The Republican Platform: Energy Independence and Free Markets
This is the first in a series of short posts in which RFF scholars will analyze the environmental plank of the Republican and Democratic Party platforms. This week we’re looking at the Republican platform. Watch next week for a similar series of posts looking at the Democratic platform’s environmental agenda. As with all posts on Common Resources, this and other posts in this series are the opinions of the authors alone, not Resources for the Future.
The 2012 Republican Party platform puts energy independence and a belief in free markets at the center of its environmental agenda:
The Republican Party is committed to domestic energy independence. . . Unlike the current administration, we will not pick winners and losers in the energy marketplace. Instead, we will let the free market and the public’s preferences determine the industry outcomes. In assessing the various sources of potential energy, Republicans advocate an all-of-the-above diversified approach, taking advantage of all our American God-given resources. That is the best way to advance North American energy independence.
The writers of the platform and those who endorse its view of energy policy ought to decide which of these they favor — energy independence or market forces, or whether they need some new goals. Actually both goals are wrongheaded, as well as being inconsistent with one another.
Energy independence (as Joel Darmstader and I have recently discussed) is unattainable as long as the U.S. participates in a world market for oil (and, to be sure, is an enduring bromide from both sides of the aisle). Regardless of how much new oil leases the Republicans would open up, it won’t be enough to free us from oil price volatility and the spectre of being dependent on the whims of Mideast despots. Indeed, some of the oil from these new places might be so expensive as not to be competitive in the marketplace.
Speaking as an economist, an emphasis on market forces is very welcome, but at the same time the paean to them ignores the legitimate role government must play in making sure that prices of energy reflect their social costs, i.e., that policies are in place to internalize the pollution and other damage done by the extraction, processing and use of various types of energy. The platform’s invective against EPA’s regulations on coal, for instance, ignores the fact that EPA’s implicit goal is to have coal prices reflect their true costs to society. If coal can’t compete in that case (assuming EPA’s regulations are appropriately responsive to the risks coal places on society – such as those to the landscape from coal mining, air pollution emissions and greenhouse gases), so be it — let these augmented market forces determine industry outcomes.
Finally, how do these two wrongheaded goals conflict? The free market is what has led to our dependence on oil, and government regulation has played a key role in progress toward ending that dependence. It has been government’s willingness to regulate various sectors to become more fuel efficient — such as this week’s new CAFE standards pushing fuel efficiency to 55 miles per gallon by 2025 — and push alternative fuels (such as the recently ended subsidy for electric hybrids like the Prius) that has led to prospects of reducing our use of oil, thereby reducing our energy dependence – as recent EIA analysis indicates: