"Rather than expand government, public policy should end preferential subsidies for politically favored energies and privatize such assets as public-land resources and the Strategic Petroleum Reserve. Multibillion-dollar energy programs at the U.S. Department of Energy should be eliminated. Such policy reform can simultaneously increase energy supply, improve energy security, reduce energy...
Energy Freedom for America
Energy has become a central issue in current public debates. Concerns have been raised over the rising prices Americans pay to heat their homes and fuel their cars; the security risks involved in America's dependence on oil imports from adversarial nations; the potential damage of fossil fuels to the environment; the need for developing cleaner, renewable sources of energy.
In the eyes of many, energy is a common good, or a resource that all Americans have a right to easily access. Pointing to government's past involvement in developing the energy sector through innovations such as railroad construction, electrical expansion, and energy research and development, it is often claimed that the government needs to finance and promote various energy sources in order for their accessibility to continue and grow.
Yet others argue that government involvement in the energy sector could actually lead to over-consumption and misuse of precious resources. Indeed, the government's historical track record of energy regulation suggests to some that it is time for a freer market in energy.
One failure raised by freer market proponents is energy subsidies. According to one source, "The department [of energy] spends about $9 billion annually on civilian energy research and subsidies." These subsidies often develop projects which result in much higher costs than were originally intended. Traditional sources such as coal, oil, and gas have received and continue to receive many of these subsidies, but the government's focus in recent years has been on funding renewable sources, including ethanol, wind, and solar energy, in an attempt to make them economically viable while reducing carbon emissions and combating climate change.
This, according to freer market proponents, has led to propping up forms of energy that would otherwise have been weeded out by market competition for being inefficient, ineffective, or simply too expensive for mass consumption. It has also created a number of high-profile cases of taxpayer funds being used to support companies and projects that have failed based on political preferences or connections rather than merit. A prime example of this is Solyndra, the solar company that went bankrupt in 2011 despite a "half billion dollar" loan from the government. Yet, Solyndra is not the only energy company to declare bankruptcy after receiving financial help from the government. Indeed, Evergreen Energy, Beacon Power, Ener1, and Solar Trust of America are all recent examples of government-supported - but now bankrupt - companies.
Freer market proponents particularly seek to encourage private entrepreneurship because, so they argue, it drives down prices by giving incentives for efficiency and innovation. Two often-cited examples are John D. Rockefeller, who was able to drop the price of oil enough for the common man to use, and the current emergence of "hydraulic fracking," a process that obtains oil from shale.
On a global scale, advocates of a market-based energy policy do encourage more domestic energy production and development. Indeed, with new discoveries of domestic oil and natural gas, for some the U.S. becoming independent from foreign oil imports within the next couple of decades is no longer a "pipe dream." Others, however, suggest that a total dependence on America’s own resources is not wise, because it could cause shortages in times of hardship and could also increase energy costs. Australia recently recognized this fact when its leaders made the decision not to pursue energy independence, but instead decided to rely on the global energy market in order to keep costs low for its citizens.
Providing information on the history, current status, and debates surrounding traditional and renewable forms of energy in America, this topic examines the pros and cons of government-based energy policy vs. a market-based energy policy.
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