Picking Energy Winners: Don't Ignore the Past

In a commentary on this morningâs Marketplace, the Cato Instituteâs Will Wilkinson critiqued T. Boone Pickensâ new energy plan â and in doing so, painted a misleading picture of the governmentâs role our energy usage.

Pickens wants wind energy to replace natural gas in electricity generation, and use the freed-up natural gas to fuel vehicles so we can use less foreign oil. There are problems with this energy plan, but Wilkerson is most concerned that the government might be âpicking a winnerâ if it helps Pickens realize his scheme. (Wilkerson doesnât specify exactly what Pickens wants the government to do, but Reuters reports that under the Pickens plan, the government would need to create power transmission corridors.)

Wilkerson doesnât seem to think the government should get involved; his criticism of the Pickens Plan is that itâs ânot about offering you, the consumer, a choice.â This is where he overlooks one crucial factor in the energy puzzle. He says:

If wind power were more efficient than the alternatives, we'd already be using more of it. If natural gas cars were attractive to consumers, we'd already be driving more of them.

The âchoicesâ weâve supposedly made â to get much of our electricity from coal and fuel our cars with gasoline, and to deal with the resulting health and environmental consequences â have been shaped by several decades of the government picking winners.

The Environmental and Energy Study Institute broke down the Department of Energyâs R&D expenditures from 1948-2003 and found that approximately $74 billion (56% of the total) went to nuclear energy; $31 billion (24%) to fossil fuels; and $15 billion (11%) to renewable energy sources. Authors from the economics firm Management Information Services, Inc. totaled up federal energy incentives (mostly tax breaks) from 1950-2003, and reported, âOil accounted for nearly half ($302 billion) of all federal support between 1950 and 2003.â Renewables got less than 10%.

There's also the larger problem of fossil fuels' externalities - the climate disruption, air pollution, and other environmental problems that come along with oil and coal use but aren't reflected in the price consumers pay. It's hard to think of a way of a addressing this problem that doesn't involve government intervention.

Pickens' plan isn't one of the best solutions to our energy problems (for one thing, natural gas is a finite resource whose extraction is destructive), and there's plenty to criticize about Pickens himself and his latest ad. Wilkerson should've stuck to those critiques rather than giving an incomplete and misleading picture about government's role in shaping our energy options.

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