23 Oct 2012

CAP’s Unsustainable Energy Vision

Economics, Oil, Shameless Self-Promotion 1 Comment

I don’t reproduce all of my Institute for Energy Research (IER) blog posts here, because they are often variations on the same themes. But this one on the Center for American Progress (CAP)’s new study is a good one to represent the kind of stuff I publish at IER’s blog. Some excerpts:

Yes, it is certainly true that in a physical sense, there is a finite amount of energy located within the United States—or planet Earth for that matter—in the form of oil, natural gas, and coal. But by the same token, even solar power is “finite”—the sun will eventually burn out.

For human welfare and government policy decisions, the relevant issue is economic scarcity, not physical scarcity. If we include Canada and Mexico—two countries that are hardly likely to boycott exports to the U.S.—and allow for unconventional recovery techniques, then North America has enough resources to last for literally centuries at current rates of consumption.

…When the economically relevant stockpile of a depletable resource (such as oil) begins to dwindle, its price rises and gives an incentive for entrepreneurs to develop alternatives. We don’t need the government to centrally plan the energy sector, any more than we need the government to run farms lest everyone starve to death. This is standard stuff and it is amazing that the CAP writers would use such dubious rhetoric in appealing to the public.

If Not Us, Who?

To see the ultimate flaw of the CAP vision, ask yourself this: Suppose someone in the year 1912 said, “Eventually we’re going to run out of oil. So we shouldn’t develop it today, we should instead use ‘sustainable’ energy sources.” This argument would have been just as true a century ago, as it is today. And yet, if people back then had heeded such advice, humanity would have missed out on 100 years of economic growth and the revolution in personal transportation made possible by inexpensive and concentrated energy.

This is the true absurdity of the CAP position. They would never allow humans to enjoy Nature’s gifts, unless these gifts could be reproduced for the rest of time. Under what value system is this sensible? It’s one thing to argue that we should preserve our natural heritage for our grandchildren. But CAP doesn’t want our grandkids having access to domestic energy, either. They are demanding that no one ever use our immense stockpiles of oil, gas, and coal, period. This is a position that makes no economic or even moral sense.

One Response to “CAP’s Unsustainable Energy Vision”

  1. RJ Miller says:

    Very spot on, this video from Learn Liberty gave a good overview of this issue:


    Practically speaking if we are able to switch to new resources and resuse old ones, then from a public policy perspective it is meaningless to speak of “finite” resources.

    In the end I would like to see those who want government to play a bigger role in this area to explain what mechanism they would use to decide how to allocate existing resources if supply and demand alone are not enough for them.

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