Do we need an energy plan?

From an email I received from a good friend who was responding to the question of whether we need an energy policy. He writes with the benefit of being a participant at the highest levels gpvernment and industry over the past 40 years, and God knows how many energy plans:

As to your energy questions:

 

1.  The idea that we don't have a "national energy policy" is a myth.  Clearly, the sum of the various existing energy laws and regulations, plus all the environmental, land use, economic, tax, budget, credit, etc. laws and regulations affecting energy add up to a de facto national "energy policy."

 

2.  The last time I checked, the only people who claimed that we didn't have an "energy policy" were those people who didn't like the way our current "energy policy" affected THEIR interests and objectives.  So they ask for elements of an energy policy that favors their particular interests and/or preconceived notions.

 

3.  The REAL problem is that we have far too much "energy policy."  We have had at least 39 years of FAULTY federal energy policy(ies), starting with Nixon's call for "Energy Independence" in 1973, major spending on federally-selected energy technology winners in 1974," beginning of centrally planned energy policy in 1974 and 1975, and continued expansion with each successive president and Congress --except the Reagan Administration which attempted to reverse course.  But Reagan energy policies were scuttled under Bush 1 and the growth in central planning, picking winners, massive tax breaks and subsidies resumed.

 

4.  The US DOE and it's predecessors have spent over $148 BILLION (in 2011 $) on "energy R&D" )as defined in budget history documents) without producing a single, significant commercially viable energy technology.  (That $148 Billion doesn't include a lot of spending and tax breaks for energy pursuits by Treasury, DOD, DOI, DOI, EPA and DOA.  Also, it doesn't include the cost of numerous tax breaks and subsidies from executive agencies and federal & state regulators.

 

5.  What has this massive central planning approach achieved?  Not much substantively but it has spawned some really dumb programs that could never pass an objective benefit cost analysis.

Wind energy and ethanol are just two examples. 

 

6.  We have other centrally planned measures such as DOE's appliance energy efficiency standards that have saved some energy consumption but at huge cost, particularly for those individuals and families whose appliance use is below average.  (We can thank Markey, ACEEE, DOE's energy Efficiency and Renewable Energy office (DOE-EERE), NREL, ORNL, LBNL for this stuff.)  As you may know, the analysis underlying the efficiency standards process is, by law, based on what DOE can justify as the benefits vs. cost for the theoretical average user of the appliance being evaluated.  By definition, this means that half of users will cone out on the short end.  Thing about the low income, single, elderly for a moment.  This program is reminiscent of the proverbial communist program to produce size 7 hats for everyone.

 

7.  Central planning in energy has led to massive wealth transfers.  Wind tax breaks, for example, take money from the pockets of ordinary taxpayers and put it in the pockets of a few "wind farm" owners (many of them foreign, by the way).

 

8.  Central planning in energy has misdirected billions in capital investment.  Again, wind is a good example.  Billions have been spent on wind turbines, blades and towers that result in huge structures (with much environmental damage during construction and operation) that produce very little electricity -- which electricity is intermittent, volatile and unreliable and most likely to be produced when least needed.

 

9.  State energy policies and programs are classic examples of "dumb."  Take NY for example.  One or two gas-fired combined cycle generating units located in the NYC area could produce more kWh of electricity than all of NY's 17 wind farms.  That electricity would be available when needed, not when the wind blows.  Somehow, the last few governors in NY, starting with Pataki, have become captive to NYSERDA and the organizations (and academics) that probably live off the contracts and grants dispensed by NYSERDA -- using money taken from taxpayers and fees attached to electric bills.

 

10.  DOE consists of a variety of program offices staffed with people who seem to believe they work not for the taxpayers but instead for the industry/organizations that received the tax dollars they distribute.  They spend tax dollars to finance creation and distribution of propaganda ("studies," "analyses," "reports) favoring the subsidized technology they are promoting.  They perform functions that used to be performed by trade associations.  The same is true of some National "laboratories."  NREL is a classic example.  Objective analysis probably doesn't even occur to them.

 

11. The availability of massive tax breaks and subsidies has had far reaching structural impacts.  Some once great organizations apparently have concluded that there is more profit and less risk in "mining" tax breaks and subsidies than in pursuing privately financed, entrepreneurial, commercially viable pursuits.  GE is a classic example.

 

Meanwhile, technology has been developed that may actually permit the US to much less dependent on imported energy.  I'm referring, of course, to the advances that have led to steadily growing domestic natural gas and oil production.  These developments plus the pipeline from Canada are doing more than 39 years of centrally planned energy "solutions."

 

Correcting central planned economic distortions such as those listed above.will require many changes in the tax code and sharp reductions in spending of tax dollars.  Whether the Congress will attempt to do so is unclear.