NCPA - National Center for Policy Analysis

Rethinking America's Energy Policy

April 18, 2012

President Obama's energy policies stifle private market efficiency by promoting a top-down approach to innovation.  By fear-mongering about the full use of America's natural resources, the president has diverted resources away from reliable forms of energy, opting instead for arbitrary and wasteful government-selected grants, says Rep. Fred Upton (R-Mich.), chairman of the U.S. House Committee on Energy and Commerce.

This approach to the future of domestic energy is discouraging, as it ignores lessons that the executive branch should have learned over the past few decades.

  • First, government choosing technology winners does not work, in large part because it all-too-often picks losers (see synthetic fuels in the late 1970s and Solyndra today).
  • Second, traditional sources of energy do not need to be attacked in order to protect the environment: these energies and technologies to use them safely can evolve simultaneously. 
  • Third, an "all may compete" approach should be adopted such that all forms of energy are given a fair chance to carve out a market share -- this speaks to the Obama administration's artificial interventions to promote certain energy types over others at the expense of higher prices.
  • Fourth, we should do all that we can to reduce barriers to responsible development of domestic resources, including removing red tape to new projects and approving the XL Keystone pipeline.

The importance of these lessons can be seen in the experience of North Dakota, which will likely become a major energy leader within the next few years.

  • As recently as 2006, the state ranked ninth in the country in oil production.
  • By 2013, the state could move to the number three spot, behind only Texas and Alaska, according to the Institute for Energy Research.
  • North Dakota's January oil output eclipsed the current third place holder, California, and it has been estimated that its production may more than double again within five years.

North Dakota's success and the country's domestic energy overhaul that has made America the largest natural gas producer in the world are due to private-sector innovation and drive.  Private forces have made energy resources available that were previously thought untouchable, and America's entrepreneurs are capable of further successes if the government can get out of the way.

Source: Rep. Fred Upton, "Rethinking America's Energy Policy," The American, April 10, 2012.

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