Saturday, April 02, 2011

What a Reasonable Energy Policy would Look Like

Let's start off by defining what a reasonable energy policy is not. Anyone who has an "energy policy" that doesn't involve increasing the price of gas is either on something or selling something. With gas prices in the United States only capturing a fraction of the true cost, demand for gas will always be too high. The only alternatives to raising the price of gas would be to lower the cost of alternatives, which would produce massive waste and misallocation. (Or, I should say, even more massive waste than is caused by a severely under-priced good.)

The key to a reasonable energy policy is the understanding that everything we do has consequences. Many of the consequences we only realize decades after the fact. Therefore, in order to mitigate that risk, you do not do one thing. Diversification is a reasonable energy policy. We're not going to be able to meet all our energy needs through oil (imported and domestic), or nuclear, or wind power, or solar, or conservation, or burning garbage, or, or, or...

The only way we will be able to meet our needs without hanging ourselves in the long run is to do everything. Everything I listed above will meet part of our needs. Diversify, because a 50 mpg car will run out of gas too.

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