Friday, March 18, 2005

The Attitude Of The Knife

Over at Green Car Congress, the authors note that Washington state appears poised to pass California's emission standards without joining the latter in greenhouse gas emissions restrictions. Given the circumstances of oil production, I have to wonder whether California's greenhouse gas emission laws are a good thing in the long term. The problem I foresee is that by passing such a law, it potentially cuts off valuable renewable solutions on the supply side. That is, assume the problem of greenhouse gases is tackled not from the vehicle side with fuel cell vehicles or electric cars, but from the fuel side. For instance, imagine 100% biodiesel (B100), cellulosic ethanol, or some similar carbon-recycling fuel scheme becomes feasible. Once the looming energy crisis makes it clear to everyone fossil fuels are limited, state mandates will lose their status as a driving force -- pardon the pun -- behind a race to renewables as the market embraces cheaper solutions. But by forcing Californians down the path of hydrogen-fueled cars, laws such as this may delay or harm other just-as-good or even better solutions to the problem of mobility.

This summarizes much that is wrong and incomplete with using the state to force energy solutions in place. The attitude of the knife: because it is cut off here, it is complete. But such thinking was what got us into this mess, with venal rent-seeking behavior by oil companies, and endless government intervention and manipulation of energy markets designed to force a solution that, in the long run, is much worse. This is a theme that resonates with Lynne Kiesling at Knowledge Problem. After reading the GAO report on energy use in the near future, she observed the pervasive state manipulation of energy markets has caused problems often misdescribed as "market failure":

In most dimensions of energy consumption, we do not send or receive accurate price signals. Transparent communication of the true value of the energy we consume is constantly subverted by regulation, by taxation, by subsidy, and by the relentless march of rent-seeking activity on all sides of all energy industries. This combination of interventions and subversions is typically draped in the cloak of "the public interest". But that cloak is actually the emperor's new clothes, inside which is a core of using political processes to achieve private benefits by sabotaging market processes.
Most primitively, the "progressives" frequently note that the cost of military adventures ought to be tallied into the price of oil, and to some degree, they're right. Before passing even more laws, and forcing yet another series of "solutions" likely to be just another sop to one special interest group or another, the most valuable thing that governments could do is to stop passing laws and let individuals sort things out on their own.