Saturday, November 24, 2007

How Does Congress Know Which Standards to Set?

The article, “Energy Bill’s Chances Growing,” was published in the Wall Street Journal on November 23, 2007. A related free article, “Voter Anger May Free Up Energy Bill,” was published in the New York Times on November 13, 2007.

My opinion: This energy bill is unnecessary.

The House and the Senate (Democrats of course) are pushing an amendment to the Energy Policy Act of 2005. Congress believes that it is in the public’s best interest to force energy-efficiency upon us. Congress (at least the democrats in Congress) is telling the public that we should be less dependent on crude oil. I have a problem with that.

The House of Representatives wants to mandate that utility companies produce 15% of all electricity from wind and other renewable inputs. This mandate directly affects the cost of energy production. The cost of electricity production from wind or other renewable resources is much higher than the cost of electricity production from coal or natural gas; the technology nor infrastructure is just not there yet! If a bill passes that mandates that 15% of electricity is manufactured using renewable resources, then the burden of the higher cost will be passed directly on to the consumer. That means even higher heating bills in the winter.

The Senate bill includes a mandate to increase the fuel-efficiency of cars, trucks, and of course, SUV’s (sport utility vehicle). At least the House of Representatives version of the bill is infeasible – the Senate version is ludicrous. It is not the place of the government to tell the public that driving that old gas-guzzling 1987 Jeep Grand Wagoneer is illegal (I understand that the bill is specific to new production, but the example makes my point). All on my own, I will notice (as if you cannot) that gas prices are rising, and that it is not in my best interest to drive the 9 mile/gallon Jeep. If the public values clean air, then a price tag of crude oil hovering around $100/barrel should be serendipitous news! People will naturally tend toward driving fuel-efficient cars without having to wait around for Congress to pass a silly bill.

I value clean air – in fact, every rational person likely values clean air. Even highly-polluting country's, such as Vietnam or China, value clean air. It is simply a good that is too costly for them at this time. The country will progress toward higher standards for environmental quality all on its own. If Congress wants to set standards, fine. Just make them minimum standards – surely the market will go from there.

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