March 5, 2011

Subsidy Folly

Facebook friend JC linked to a DOE report on energy subsidies in a comment to this post that is about to scroll off the page. I think he may have thought I'm a fan of oil subsidies, since I am an avowed supporter of oil and oil companies. But I want the market to decide, not my congressman. (Well, maybe if it was only my congressman without the other 434, but I digress.) The linked report offers this nugget on the ability of subsidies to produce more product.

Notwithstanding the doubling of Federal energy-related subsidies and support between 1999 and 2007, and a significant increase in most energy prices over that period, U.S. energy production is virtually unchanged since 1999 (Table ES2). Basic economic principles suggest that higher real energy prices together with the significant incentives provided to various production segments of the energy sector would tend to raise domestic energy production. A variety of factors unrelated to prices or subsidy programs such as State and Federal statutory limitations imposed on onshore and offshore oil and natural gas exploration in environmentally sensitive areas, uncertainty regarding future environmental policies possibly restricting future emissions of greenhouse gases, and declines in future production from previously developed domestic oil and natural gas resources may have impeded growth in energy production despite modest growth in consumption.

[Emphasis in original.]

Did anyone else notice that none of the regulatory restrictions affected wind, solar, ethanol or biogas? Yet energy production was unchanged. Go figure.

(Graph moved to "Continue Reading)


Oil and Energy We're from the government, and here to help. Posted by JohnGalt at March 5, 2011 11:38 AM
| What do you think? [0]