Here is a message I sent to Loren Steffy, business columnist of the Houston Chronicle.
You seem to be preternaturally inclined to insist that all energy problems be addressed through an energy plan , though this time you did at least preface your conclusion with, “If we’re going to have an energy plan . . . (as though you might possibly consider that “we” might not necessarily determine that we are going to have one). Please allow me to introduce my energy plan.
If you insist upon using the “plan” vehicle, here are the specifics of my “plan:”
(a) Instead of shifting tax incentives from the oil industry to renewable programs, how about we eliminate all existing tax incentives and merely allow depletion allowances, depreciation of fixed assets, and inventory-accounting in a standard and uniform manner that, as once was the case with other industries, uses realistic standards based upon real-world experience as to things like known reserves, useful lives, either LIFO or FIFO based upon GAAP precedents, etc. In other words, how about we eliminate all vestiges of crony capitalism from the oil industry. Of course that would be hard to sell unless we did the same thing to/for other industries and, as a fair trade-off, reduced the rates of taxation at the corporate level – in a manner along the general outlines of tax reform that have already been advanced by several prominent Republicans and Democrats, but with no grandfathering for specific industries like energy or other favorites of the crony-capitalism/DC lobby crowd.
(b) And how about we eliminate all governmental favors for this company or that favored sector or new energy source (e.g., Solyndra), and get the government totally out of the business of trying to micromanage the energy industry and develop new energy sources? How about eliminating government-funded research and cost-sharing on early projects, and all other “government initiatives?”
(c) In short, how about we have an energy plan consisting of no plan whatsoever, other than leveling the playing field and letting the markets separate the winners from the losers – regarding both which forms of energy, and which companies, ultimately prevail? How about letting basic supply and demand re-enter the picture, so that we get around to developing alternative energy-sources as soon as the prices of existing sources rise enough to make the alternatives attractive to risk-capital? And please spare me the national security argument regarding marshalling of reserves, etc. – we can talk about stockpiling if and when this Administration gets around to taking seriously the whole concept of national security.
I assume you will throw up your hands and tell me why it cannot work – too many political hurdles, too many powerful lobbies, etc, etc, etc. I will just remind you that there is no way the markets, unimpeded by governmental jury-rigging via tax policy, subsidies, favors, etc., could screw things up as badly as the “Energy Plan” crowd has done. The markets are way smarter than you, me, the President, Austan Goolsby, Larry Summers, and anyone else whose “plan” you might like. The markets do not need a Plan; they generate a revised and updated plan every nanosecond of every day of your life, constantly updating the plan to account for up-to-the minute changes in all pertinent data. The markets are certainly better allocators of economic resources than Lenin, Mao, and all the other inventors of the infamous 5-year plans and 10-year plans that taught us, years ago, what happens when you try to run a national economy by government plans.
Blogster’s postlude: Just a couple of weeks after this posting, Holman Jenkins of The Wall Street Journal (a highly-trained professional) captured the essence of this posting with bracing brevity when he wrote that We already have an energy plan: it is called ‘the market.’