US Energy Policy

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Broadly speaking, on many economic issues there are usually two sides—liberal and conservative. In order to allow the reader to view both sides of the debate, you might think that it would be easy to list energy policy websites categorized by liberal or conservative, left or right, interventionist or laissez-faire. Alas, life is not so simple.

The views of TheRightInsight.org are rigorously market oriented. People and organizations that share that rigorous view are decidedly in the minority. We believe the reason for this is that too many special interests want to use energy policy to achieve a variety of objectives that have nothing to do with the supply and demand for energy. So it is not easy to categorize people and organizations as either pro or con on energy policy in general. It reminds me of the old saw attributed to Senator Russel Long of Louisiana: “Don't tax you, don't tax me, tax that fellow behind the tree!” Everyone is in favor of market reliance for energy until it impinges on their sacred cow. At which point, special interests become the defender of all that is good to justify their little deviation from competitive market outcomes.

Additionally, there are several bright dividing lines in energy policy. First, if you are worried about oil imports, you will often be driven to support a lot of stupid interventions into energy markets—mileage standards, Strategic Petroleum Reserve, ethanol subsidies, bans on oil exports. There are as many conservatives as liberals that use “energy independence” and concern about supporting terrorists by relying on oil imports, though with slightly different emphasis.

Second, if you believe that carbon emissions will lead to catastrophic consequences a century from now, you will likely be driven to support a lot of stupid interventions into energy markets—renewable portfolio standards, renewable subsidies, anti-coal policies. While there is a strong tendency for a split on concerns about climate change on the liberal/conservative axis, it is by no means uniform. One’s position on the issue depends somewhat on your assessment of the scientific basis for climate change. A great example of this contrast is the Niskanen Center, a libertarian think tank that supports a carbon tax. Another libertarian think tank, the Cato Institute, opposes a carbon tax. Normally, libertarian think tanks would vigorously support most of the recommendations and analysis in this Article. But on this issue there is a huge gulf between their views. So how should these two organizations be characterized.

To a much lesser extent, there is a third fault line in energy policy and I will state in advance that it is pretty esoteric and at the margins of the debate. Some libertarians do not believe that the economic theory of “natural monopoly” justifies regulation of pipelines and electric wires. Thus they believe in complete deregulation of all energy facilities. Their position has some theoretical support in that they believe that in the absence of government intervention there would be strong incentives for innovation that would discipline the monopolist’s ability to harm consumers over the long haul, though they might acknowledge some short term harm. But it is fair to say this is probably a minority view among economists and one that we do not share. In general, we view some regulation of pipes and wires as a necessary policy tool.

There is one fault line that is imagined but is not in our opinion accurate. Many leftists and environmentalists accuse conservatives or those that favor market outcomes as opposing environmental protection. I don’t know a single serious energy expert that does not recognize the problem of environmental externalities. No one I know favors allowing coal plants to belch pollution into the air and water. There are serious disagreements about the method for achieving a cleaner environment but not on the goal of environmental protection itself.

There is another fault line in energy policy—energy’s impact on foreign policy. Not surprisingly, every country needs energy for it economy. There are some instances where one country can use its energy resources to blackmail other countries using energy as a weapon. The best example of this is Russia’s use of natural gas to threaten certain European countries into agreeing with them on certain positions. Some believe that OPEC has the power to use oil as a weapon. Depending on your view of foreign policy, US energy policy should be used as tool to support our foreign policy objectives. A deeper discussion of this fault line is beyond the scope of this Article.

Inside Gov, a website dedicated to government transparency, has a comprehensive list of think tanks dedicated to energy and resource policy, 46 in fact last time I looked. Indeed, they even rank the think tanks by its perceived quality of the think tank. My analysis indicates that the Inside Gov ranking is relatively objective and I perceive no left or right wing bias. With the previous caveats in mind, the following is an attempt to identify think tank organizations by their support or lack thereof for competition and reliance on market forces in energy markets. (Note: this list does now include trade associations; whose role it is to advocate on behalf of a special interest.)

Think Tanks Strongly in Favor of Free Markets and Against Government Intervention (links are to the energy part of the organizations website)

Heritage Foundation

American Enterprise Institute

CATO Institute

Institute for Energy Research

Competitive Enterprise Institute

Manhattan Institute

Niskanen Center

CRISIS & energy markets!

Think Tanks Moderately in Favor of Free Markets and Against Government Intervention

Brookings Institute

Resources for the Future