Snake Oil Policy Snake Oil Policy

TCS Daily article by Ben Lieberman: Snake Oil Policy lays out the author's five worst energy policies:

1. Oil Rationing

Ok, let's see if I understand the plan. Decrease supply and that will make the price do what? Econ 101 says the price should go up, depending on how ineleastic the curve is.

2. Alternative Energy Mandates

So far, alternate energy sources are significantly more expensive than oil. Thus, somehow we are paying for this. Even worse, it looks like grain based bio-fuels are going to eat up our grain exports this year, resulting in both increased food costs for us, and starving people around the world.

3. Windfall Profits And Other Taxes

Let me see if I understand this one - this should: 1) increase the costs for the oil companies, which they 2) pass through to the consumers, thus 3) increasing the cost of gas to them, while 4) reducing the incentive to invest in exploration or refinary capacity. Great idea.

4. Price Controls and Price Gouging Laws

Well, all of us who were alive when Nixon was President know what will happen here. How about long lines at the gas stations? Higher prices? Oh - that is where the "Price Gouging" laws would come into effect. Doesn't anyone take Economics any more?

5. Raising Fuel Economy Standards

Well, this would reduce demand, and thus, price, at, of course, the cost of reduced choice, safety, and increased vehicle cost. Other than that, it might work.