Get the Government Out of the Energy Business

Jeffrey Leonard at the Washington Monthly makes a persuasive and sensible argument for the return to free enterprise in the energy sector.  The new Congress should eliminate the federal government’s attempts to shore up old industries and choose the winners in emerging technologies. It should cut all subsidies, tax breaks, incentives to solar, wind, coal, nuclear, natural gas, replacement materials, and oil.

Senators Jim DeMint and Tom Coburn have already proposed doing away with the ethanol subsidy, one of the great boondogles of the modern era, put in place and defended solely by the prominence of the Iowa caucus in the presidential primaries. (That caucus idea was a masterful stroke, Iowans.)

Of course, our Texas oil industry would be the hardest hit, since the oil industry receives the biggest subsidy: a $2.2 billion annual tax break on royalties paid to foreign governments. (So much for the free enterprise rhetoric of the oil lobby.)

What do we taxpayers get in return? Not much. Certainly there’s no evidence that subsidies do anything significant to increase our domestic energy supply. A recent study by the U.S. Energy Information Agency found that subsidies for domestic energy production doubled between 1999 and 2007, but despite all the extra money the amount of energy supplied by domestic sources stayed the same.