Friday, November 20, 2015

The "all of the above" energy fantasy

An "all-of-the-above" energy policy has been a political dodge, recently promoted by the White House.  The authors of this report are smart economists and they well understand that we live in a world of scarcity and must choose among various tough trade-offs.

Take away the recent U.S. energy boom and the report collapses. Yes, relatively clean natural gas production and usage are up but this has not exactly been a policy success. The White House loves to be seen as opposing anything having to do with fossil fuels. The Keystone pipeline project was deep-sixed after years of political hide-seek-dodge.

Yes, renewables are up but spend enough money and you can put a man on the moon. There are no cost-benefit studies in the WH report. In the world of serious policy analysis, cost-benefit studies are essential.  For a while, it was fashionable to cite the many poor cost-benefit studies done over the years. I forgot who said it but it is fundamental that the antidote for poor cost-benefit studies is good cost-benefit studies.

The antidote is surely not the pretense that scarcity and trade-offs are not relevant -- and that we can live the "all of the above" fantasy. I mention all this because I just read Matt Ridley's post on the topic. "By preventing investment in gas, the dash for wind has done real harm ..." Read the whole thing.