When Government Picks Winners, It Mostly Chooses Losers

In an article for Cato mocking the Obama Administration for creating energy technology forecasts that run to the year 2300, Pat Michaels wrote:

Consider the case of domestic natural gas. In 2001, everyone knew that we were running out. A person who opined that we actually would soon be able to exploit hundreds of years’ worth, simply by smashing rocks underlying vast areas of the country, would have been laughed out of polite company.

Energy statists on the Left today are trying to get rid of coal-fired electricity generation in this country (due to climate concerns).  But one thing that few people remember is that a significant reason we have so much coal-fired electricity generation in this country is that energy statists on the Left in the 1970's mandated it.  I kid you not:

The Powerplant and Industrial Fuel Use Act (FUA) was passed in 1978 in response to concerns over national energy security. The 1973 oil crisis and the natural gas curtailments of the mid 1970s contributed to concerns about U.S. supplies of oil and natural gas. The FUA restricted construction of power plants using oil or natural gas as a primary fuel and encouraged the use of coal, nuclear energy and other alternative fuels. It also restricted the industrial use of oil and natural gas in large boilers.

As a further irony, and absolutely typical of government regulation, this regulation banning oil and gas fired plants because oil and gas seemed to be running out was really trying to fix a problem caused by another regulation.   The government had caps on oil and gas prices through the 1970's that artificially reduced supplies.  Once these price regulations were removed, we suddenly had an oil and gas glut in the 1980's and the FUA was eliminated in 1987.  Watching regulators chase their tails in energy policy over the last 40 years would be comical if the effects of their repeated mistakes were not so dire.

  • DirtyJobsGuy

    I work in the power plant business and I remember the 1977-78 winter. A big cold spell brought freezing weather deep into the south even freezing gulf oil platforms. The rivers froze and coal barges had trouble moving. but the biggest problem was demand for natural gas from residential and commercial customers. I was driving towards Boston on the Mass Pike behind a huge convoy of propane tankers trying to top off tanks. Congress panicked an swept into action. Now we are doing even worse things with wind and solar subsidies. The damage to US industry is worse than you could imagine (the German Energiewende debacle is the pattern for this)

  • ColoComment

    Remember the "Windfall Profit Tax" of 1980? Because heaven forfend that oil companies might reap the reward of a rapid price increase once price controls were removed, so our government additionally taxed "... the difference between the market price of oil, which was technically referred to as the removal price, and a statutory 1979 base price that was adjusted quarterly for inflation and state severance taxes." 'Way to encourage exploration and development, guys!

    https://en.wikipedia.org/wiki/Windfall_profits_tax

  • SamWah

    Predicting is difficult. Predicting the future is even harder. Too many unknowns, especially those unknown unknowns.

  • Fred_Z

    Never mind the unknown unknowns, it's the known knowns that are completely wrong that are hurting us.

  • Fred_Z

    Here's one known known that everybody but politicians and civil servants knows: Average capitalist business people, if allowed to do so, can and will compete to find us whatever products or resources we need at a price much lower and quantities much larger than any group of politicians and civil servants.

  • TMallory

    You can also reference the "Energy Supply and Environmental Coordination Act of 1974", giving the department of energy the ability to require that all power plants burn, or be capable of burning coal, even if they have to be modified. It also allows for relaxation of the clean air act if required to modify a plant. Interestingly, this law is still on the books.

  • Ann_In_Illinois

    That's precisely why the government shouldn't force everyone to march in one direction. Government planning generally eliminates flexibility and diversity of ideas. Predicting is difficult, so why force everyone to gamble on one and only one outcome? Let 'the market' risk it's own money if someone wants to bet a different way.

  • Ann_In_Illinois

    People said "we must do something", and Congress responded.