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In the Pipeline: 11/26/12

November 26, 2012 by Leave a Comment

We agree with Senator Vitter.  We do rock. Larry Kudlow Show, begins at 1:21:00 (11/17/12):  “I’d love to direct your listeners to a really good website . . . it’s by the Institute for Energy Research, which is a pro-domestic energy think tank, and they have a long list of action item possibilities from the Obama administration that they may be working on.  So that’s a great place to go if anybody wants to learn more about what the possible threats are.”

 

Whoops.  Larry slipped up here and told the truth about carbon taxes and energy taxes and how they are the same thing.  No wonder why the Obama crew had no use for him. Washington Post (11/23/12): “Summers asserted that it’s shocking that the United States has the lowest-priced energy in the world. “Why aren’t we talking more about raising taxes on carbon and energy?” he asked.”

 

You may have missed this.  But it is instructive because no one even tries to pretend that this is about climate change or global warming or the environment or anything other than expanding the size of government. The Sacramento Bee (11/26/12): “The likelihood of there being a hole in the budget has increased,” said Tiffany Roberts, an LAO analyst who focuses on climate change issues. “Not only do we question the viability of using the $500 million, but if these assumptions hold, it’s unlikely there’s even going to be $500 million.”

 

Lawmakers of the world unite and set the global price for carbon. OK, impossible, but at least Shell, et al. are covered for their next shareholder meeting. Bloomberg (11/19/12): “Royal Dutch Shell Plc (RDSA) joined Unilever NV (UNA) and more than 100 companies calling for lawmakers worldwide to put a “clear” price on carbon emissions in order to contain global warming.”

 

It is kind of shocking to think the entire world is not impressed with the collectivist ideas that are ascendant in the United States.  I mean, it’s great, but it does seem like a surprise to people like Walsh. Time Science (11/21/12): “The war on coal is being won in the U.S., but that won’t make much of a difference to global climate change. The real war is being fought in countries like China and India — and there may be little we can do to influence their policy choices.”

 

This must be a good thing if Juliet feels a need to attack it.  Keep it up gang. Washington Post (11/24/12): “The people who are saying that are trying to take attention away from the real issue — that alternative energy, renewable energy, is more expensive than conventional energy.” Todd Wynn, who directs ALEC’s energy, environment and agriculture task force, said the group decided to take up the issue because some of its members are worried about the mandates’ “impacts on their state’s economies and their constituents.”

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In the Pipeline: 11/20/12

November 20, 2012 by Leave a Comment

This doesn’t sound very good. Fox Business (11/16/12) reports: “The Obama administration provided struggling battery maker A123 Systems Inc with nearly $1 million on the day it filed for bankruptcy, the company told lawmakers investigating its government grant.”

 

Maybe Richard Windsor is also controlling EPA’s unmanned drones: “Is The Obama EPA Running Its Own Black-Ops Program?” Investors Business Daily (11/19/12) reports: “Federal law prohibits the government from using private emails for official communications unless they are appropriately stored and can be tracked. Because things look suspicious at the EPA, the House Science Committee is investigating the possibility that the agency has conducted business it doesn’t want the public to see.”

 

A little more Richard Windsor/Lisa Jackson/ most transparent Administration in history news. IER (11/19/12) reports: “The Institute for Energy Research (IER) renewed a request to the federal Environmental Protection Agency (EPA) for documents related to the administration’s rejection of the Keystone XL pipeline earlier this year.  Recent reports indicate that EPA Administrator Lisa Jackson has used at least one alias email account to conduct official government business, and IER believes that the EPA’s non-responsiveness to the organization’s original March 15 request under the Freedom of Information Act (FOIA) may owe, in part, to the administrator’s use of alias accounts that were not covered in the earlier letter.”

 

Doug Lamborn is right as rain.  Cory Gardner probably needs to rethink his position.  Allison Sherry remains the best reporter on the Denver Post staff. Denver Post (11/18/12) reports: “On the House side, the three Colorado Republicans who support it have written letters to congressional leadership trying to get a vote on some of the proposed measures that would extend the credit… Rep. Doug Lamborn, R-Colorado Springs, doesn’t support it because he says he doesn’t believe the federal government should pick winners and losers in energy development.”

 

Of course it’s the right thing to do to rob taxpayers and poor people with regressive spikes in the cost of energy to build an “oasis” of electricity with solar panels, and top it off with Chevy Volts for people who make $170,000 a year… This is a house of cards that will blow over with or without another hurricane.NYTimes (11/19/12) reports: “But a drawback is that residents have to figure out where to put the batteries — a particular quandary for those with homes vulnerable to flooding… So some are looking at electric vehicles as potential backup energy sources instead. In some cases, a car could fuel a house for days on a single charge.”

 

When the bureaucracy starts giving up on an idea, you know its time is starting to wind down. E&ENews (11/19/12) reports: “With the U.S. intelligence budget shrinking, the CIA has quietly shut down its Center on Climate Change and National Security — a project that was launched with the support of Leon Panetta when he led the agency, but that drew sharp criticism from some Republicans in Congress.”

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More Regulations for Victims of Hurricane Sandy

November 19, 2012 by Leave a Comment

 

In a previous post I explained how it wasn’t Hurricane Sandy, but government price controls, that were causing the long gas lines in New Jersey and New York. As usual with government regulations, they caused problems that the government then swooped in to “fix,” patting itself on the back. In this case, allegedly pro-business officials Governor Christie and Mayor Bloomberg instituted license plate restrictions, and then praised the wonders in reducing the harmful effects of their own policies.

Look for example at this news story:

New York drivers woke up Friday [November 9] to the first widespread gas rationing since the fuel crisis of the 1970s, as the Northeast struggles to recover from the devastation of Superstorm Sandy and a subsequent snowstorm.

Officials said the gas rationing was imposed because something had to be done to ease the long waits for fuel, which they say has caused panic-buying and hoarding.

Police officers were assigned to gas stations to enforce the new system, beginning their shifts at 5 a.m. in Long Island and 6 a.m. in New York City.

“This is designed to let everybody have a fair chance, so the lines aren’t too oppressive and that we can get through this,” Mayor Michael Bloomberg said. Officers would also make sure people “don’t get pushy in line,” Bloomberg told WOR-AM radio on Friday morning.

…

New York City’s program of gas rationing is modeled on one New Jersey implemented last week — allowing drivers to fill up on alternating days depending on their license plate number — that has reduced lines dramatically…

“The last two days, I’ve barely seen any fuel lines anymore,” Christie said. “There’s order, there’s easy access to gas.”

In New York, however, Bloomberg indicated that the city had little choice but to implement the policy.

“It now appears there will be shortages for possibly another couple weeks,” Bloomberg said, later adding, “If you think about it, it’s not any great imposition once you get used to it.”

To repeat, the long lines for gas—which the article above admits is one of the primary culprits for the residents’ panic hoarding—were not caused by the storm per se, but by the government’s threats to crack down on any retailer who raised prices. When the supply of gasoline drops drastically, and the demand goes up, the market-clearing price rises too. If the government doesn’t allow the actual price to rise, then you get a massive shortage—more people trying to buy gas than can be accommodated by the available supply. This is literally textbook stuff.

What’s interesting is that even the policy of license plate rationing doesn’t reduce lines as much as one might initially suppose. Another blogger has given numerical illustrations, but here’s the intuition: In the absence of the license plate restrictions, people would have a natural tendency to smoothen the length of gas lines. For example, if someone has half a tank left, and on his way to work sees that the lines are all 3 hours long, he’ll probably keep driving and hope to fill up later in the week. But, if he sees a particular line that happens to only have 10 cars in it, he might pull off and get in that line, since the opportunity is too good to pass up.

This type of process would have naturally occurred in the absence of formal government restrictions on who could buy gas on a given day. It wouldn’t be perfect, of course, but there would be a natural tendency for the people lining up on any given day, being the ones who really needed gas then and couldn’t wait—with everybody else biding their time to fill up on a later day of the week.

But now if we introduce an arbitrary restriction on which cars are eligible to receive gas, this natural sorting process is upset. Now, if a guy with a half a tank of gas is driving past a station with a short line (perhaps it’s late at night), he only has a 50 percent chance of even being legally eligible to fill up.

On the other hand, if a couple know they need to go on a long road trip on Wednesday, without the license restrictions they could fill up either on Tuesday or Wednesday. If the lines were too long on Tuesday, they could wait and fill up Wednesday morning, before their trip.

But now with the license restrictions, suppose this couple’s car is only eligible to get gas on a Tuesday. They have to get in line that day, since Wednesday is no longer a legal option.

These considerations show the various ways in which the license plate restrictions can actually make the “queuing” process less efficient; generally speaking you don’t have people by introducing arbitrary constraints. The mere fact that lines were reduced after the introduction of the license plate restrictions by itself overstates their effect, because the lines would have naturally receded as people’s panic subsided and they got a sense of how long the “average” line would be during the crisis.

Now in practice, it is possible that the license restrictions really did reduce average wait times. But if you think it through, the only way this is possible is if there were lots of people who would line up multiple days in a row. Thus, the license plate restriction makes half of them ineligible on a given day, reducing the lines.

Thinking through the logic of the situation, you realize that this only makes sense if people were arbitrarily limited by how much gasoline they could buy once they reached the front of the line, either by the police or by the station owners (perhaps because they didn’t want to run out with so many people still waiting in line).

At best, the episodes in New Jersey and New York show that one form of government intervention—price controls—inevitably gives rise to further ones, to deal with the previous intervention’s ill effects. At worst, the situation shows that the government keeps making things worse with further rounds of intervention. Even if it’s true that the license plate restrictions reduced average wait times (and again, a simple measurement of times would overstate the savings), we are still missing all of the individual hardship cases where someone really needs to buy gas on a Wednesday (say), but now has to wait till the next day because of his license plate. This is a ridiculous situation in a country priding itself on economic freedom.

 

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In the Pipeline: 11/19/12

November 19, 2012 by Leave a Comment

It may be a little difficult to follow this, so we will make it easier.  It appears that Administrator Jackson may have created and used secret email accounts using a pseudonym (Richard Windsor) for the specific purpose of evading Freedom of Information requirements.  She was not alone. Washington Times(11/17/12) reports: “A House committee has launched an investigation into whether EPA Administrator Lisa Jackson used an email alias to try to hide correspondence from open-government requests and her agency’s own internal watchdog — something that Republican lawmakers said could run afoul of the law.”

 

But, then again, Administrator Jackson would not be the first EPA Administrator to evade Freedom of Information Act requirements. Daily Caller (11/12/12) reports: “You remember Ms. Browner, the lady who suddenly ordered her computer hard drive reformatted and backup tapes erased, hours after a federal court issued a ‘preserve’ order … that her lawyers at the Clinton Justice Department insisted they hadn’t yet told her about?” Horner told TheDC News Foundation. “The one who said it’s all good because she didn’t use her computer for email anyway? That one.”

 

Europe is doomed.  I mean, not as doomed as California, but it’s close. The Telegraph (11/18/12) reports: “Effectively, the policy goal is to phase out fossil fuels from power generation within 15 years. And the cost ? We’re looking at over £100bn in the UK just to get to the 2020 milestone and at least the same again in the next decade. Which brings us nicely to the problems faced by the Coalition Government.”

 

We like Geoff Davis. RealClearEnergy (11/16/12) reports: “Already, many small business owners are announcing they will be forced to lay off workers to get below the 50-employee threshold set by ObamaCare to avoid the law’s costly regulations, which will take effect in January. A more immediate threat, though, are the reckless anti-coal regulations that are expected to be released before the end of November that will make it cost-prohibitive to build any new coal-fired plants, and further drive up consumer and industrial energy prices.”

 

Feed-in tariffs are helping to bankrupt Europe.  Maybe we should test them someplace, preferably near where the author lives.SmartPlanet (11/14/12) reports: “The revenues collected would go into a dedicated national Energy Trust Fund, just as a portion of our gasoline taxes go into the national Highway Trust Fund. And like the latter, they would then be disbursed to states who elect to implement FiTs meeting or exceeding the federal guidelines. The states would not be required to implement FiTs, but if they didn’t, they wouldn’t be eligible for the federal funds. The funds collected would only be used for renewable generation capacity and building efficiency upgrades.”

 

That’s odd. We thought everybody loved wind turbines and that there was absolutely nothing wrong with them. GlobalWarming.org(11/2/12) reports: “A major disagreement erupted this week in the British government over future onshore windmill installations.  The number two minister in the Department of Energy and Climate Change, John Hayes, MP, declared that “enough is enough,” and that no more wind farms needed to be built in the United Kingdom.  Hayes complained that wind turbines had been “peppered across the country” without regard for public opinion.”

 

Climatologist Curry to Obama: Hmmmmm…   Judith Curry (11/17/12) reports: “What we do know is the temperature around the globe is increasing faster than was predicted even 10 years ago,” Obama stated. “We do know that the Arctic ice cap is melting faster than was predicted even five years ago. We do know that there have been an extraordinarily large number of severe weather events here in North America, but also around the globe.” Hmmmmm. . .   I wonder what his source was on the bolded statement.

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Will the Wind PTC Fly?

November 16, 2012 by Leave a Comment

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AEA Responds to EPA Rejection of Renewable Fuel Standards Waiver

November 16, 2012 by 4 Comments

WASHINGTON D.C. — The American Energy Alliance President Thomas Pyle responded today to the decision of the Environmental Protection Agency to deny a waiver request by seven state governors seeking relief from the federal Renewable Fuel Standard.

“President Obama famously promised Vladimir Putin more flexibility after his re-election, but he’s offered no such flexibility to governors seeking relief from rising consumer prices in their states. Congress specifically authorized the EPA to grant RFS waivers when adverse circumstances made compliance difficult or impossible.The Obama EPA shows little concern for the hardships being faced by American consumers, and the denial of the governors’ request signals four more years of regulatory burdens, bureaucratic indifference, and politicized rule-making from this administration. As long as government mandates trump the free market, Americans will continue to suffer. Congress should repeal the mandate altogether and begin restoring sanity to our nation’s energy policy.

Although the U.S. Department of Agriculture forecasted the smallest corn crop in six years, thanks to this summer’s severe drought, the EPA is unfazed in its support of a policy that diverts nearly 40 percent of the nation’s corn crop into fuel. In addition to artificially inflating food and feed prices, RFS will continue to cost consumers at the gas pump. This is because ethanol has a lower energy content than traditional gasoline, requiring more frequent, $60+ fill-ups at the gas station.

Perhaps the greatest irony is that the RFS was borne from the need to reduce imported oil and on the assumption that we would soon deplete our domestic supply. However, just this week the International Energy Agency forecasted that the U.S. is on the brink of becoming the world’s largest oil producer by 2020. We are within reach of energy self-sufficiency, but fundamentally flawed policies like the RFS will get us no closer to realizing it.”

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Is American Energy Independence Finally in the Cards?

November 16, 2012 by Leave a Comment

 

The International Energy Agency (IEA) released its 2012 edition of the World Energy Outlook (WEO) this week and proclaims “North America leads shift in global energy balance.” This should come as no surprise to many familiar with the vast amount of natural resource potential that Americans are blessed with and the new energy revolution that is taking place with shale oil and natural gas.

According to the IEA, the United States will become a net exporter of natural gas by 2020 and almost self-sufficient in energy, in net terms, by 2035. Furthermore, by 2035 North America is projected to emerge as a net oil exporter. Oil and natural gas production has been increasing the past few years, but surprisingly, to those who don’t follow the Obama administration’s policies, the increase has all been on private and state lands. Oil and natural gas production has been decreasing on federal lands yearly and accelerated under the Obama administration. Energy took the national spotlight in this year’s Presidential election, including the topic of energy independence. If President Obama wants to bring Americans closer to energy independence during his second term, he needs to drastically change his administration’s permitting process in order to speed up the energy production that IEA predicts.

Another big factor in achieving energy independence is smarter regulations on the coal production on use. America has the world’s largest coal reserves and coal produces nearly forty percent of the electricity in the U.S. The administration appears to be doing everything they can to keep good on the President’s promise of “bankrupting” the coal industry. If America is to reach energy independence in an affordable, reliable, and practical way, then coal should be part of that plan.

The IEA report also estimates renewables having the potential of becoming the world’s second-largest source of power generation by 2015 and closing in on coal by 2035. Not surprisingly though, the increased usage of renewable production is highly contingent on continued amounts of subsidies for these industries. Due to the fact that these industries have to rely on subsidies to be viable, it shows that they are not the most affordable and reliable paths to energy independence.

If the United States is to realize its energy potential and become energy independent in a cost effective manner, it will have to be pursued through the increased production of oil, coal, and natural gas. With the vast supplies of these resources, it is not a question of if we can achieve energy independence; it is a question of when. The question of when can be accelerated once the Obama Administration embraces the vast natural resources this country possesses and increases access to these resources on federal lands. Sensible public policy and market forces, not legislation and bureaucracies will achieve energy independence affordably.

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In the Pipeline: 11/16/12

November 16, 2012 by 3 Comments

Or, Nissan’s CEO realizes that trolling for taxpayer cash is a whole lot different than putting an attractive product on the road. Detroit News (11/15/12) reports: “As recently as October, Andy Palmer, Nissan’s executive vice president of product planning, said the automaker is not giving up on its plan to double electric vehicle sales, but that sales are not meeting expectations.”

 

So the good news is that the National Academy of Sciences got 350 million and the Fish and Wildlife Foundation got 2.4 billion.  I guess they couldn’t figure out a way to funnel some of the money to unions or trial lawyers. Politico (11/15/12) reports: “BP will pay a record $4.5 billion in fines and plead guilty to a dozen felony counts under a deal with the U.S. government to settle criminal charges stemming from the 2010 Deepwater Horizon accident that killed 11 workers and spilled nearly 5 million barrels of oil into the Gulf of Mexico.”

 

These wise words are certainly chicken soup for my soul. Orange County Register (11/14/12) reports: “The temperature after imposition of cap-and-trade, the Kyoto Protocol or a carbon tax will be whatever it would have been without any of them. So, while a new energy tax may be chicken soup for the wealthy world’s environmental guilt, as a substantive matter, it is a futile gesture.”

 

So, I guess the message here is that the mandate is not a particularly good idea. Beacon Hill Institute (November 2012) reports: “Over the period of 2013 to 2021, the [renewable energy standard] will cost Missourians an additional $4.47 billion over conventional power, within a range of $2.06 billion and $6.87 billion… Missouri’s electricity prices will increase by an average of 1.27 cents per kilowatt-hour (kWh), or by 14.8 percent, in 2021, within a range of 46 cents per kWh, or by 5.3 percent, and 1.97 cents per kWh, or by 23 percent. Costs for customers of investor-owned utilities, such as Ameren, will be higher… By 2021 Missouri will lose an average of 6,065 jobs, within a range of between 2,185 jobs under the low-cost scenario and 9,450 jobs under the high-cost scenario… In 2021 the RES will reduce disposable income by $675 million, within a range of $245 million and $1.055 billion… and Investment in the state will decrease in 2021 by $75 million, within a range of $27 million and $116 million.”

 

More battery failures are coming. Alt Energy Stocks (11/15/12) reports: “Exide is closing certain facilities for the sake of reducing costs.  The company has been historically profitable, although it did report a net loss of $106.5 million on $693.4 million in sales in the June 2012 quarter, after establishing a valuation allowance for future tax allowances of $87.6 million.  Exide has produced positive operating cash flow in each of the last five fiscal years at a rate averaging 3.4% of total sales.”

 

Does anybody really think that a carbon tax is going to be an alternative to regulation?  Does anybody really think that a carbon tax is going to be revenue neutral? Renewable Energy World(11/15/12) reports: “Exxon Mobil Corp. is part of a growing coalition backing a carbon tax as an alternative to costly regulation, giving newfound prominence to an idea once anathema in Washington.”

 

What great news!  35 billion in savings, taken right off the top of a trillion dollar monstrosity.  Because nothing says fiscal sanity more than limiting deductions for taxpayers while loading up the goodies for “farmers”. Politico (11/15/12) reports: “House Agriculture Committee Chairman Frank Lucas said Thursday that he had been assured by Speaker John Boehner that the farm bill remains part of the year-end “big picture” for Republicans and the promise of $35 billion in 10-year savings “has gotten somebody’s attention.””

 

The following think tank chiefs are opposed to a carbon tax.  The list to date follows.  If your guy is not on the list, it is because he either favors a carbon tax, wants to retain the option of favoring a carbon tax at some point in the future, or has yet to contact us.

Tom Pyle, American Energy Alliance / Institute for Energy Research
Myron Ebell, Freedom Action
Phil Kerpen, American Commitment
Fred Smith, Competitive Enterprise Institute
Andrew Quinlan, Center for Freedom and Prosperity
Tim Phillips, Americans for Prosperity
Joe Bast, Heartland Institute
David Ridenour, National Center for Public Policy Research
Michael Needham, Heritage Action for America

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In the Pipeline: 11/14/12

November 14, 2012 by 1 Comment

After decades of government interference, capitulation, inaction, stupidity, and outright lies, the U.S. will soon return to its rightful place as the number one energy producer in the world.  Man, I want to be a fly on the wall at the Sierra Club, CAP, NRDC, Defenders, 350, and Al Gore’s private jet and/or mansion on that very special day. Bloomberg (11/12/12) reports: “U.S. oil output is poised to surpass Saudi Arabia’s in the next decade, making the world’s biggest fuel consumer almost self-reliant and putting it on track to become a net exporter, the International Energy Agency said.”

 

Try to remember that the President talked about running the most transparent Administration in history.  Of course, Secretary Geithner also had trouble with his taxes, so, not everything works out like it should. Washington Examiner (11/12/12) reports: “A conservative Washington think tank will file suit Tuesday seeking to force Treasury Secretary Timothy Geithner to make public more than 7,300 internal emails circulated in recent months among senior executives in his department about a carbon tax proposal officials say taxpayers don’t need to know about.”

 

The author of this document was Terry Dinan.  She spent yesterday with her pals at AEI trying to figure out how to sell this disastrous idea. Congressional Budget Office (November 2012) Working Paper: “For example, the Congressional Budget Office (CBO) found that a policy that set a price of $28 per metric ton on CO2 emissions (roughly $103 per ton of carbon) would impose a cost of $425 dollars per year on the average household in the lowest income quintile and a cost of $1,380 per year on the average household in the highest income quintile (note that those annual costs were measured based on the size of the economy in 2010). That cost would account for 2.5 percent of after-tax income for the average household in the lowest income quintile, compared with less than 1 percent of after-tax income for the average household in the highest quintile.”

 

The automobile mandate will not save money, not reduce oil consumption, and not reduce carbon dioxide emissions.  What it will do is increase the cost of a car by an average of $3200 (according to EPA), result in more deaths, price six or seven million people out of the new car markets, and expand the scope and power of a rapacious government. NYTimes (11/11/12) reports: “For the United States, some of the best recent steps serve to save money, promote energy security and reduce air pollution. A good model is provided by rules from the Department of Transportation and the Environmental Protection Agency, widely supported by the automobile industry, which will increase the fuel economy of cars to more than 54 miles per gallon by 2025.”

 

Norquist: ‘No conceivable way’ carbon tax matches pledge. Politico(11/13/12) reports: “Don’t even think about supporting a carbon tax, Americans for Tax Reform President Grover Norquist told congressional Republicans on Tuesday. Norquist blasted out a statement saying a carbon tax would almost certainly violate the pledge many Republicans took at his group’s behest not to raise taxes.”

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Hurricane Sandy and Gas Lines: Regulations Lead to More Problems

November 13, 2012 by Leave a Comment

 

In the wake of Hurricane Sandy, government officials in New Jersey and New York interfered with the energy sector and made a bad situation much worse. By threatening to crack down on “price gouging,” the authorities crippled the ability of the market to respond to the emergency shortage of gasoline. Now, faced with the disastrous consequences of their initial policy, the authorities are upping the ante by cracking down all the harder. The whole sordid episode is a textbook example of the problems of government regulations on the energy sector.

Elsewhere I have explained in comprehensive detail why price controls are hurting the residents of New Jersey and New York. In a nutshell: When the hurricane struck, the supply of gasoline was severely curtailed. Because bridges and ports were damaged, it was hard to cart in additional supplies, and even much of the gasoline physically in the region couldn’t be accessed, because the power was out at many of the gas stations.

At the same time, the demand for gasoline went up. This was because of the natural human desire to hoard in the wake of the storm, but also because the subways and trains were knocked out. (This meant more people had to drive to work than before the storm hit.) Put the two together: The supply went down, while the demand went up. Thus, the market-clearing price should have risen significantly.

Alas, the wise authorities in New Jersey and New York didn’t want to let market prices do their job. They warned retailers not to “price gouge.” The consequence was predictable—and I’m not bluffing when I say that, because I literally in my economics textbook (Chapter 17) talked about shortages resulting from price controls after a hurricane—that people would have to line up at the pump. This underscores the basic economics point that it’s not Hurricane Sandy per se causing gas lines. No, it was the government response with price controls causing the lines.

As with most government regulations, once the authorities decided to prevent market prices from rationing the available supply among the motorists who wanted to buy it, they needed to deal with the undesirable consequences. For example, both in New Jersey and then New York City, the government instituted license plate restrictions, where only half of the motorists on a given day are eligible to buy gas. This just added insult to injury; imagine all of the thousands of people who may have needed to get gas on a Wednesday (for example) but now were legally forbidden from doing so.

To magnify the absurdity even more, now the New York State Attorney General is investigating individuals posting ads on Craigslist offering to sell gasoline at “unconscionable” prices. Thus, the very people who are alleviating the shortage—by driving to outer regions and bringing in new gas, or by giving up some of the gasoline that they may have stockpiled before the storm hit—are being punished by the authorities.

The lessons from this episode should be clear. Government intervention in the energy sector achieves the exact opposite of its intended effect. Thinking they were helping with the gasoline shortage, government officials actually exacerbated the problem. Then, seeing the long lines that their own policies had created, the officials introduced yet more arbitrary rules (the license plate rationing). And a final lesson: Fans of the free-market must not blame everything on “liberal Democrats.” In this case, it was the allegedly conservative New Jersey Governor Chris Christie, as well as the allegedly pro-business Mayor Bloomberg, leading the charge against the free market.

Filed Under: News, Products and Power, Threats Tagged With: , , , , , , , ,
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