Government meddling distorted gasoline and electricity markets. We’re all paying the price
Five-dollar gas arrived in the United States this month. Even corrected for inflation, that’s a record.
In California, a gallon of unleaded will cost you a little more than six bucks. Just another reason folks from the Golden State love moving to Texas.
Prices have ascended as the supply-demand gap has widened. Oil companies haven’t ramped up exploration because drilling supplies are scarce. Russia’s invasion of Ukraine has taken one of the world’s largest oil exporters off the western market.
Americans are flying again. International travel has increased to pre-COVID levels, and for what it’s worth, I’ve noticed more-congested automobile traffic around southwest Fort Worth.
What is there to do about fuel prices?
Recently, President Joe Biden criticized refinery companies for taking “profit margins well above normal,” and a spokesperson added that the White House was contemplating action under the Defense Production Act. Last week, the president pushed Congress to pass a federal gas tax holiday.
Elected officials meddling in the private sector should frighten all of us. For example, due to environmental legislation and safety concerns, we haven’t built nuclear reactors in almost 40 years in the United States. Yet, even when factoring in the lives lost from the Chernobyl and Fukuyama disasters, nuclear energy is still one of the safest ways to generate power.
It is also remarkably clean. But in the current regulatory climate, it is estimated that building a nuclear reactor would take 20 years.
The absence of a more robust nuclear sector causes all of us to pay more for energy. Had we been building nuclear plants over the past 40 years there would be a much larger energy supply in general, and our electricity bills wouldn’t rise as much when natural gas prices go up. Furthermore, we would be less dependent on foreign energy.
The environmental lobby has successfully pressured legislators to tax the populace to pay energy companies to build wind turbines. Although those giant West Texas windmills are mesmerizing to look at, they represent a hidden energy tax on consumers. Additionally, environmental legislation has eliminated Arctic oil production, stifled rare earth mining, stopped important pipeline construction, limited capital lending to oil and gas companies, and made oil refineries more expensive to build.
Taking care of the planet is a noble endeavor, but because fossil fuels form such a large bulk of our national energy supply, it is naive to think we can wean ourselves quickly from them. Attempts to do so are driving up energy costs and the prices of staples such as chicken — $4.20 a pound! — at grocery stores.
Though environmental legislation has a role to play, if we want to bring down energy prices and limit our carbon footprint, we need to lean more on market forces and less on government interference. We should curtail some of the environmental hoops required to expand nuclear power capacity which would slowly decarbonize our electric grid, for example.
When horizontal drilling and fracking technology enabled the extraction of previously untapped natural gas reserves in the 2000s, energy prices dropped. Natural gas burns more cleanly than oil, so carbon output fell, too. It was an example of market forces eliminating more heat-trapping gasses than all of the global warming hand-wringing and expensive environmental legislation.
Some energy industry regulations are necessary. I don’t want Exxon drilling next door to my house, for instance, and I like to breathe relatively clean air. But we have to remember the financial (consumer good inflation) and safety (waning clean nuclear energy) consequences of regulation.
The market isn’t perfect, but it contains within itself powerful means to moderate energy rates as profit-driven energy companies eventually escalate production. Furthermore, there is enough investor sentiment toward renewable energy that the transition to more carbon neutrality will, in due time, come about without the detrimental fallout from over-regulation.
Let’s encourage lawmakers to push the balance away from government oversight so that the marketplace can lower energy prices, diminish carbon production and spur innovation.
Brian Byrd, a former City Council member, is a physician in Fort Worth.
