Thursday, December 27, 2007

That Awful Energy Bill

Congress recently passed, and the President signed, a terrible energy bill.

The fundamental flawed premise behind the bill is that we need to use less energy. But our standard of living requires energy use. Thus using less energy means increasing poverty.

The bill is full of regulations that increase conservation, or increase efficiency. One will effectively ban traditional light bulbs. This looks like a boondoggle in the making.

The bill mandates more ethanol use. This will increase oil usage, as oil is required for farm equipment, fertilizer, and other parts of the process of making ethanol. It will decrease fuel efficiency, as ethanol is less efficient than gasoline. It will of course increase corn prices. It will also increase prices for most other types of food, since many animals eat corn, and demand for farm land will increase.

The bill also mandates use of cellulosic biofuels, despite the fact that they don't exist.

Last and worst is the mandate to increase fuel efficiency. John Lott confirms what I wrote earlier--that this will kill thousands of drivers by forcing them into smaller, more dangerous cars. It also won't do much to reduce gas consumption, since decreasing demand reduces price, which increases demand. In other words, people will drive more. This will also hurt Detroit automakers and their employees, as they make more SUVs than their foreign competitors.

A positive energy bill would eliminate government regulations and allow the free market to function. This would encourage more oil drilling and nuclear energy production in America, decreasing prices and increasing energy independence.

Alternative Energy Inanity
Gouging by Government


Dan said...

I agree that this new bill is garbage. Bio fuels and E85 are terrible. E85, as you mentioned, can have a huge impact on the price of corn. This will hurt the cost of food.

However, this notion that driving smaller cars will cause more deaths on the roads is absurd. Smaller cars are perfectly safe. I would argue safer than large SUVs. Why? Because they are smaller and lighter, they are, by the laws of physics, more agile. This means that you are more likely to avoid an accident. Also, in a matter of scale, a large SUV running into another large SUV offers about the same level of protection as a small vehicle running into another small vehicle. Taking more SUVs off the road actually improves automotive safety. Then in a pedestrian situation, smaller cars are better for the pedestrians than larger SUVs due to their lower mass. But if you really want safer roads, we need to start making it harder for people to get a driver's license and easier for people to lose them. We have this idea that everyone over 16 has the right to drive when there are many who are uncapable of driving safely. I argue it's the main reason why we have so many accidents and the aviation industry has so few (requires more training, knowledge, and skill to be a pilot with a license). We also need to ditch airbags and move to every car having 4 point harnesses. There's a reason not a single racing league in the world uses airbags. They're not very good. But a 4 point harness will take care of you.

Also I would argue that the demand for fuel is much much more dependent on our driving distance than price. Just because gas prices drop doesn't mean I'm going to do more driving. Therefore, my consumption will stay the same. And I imagine that's the same with others. At most it will encourage people to live a little further from work. But that's always going to be limited due to the fact that no one wants to spend 2 hours going to and from work. I believe gas prices are highly linked to what kind of gas mileage the average American is getting as well as how many drivers we have on the roads.

Everyone knows we're eventually going to run out of oil. That's a given. But I think we're so caught up in this idea that we need to find the solution NOW. This leads to us adopting terrible ideas like this bill. The truth is that there isn't a good solution out there yet. We need to keep plugging away until a solution comes up. Until then, our government needs to stop pushing these lame ideas so they can say they did something about the energy crisis in America.

Allan said...

Several different studies have concluded that CAFE regulations cause additional deaths. No vehicle is perfectly safe. I'm not an engineer, but I suspect that the problem with small cars has something to do with their ability to absorb thte impact of a crash.

Change happens at the margin. You may not drive more, but that doesn't mean that others won't.

We are not going to run out of oil. There is significant evidence that oil is not a "fossil fuel", but an inorganic substance. In any case, the solution is the free market, which would allow an increase in supply of oil and nuclear energy.