A lot has been said lately about energy independence, even government officials making quite a show of wanting to promote energy independence for the US. Now, I am a bit of a skeptic, as I think most such "autarchy" goals are bad ideas, but that is not my subject today¹. What I want to write about here is how, despite all their rhetoric, the government is working actively against any form of energy independence, and how, but for government interference, we would be much closer to that goal, whatever its value may be.

The early steps in the government war on energy took the form of "helping", as such things always do. Whether the TVA or the Rural Electrification Act, these early efforts were nominally intended to bring electricity to the hinterland². They were hardly as destructive as later measures, but they did manage to do some harm. Granted, they brought electricity earlier than the market would have in some regions, but by either placing a large government bureaucracy in charge, or by providing below market loans for inefficient enterprises, or both, they managed to raise the price of energy considerably.

But it wasn't until the 1970's that the government really began to take on the task of destroying domestic energy production. Though it didn't start that way. The price controls on energy were just one of many price controls. When Nixon removed the last tenuous connections between the dollar and gold, he rightly feared massive inflation³, and so he unwisely decided that the solution was imposing nearly universal price controls.

When the futility of these price controls became obvious,they were almost entirely removed. That is, except for the price controls on oil. Having just gone through an oil crisis, rife, as is our current crisis, with charges of profiteering against "Big Oil", no one was going to pass up an opportunity to earn populist credit by bashing big oil. So, inevitably, the price controls on oil were continued, in the wrong headed belief that price controls would result in a surplus of cheap oil. As always, it resulted in a shortage, at least of regulated domestic oil.

Even by the 1970's the US was not "energy independent". We used a massive quantity of oil, and, like most resources, we found it cheaper to import some portion of our needs rather than pay more to produce it ourselves. However, with price controls creating a shortage of domestic oil, our imports nearly doubled.

And how did the price controls create a shortage? Not satisfied with simply imposing ordinary price controls which would inevitably cause some shortages but would leave the industry somewhat viable, the government imposed bizarre two-tiered price controls, making "new oil", oil form newly drilled wells, lower in price than "old oil", which effectively stopped all oil exploration in the US. So, not just content with creating a shortage, the government enacted price controls destined to lead to the eventual extinction of the domestic oil industry, had they not been removed early in the Reagan administration.

These controls were still in place when the next blow against energy was initiated. Not content with imposing absurdly restrictive safety requirements on nuclear power, the Carter administration raised absurd fears of "proliferation" and possible terrorism, and banned the reprocessing of nuclear waste. So, rather than allowing fuel rods to be reprocessed and fuel recovered and reused with maybe 5% needing to be buried, we were left with 100% of radioactive waste to be buried. (Somehow, shipping it to a waste dump kept it out of terrorist hands better than using it in a power plant.) This was the first step in our modern nuclear waste "problem". And when coupled with the refusal of the government and private environmentalists to accept even the most absurdly safe waste disposal sites, it explains why even Europe has surged ahead of the US in the exploitation of nuclear power.

We then reach the 1980's and the assault on one of our two remaining abundant sources of power, coal. Thanks to massive public propaganda about acid rain and the theory that Ohio Valley factories were killing the Catskills and Canada, the government managed to push through restrictive rules on sulfur content on coal, making it much more expensive to use, and effectively placing off limits many of our coal mines due to high sulfur content. The law was enacted just ahead of the results of an expensive federal study, and for good reason. That study, and several studies since have shown acid rain is largely a local affair not the result of distant smokestacks, acid lakes are mostly a natural phenomenon and tree die off is due more to weather and disease than pollution⁴. But why wait for the study to be completed? There were important laws to enact, and evidence would just get in the way.

That was the first successful blow in the environmentalist's war on energy, but far from the last. From earlier efforts trying to stop the Alaskan pipeline through worries about the Caribou, to rules against building LNG terminals, laws to prohibit new refineries, oil pipelines, nuclear reactors, anything energy related, the environmentalists, and their allies in the EPA and congress, have worked to keep energy production as inefficient as possible. Never mind that new facilities and equipment produce less than the 20 year old facilities we are forced to use, they claim new plants would pollute, so we have no new plants.

A bit of a backlash set in during the 90's and we saw a series of supposed deregulation efforts in local utilities. The only problem is that these efforts were gutted by the governments. Through a variety of schemes (continuing price subsidies to keep out meaningful competition, restrictions on market purchases, excessive fees, prohibition of building new generators, and so on) the states managed to gut nominal deregulation, which resulted in nothing but power outages or sudden price increases, convincing the public deregulation was a failure and ushering in many new, even more draconian, government schemes, which are never a good way to create efficient delivery systems.

Which brings us to our present day. Kyoto died, so the government did not manage to destroy all energy production in one fell swoop.
But the effort continues. The congress has largely been effective in standing in the way of opening up new drilling, and when even some Republicans are supporting cap and trade and other efforts to regulate "carbon emissions", the future of energy looks rather bleak.

All of which makes quite ironic the claims by politicians that they intend to promote energy independence. When every action the government has taken seems intended to destroy the domestic energy production capacity, how likely is it that any of those promises will be fulfilled?

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1. If, by energy independence, we mean that there is sufficient energy produced inside the nation that, should there be some form of embargo, we could fulfill our own energy needs, then I am not opposed, provided the energy sector remain private and export be allowed, and provided such independence arises naturally from the action of the market, not by government intervention. However, by energy independence, many seem to mean an active cutting off of both imports and exports, forcing companies to sell domestically and forcing a reduction of imports. In that case, I am opposed, as, like all protectionist schemes, it will cause a reduction in our total wealth and force us to produce domestically what can be obtained more cheaply elsewhere.

2. Note how these "emergency measures" to bring electricity to the hinterland still remain, even though the hinterland has been electrified for decades. This should serve as a lesson on the need of sunset clauses, as once enacted, even emergency measures will never go away unless forced to do so.

3. If we measure inflation by the price of gold in dollars, inflation was nearly 600% between 1971 and 1981. Using other measures, such as the CPI, the rate of inflation drops to 170-300%. Whatever measure we choose, no one can doubt that the decade of the 1970's we a period of serious monetary problems.

4. As with any environmental subject, there are supposed studies which prove both sides. The range of acid rain is not disputed by any reliable study, as radioisotope tracking pretty much settled the question, but the other matters are still disputed by environmentalists. However, I rely on one simple proof. There are reports of dead lakes in the Appalachian Mountains back to colonial days, long before coal was used in the US, and in Norway back to Viking times. Likewise, extensive tree deaths share an equally ancient provenance. In both cases, I have to assume the prior cause is also the present cause, and that isn't coal.