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  • Digging Deeper On Energy

    Fareed Zakaria predicts that no matter who is elected presidents in November, that person will face “increasingly grim economic news” due in large part to rising energy cots. Zakaria then mentions a book that details all the great innovations private companies are making in the energy sector. He then says:

    energy is a highly regulated industry. In fact, it’s notable that we have low productivity and runaway inflation in two crucial areas these days—food and fuel. Both have been nationalized, protected or subsidized by governments around the world for decades. A host of regulatory and legal barriers make renewable and small-scale energy production less attractive, profitable and manageable than it could be.

    So now that Zakaria has admitted that U.S. energy policy is a mess because of government intervention, he’ll now make the logical conclusion that government should withdrawal from the energy sector, right? Worng:

    But Krupp and Horn focus on the central policy change that the United States needs to make—enacting a cap on carbon. America is the only developed country that does not put a price on carbon.

    Imagine if President Bush were to announce at the G-8 summit that the United States would institute a cap on emissions. We would instantly have the world’s largest carbon market and it would, instantly, change the price of clean energy. It would unleash a tsunami of economic activity in renewables that could, over time, give American productivity the next big boost it needs. It would, of course, also quickly send a signal to the market about future demand for oil, which would in turn affect the price.

    So, according to Zakaria, the answer to an American economy faltering in large part due to already high energy prices is a massive, regressive, new energy tax that can only send energy prices skyrocketing higher. Thank god it appears the Democrats in Congress and the American people are beginning to move in the exact opposite direction.

    Posted in Energy [slideshow_deploy]

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