 |
Human Events...
Free Market, Not
Government Policy, Drives Energy Boom
by Michael Barone
06/09/2011
There’s an awful lot that’s stale in the debate on government energy
policy.
Some stale arguments are nevertheless valid: It’s dangerous to depend
heavily on Middle Eastern oil. Others have increasingly been seen as
dubious: that global warming caused by human activity will result in
catastrophe.
There’s stale talk about federal and state laws that promised great
change but have produced very little. Electric cars, even with
subsidies, are no larger a part of the auto fleet than they were 100
years ago.
Renewable energy sources like wind and solar still produce only a tiny
percentage of electricity. That offshore wind farm hasn’t gone up in
Nantucket Sound, and the Mojave Desert is never going to be covered
with solar panels.
Ethanol subsidies have jacked up the price of corn, raising the price
of meat here and tortillas in Mexico. But the subsidies haven’t done
much for gas mileage, and presidential candidates heading to Iowa now
call for abolishing them.
In contrast to the marginal effects of these much ballyhooed public
policies, there has been a huge breakthrough in energy production in
the past couple of years.
Petroleum engineers working for private companies have used a technique
called “hydraulic fracking,” injecting vast amounts of water into rock,
to release commercially viable amounts of natural gas and oil.
Hydraulic fracking has resulted in a boom in the Bakken oil shale
formation under North Dakota and Montana. North Dakota is now the No. 4
state in oil production.
And hydraulic fracking has made commercially viable huge volumes of
natural gas previously imprisoned in shale rock in western Pennsylvania
and West Virginia.
The U.S. Energy Information Administration has estimated that there is
at least six times as much natural gas available now as a decade ago,
as well as a big increase in commercially recoverable oil.
All thanks to hydraulic fracking, a phrase I bet you didn’t hear in the
energy debate in the 2008 presidential campaign or in the debate over
the cap-and-trade bill passed by House Democrats in June 2009. My
(perhaps defective) search for the phrase in the New York Times and
Washington Post websites didn’t yield any mentions earlier than 2010.
While government’s ethanol subsidies and renewable requirements have
made little difference, the private sector’s hydraulic fracking has
increased our energy supply and reduced our dependence on dicey Middle
Eastern oil.
This kicks back against the efforts of government under the Obama
administration to restrict energy supply. The administration has shut
down much offshore drilling in the Gulf of Mexico (even though
President Obama cheered Petrobras’ drilling off the shore of Brazil)
and has been denying permits for oil drilling in Alaska that are needed
to keep the pipeline pumping. This on top of environmental groups’
successful attempts to prevent drilling on the desolate tundra of the
Arctic National Wildlife Refuge.
The State Department has even been stalling on approving the Keystone
pipeline from the tar sands of Alberta, Canada, to refineries in
Oklahoma and Texas. Environmental groups object to drilling techniques
Canada allows.
It’s unclear why we should feel called on to second-guess the internal
regulations of a competent and environmentally conscious nation like
Canada. And it’s incomprehensible why we should want to keep out a
plentiful supply of oil from a dependable and friendly neighbor.
There is a lesson here for public policy generally, including health
care. No centralized government expert predicted the vast expansion in
energy supply from hydraulic fracking. It was produced by decentralized
specialists in firms subject to market competition.
Just as Friedrich Hayek taught, no central planner can know or foresee
enough to produce the beneficial results regularly produced by
competition in free markets regulated in accordance with the rule of
law. And no central planner can accurately predict the course of
innovation that can be achieved in decentralized markets.
That’s something you might want to keep in mind when someone tells you
that Medicare costs can be controlled by 15 members of an unelected
board created by Obamacare. Better results and lower costs can be
expected with the kind of market competition set up by the 2003
Medicare prescription drug law.
No one can tell you just how that will happen, just as no one was
telling you three years ago just how hydraulic fracking would expand
our energy supply. But it did. That’s what market competition can do --
and government control can’t.
Read it at Human Events
|
