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Gore's Energy Plan

Mises Daily: Thursday, July 06, 2000 by

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In the summer of 1979, his presidency in tatters and his poll numbers falling, President Jimmy Carter announced what he termed a "bold, new" energy plan. As gasoline prices were rising and Americans were seething while sitting in those infamous gas lines, Carter declared that he would come up with new ways to produce "alternative energy" using tax dollars, thus allowing Americans to "invest" in their own energy futures.

Like the Carter Administration itself, the short-lived energy plan, complete with tax breaks and taxpayer-funded subsidies for dozens of environmentalist-approved schemes, soon fell into the historical dustbin. Perhaps it was wishful thinking to hope that no one would resurrect the Carter plan, but this past week Vice President Al Gore announced his own Carteresque plan. All he lacked was the cardigan sweater.

Gore's energy plan follows the same statist formula that guaranteed Carter’s plan to failure, and it is fitting that Gore followed the ideas of the former peanut farmer. After all, Gore's poll numbers themselves have been falling as of late and the latest surge in gasoline prices has threatened to derail this administration’s "prosperity express."

According to the Gore camp, the vice president has both short-term and long-term strategies. In the short term, Gore will accuse the oil companies of price gouging and anti-trust violations. Long term, the veep proposes to use up to $150 billion of the expected federal budget "surplus" to engineer a number of "energy efficiency" schemes. We shall next examine how these plans would work.

There is something quite contradictory in Gore's short and long-term plans. If, as he claims, higher gas prices are no more than criminal activities by greedy oil executives, then there is no need for the long-term strategy. All that would be needed for Americans to enjoy the energy they "deserve" would be for the government to expose the evildoings by oil companies and force down gasoline prices. After that, our worries would be over.

As explained many times on this page and elsewhere, however, higher gasoline prices are no plot by oil executives. If that were so, oil stockholders would be demanding that their firms be earning "obscene" profits all of the time, since the companies would have complete control of their pricing and levels of profitability. Since that has not been the case, the truth lies elsewhere, as others and myself have clearly demonstrated.

Thus, Gore's short-term strategy is nothing more than political posturing aimed at pointing the blame at the wrong people. In short, Gore is lying in order to move the political heat from himself and place it on others. That leaves us to next examine Gore’s long-term plan to see whether or not it passes economic muster.

Much of the plan is aimed at enticing companies to produce "energy efficient" products and to give consumers tax breaks for buying such items. That Gore would see a need to use the tax system as a way to manipulate production and sales of certain goods should tell us immediately that something is amiss. The very tenets of human action, as laid out by Carl Menger, Ludwig von Mises, and Murray Rothbard, demonstrate that individuals act purposefully as they choose between scarce alternatives.

In the case of purchasing energy-efficient products, individuals will freely choose to buy such things if they satisfy consumer demands and are priced within their own personal budgets. On a free market, consumers will look for a number of things they consider to be important when they purchase something.

For example, my wife and I purchased a used Toyota van when we adopted our little girl. While the van is comfortable and carries all of the things needed for traveling with a baby, it is not particularly economic when it comes to burning gasoline. No doubt, we could have purchased a vehicle that burns half the gasoline per mile that our van burns, but the tradeoff to us would have been unacceptable.

While we might have been able to pass more gas stations in our tiny, gas-saving car, we would have been cramped and had we had the misfortune of having an accident, our child would have been less safe.

In other words, energy efficiency, while having some importance in our vehicle choice, was hardly all encompassing. Likewise, consumers look for things other than just energy efficiency when purchasing appliances and other things. Apparently, Gore and his advisors understand consumer behavior all too well and are going to try to force people to make different choices than they would otherwise make in a free market.

While Gore calls his plan "market-based," it is anything but conducive to a free market. A free market is just that--free of government interference. The idea that tax breaks are necessary to encourage people to make choices different than they otherwise would have made is not one rooted in freedom of choice. Rather, it reflects the bureaucratic mindset which says that government knows best and it is the duty of the state to make the rest of the people see "the error of their ways."

That Gore wishes to use tax breaks instead of threatening consumers and producers with fines and prison terms is hardly encouraging. What is offensive here is the fact that the vice president believes that it is up to the state to determine what kinds of vehicles and appliances individuals should be purchasing in the first place.

When Gore condemns automobile makers for producing large sport utility vehicles that have poor gas mileage, he is really condemning consumers for wanting to buy those SUVs. Although he may be saying that his long-term energy plans to encourage the purchase of electric cars and other vehicles that do not burn gasoline, by making production and exchange of those products a concern of government, he is simply attempting to impose his dictatorial views upon the market.

The Carter plans eventually failed because gasoline prices fell after the government ended its price and allocation regime. If the Environmental Protection Agency and Clinton Administration stranglehold on the production, refining, and transporting of oil products could somehow be lifted, we would see a drop in gasoline prices similar to what people saw in the early 1980s.

In short, an effective energy plan would allow private individuals and firms do their own planning without interference from government bureaucrats and politicians. Granted, that leaves politicians and bureaucrats out of the picture, but that is the price one pays for progress.

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William Anderson teaches economics at North Greenville College. Send him MAIL.

See also Mises.org on Oil.