sector, gasoline prices will begin to decline slowly—but steadily—this summer.

JT

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Jerry Taylor

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IT’S regrettable that conservatives are rallying around the new Bush energy plan, because this whole debate is nine parts political theater to one part policy—and even that “one part” of policy is pregnant with economic and rhetorical mischief. To begin with, conservatives should not be cheering the introduction of a “comprehensive national energy strategy,” any more than they cheered Hillary’s “comprehensive national strategy” on health care; these are matters to be addressed by the free market, not government policymakers. But they insist that “energy’s different,” that excessive regulation and environmental opposition have shut down energy production and delivered us into a mess that only a “comprehensive national energy strategy” can sort out.

Really? Today, without any guidance from a comprehensive national strategy, investors are pouring billions into the energy sector. We’re in the midst of a power-plant construction boom, with some 90,000 megawatts of new electricity capacity scheduled to come on line by 2002 and a staggering 150,000-200,000 megawatts by 2004. This will not only burst the electricity-price bubble but will probably, in the near future, produce an electricity glut. Billions are flooding into the natural-gas market. High gasoline profit margins are inducing foreign refineries to enter the American market for the first time in decades, and sparking new investment in domestic refining capacity as well. Barring some unforeseen supply disruption in the refining sector, gasoline prices will begin to decline slowly—but steadily—this summer.