Yesterday we posted about the energy policy paper released by the Romney campaign. While there was much to like in Romney’s stances on energy policy and how they compare to President Obama’s, I couldn’t help but feel uneasy about the plan, yet unable to articulate why that was.
The Wall Street Journal published an excellent op-ed which laid out many of my reservations, titled “How to Avoid Making the Energy Boom Go Bust“:
Mitt Romney’s energy plan, unveiled Thursday in New Mexico, is the first to deal with the new reality on the ground. It recognizes that the United States has accessible energy stores that could not only help resuscitate the American economy, but also transform global politics by taking energy leadership away from the perennially troubled Middle East. Mr. Romney and President Obama would serve voters well by making it the starting point for a serious energy-policy debate.
Already, the direction of U.S. energy policy is shifting dramatically. New extraction technologies—especially for natural gas and shale oil—have replaced the idea of energy scarcity with that of abundance. Just a few years ago, alternative energy—and the “green jobs” that were supposed to come with the development of biofuels and solar and wind power—dominated policy discussion in Washington.
Read the whole thing here. It provides some much needed perspective regarding the push from the left for solar panels and windmills.
However, the author touches on an important point that generally isn’t discussed: energy independence isn’t all its cracked up to be, though it remains very popular with the general populace. We’ve discussed this before at Resourceful Earth. Lawrence Mone writes:
Second, we need to avoid what Edward Morse, an energy economist and the global head of commodities research at Citigroup, has termed “resource nationalism”—a potential fight between energy exporters and domestic users. North American energy resources may enable this country to achieve self-sufficiency in a crisis, but it would be a mistake if this were to lead to protectionism.
It may seem counterintuitive to encourage energy exports—even when liquefied natural gas can be profitably shipped to energy-hungry global markets—but that is what we need to do if we are to become leaders in the world market.
Some energy-intensive U.S. manufacturers, especially chemical companies, benefit from low-cost oil and gas, and they worry about the impulse to ship hydrocarbon resources offshore. It is not surprising, then, to see Sen. Ron Wyden (D., Ore.) and Rep. Edward Markey (D., Mass.) urge President Obama to use his executive authority to restrict exports of oil, natural gas and coal. Such restrictions cannot be justified economically or philosophically.
If domestic energy producers can profit from exports, they should be allowed to do so. As Mark Mills, founder and CEO of the Digital Power Group and Manhattan Institute fellow, has pointed out, accelerating rather than restricting hydrocarbon exports is a path to both greater jobs and economic benefits for America as well as a key to keeping the lid on energy prices that are set globally.
This nails it on the head. Energy resources are just like any other resource. Markets should decide where they are best allocated. Some forms of energy will be exported, some will be imported. Attempts to control and limit these transactions are likely to make us all worse off.