The American Energy Act: Supply Side Solutions
Posted July 23rd, 2008 at 4.05pm in Energy and Environment.
Congressman John Boehner of Ohio is set to introduce The American Energy Act, which will most importantly increase America’s energy supplies. The bill calls for leasing regulations for offshore natural gas by 2010, removing restrictions for outer continental shelf drilling, and opening up sections of ANWR for drilling.
As The Heritage Foundation’s Senior Policy Analyst Ben Lieberman has been arguing this even when gas prices were around $1 a gallon. More energy supplies, not more taxes and regulations, are what this country needs. It’s economics 101: expanding supply is the surest way to lower energy prices, and the quicker Congress moves to open up restricted areas, the quicker more resources will be available.
As my colleague Michael Franc writes, it is the first time in awhile House Republicans are leading the charge on producing more in America here at home. Now that gas prices are surpassing $5 a gallon in some states, consumer pressure is causing a number of Members to switch their stance on drilling. Franc notes,
Recently, freshman Rep. Steve Kagen (D., Wisc.), who previously voted the environmental line, got religion. “Drill for new oil across America,” he wrote in the Milwaukee Journal-Sentinel. On the Republican side, Maryland conservative Rep. Roscoe Bartlett, who has also opposed drilling, recently co-sponsored a plan to open up the vast oil and gas resources under the Alaskan Coastal Plain for exploration and development.”
These supply side ideas are considerably better than those that were tried and failed in the past. For instance, the Consumer-First Energy Act of 2008 (S. 3044), introduced by Senate Majority Leader Harry Reid (D-NV) would raise taxes on the price of oil, impose price gouging legislation that, in effect, led to supply shortages and long lines at the pump in the late 1970s.
Where Boehner’s bill falters is the support for renewable fuels such as biodiesel and ethanol. Ethanol has been a prime culprit for rising food prices not only in America but also globally. The federal government has been trying since the 1970s to pick winners and losers by subsidizing unsuccessful alternative sources of energy and these sources still only comprise a small fraction of America’s energy profile.
Overall, Congressman Boehner’s legislation is the right move to relieve American consumers from high gas prices. Lieberman summarizes it accurately: Good energy policy is easy to distinguish from bad energy policy: Good policy leads to more supplies of affordable energy, and bad policy leads to less.
- Author: Nick Loris
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July 23, 2008 Bill writes:
Another part of Economics 101 is “competition” to control prices
Another thought is that California regulators believe that energy efficiency is the most cost effective way to resolve our energy crisis.
IMHO the energy crisis is much more complicated that any situation taught in Econ 101.