On the Soapbox

I was delighted to see a brief article in 4 Feb 2006 issue of The Economist titled "The pusher-in-chief" gleefully taking punches at Bush's State of the Union energy policy proposals. In addition to the objections that I made last week, The Economist touched on a good point that I did not mention. It notes that last year's Energy Act handed out billions of dollars to the energy industry, but it did so without any sort of guidance. By failing to force the pricing of externalities (e.g., carbon taxes and raising efficiency requirements), the administration has failed to generate the market forces necessary to guide the money spent. The problem with energy policy is not money; the major energy companies are swimming in revenue. The problem is the lack of market forces to guide that money towards useful solutions. This failure to force the market to correct its lopsided pricing, in my opinion, suggests that while Mr. Bush claims to be on the side of market economics, he really is not (to be cynical, I personally think that he chooses market solutions not out of principle, but only when it is politically convenient). In addition, his utter failure to recognize that "oil is a fungible, globally-traded commodity" in his ill-constructed speech certainly does not help his economic credentials. To quote the article, Bush "is firmly on the side of the pusher, not he addict."