Posted by: bmeverett | March 25, 2012

The Silver Bullet Fallacy

The recent debate on energy policy and gasoline prices has been terribly disappointing. Neither republicans nor democrats have shown any evident interest in anything other than gaining temporary political advantage from the very real energy issues we face. Once again, their only analytical tool seems to b the focus group.

President Obama has been out on the stump recently defending his energy policy against Republican charges that he is responsible for rising gasoline prices. The President’s response is that there is no silver bullet, and that it’s irresponsible to promise quick fixes for gasoline prices. The President is correct, but misses the point. The issue is not how to force gasoline prices down over the next few months, which is impossible, but how to craft a constructive energy policy.

President Obama’s energy policy has been a disaster. Not because he has failed to implement a quick fix for gasoline prices, but because he has used the power of government to impede actions that would help and instead squandered resources on programs that produce zero results. Despite his claims to the contrary, he has not opened up federal lands for drilling. He demonizes the oil companies, denies approval for the Keystone Pipeline, pours money into the 40-year failed alternative energy research program and passes out large amounts of taxpayer money to start-up solar and electric vehicle companies whose success is extremely unlikely.

The environmental community and the political left in the US have a clear and strong view that fossil fuels carry too many external costs and should be driven out of the economy by a combination of forced reduction in consumption and by the substitution of new fuels, even if they are much more expensive than fossil fuels. President Obama never articulates this view explicitly, but he clearly wants his political base to believe that he believes it.

This approach has two fundamental problems. The first is that forced conservation, particularly through higher energy prices, suppresses economic growth, since energy is an essential input in virtually all economic activity. The second is the there are no economically viable alternatives to fossil fuels. People can reasonably argue that we should work hard to develop alternatives, but it’s a stretch to argue that we should begin reducing fossil fuel use before we have any replacements. That’s like jumping out of an airplane and hoping to invent a parachute on the way down. More extreme environmentalists are in fact quite comfortable with a general slowdown in the economy anyway, since they believe that consumption is inherently damaging.

As an analogy, let’s take weight loss (an issue near and dear to my heart). If you find yourself overweight, the only safe and effective option you have to reduce your weight is proper diet and exercise over an extended period of time. There is no “silver bullet”. It’s wrong, however, to forego diet and exercise because they don’t work fast enough or because they are too difficult and unpleasant. It’s also wrong to step on the scale every few months and say, “Wow, my weight has really gone up, but there’s nothing I can do today. I’ll have another hot fudge sundae and wait for the government to invent a magic ‘fat burner.’

The best energy policy the US can pursue today is for government to just get out of the way, and let the market work. We have no commercially viable alternatives to oil in transportation or to natural gas in power generation. We undoubtedly will someday, but until we do, common sense requires that work with what we have.


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