“Economists may not know much. But we know one thing very well: how to produce surpluses and shortages. Do you want a surplus? Have the government legislate a minimum price that is above the price that would otherwise prevail…. Do you want a shortage? Have the government legislate a maximum price that is below the price that would otherwise prevail.”

– Milton and Rose Friedman, Free to Choose (1979), p. 219.

Tomorrow (October 5, 2016), a book seminar will be held at Resources for the Future [register here] to revisit the lessons from the 1970s energy crisis. Panic at the Pump: The Energy Crisis and the Transformation of American Politics in the 1970s by Meg Jacobs will receive comments from three RFF scholars.

The Princeton historian and author usefully provides a good deal of archival documentation surrounding the ill-fated attempt by federal authorities to regulate the price and allocation of crude oil and oil products in the 1971–1981 era. …

“Profile costs exist due to the fact that wind has bad timing; when the wind is blowing strongly the market isn’t demanding high amounts of electricity and vice-versa.”

With nearly a century of federal government oversight in electricity markets, one might expect the regulatory equivalent of a well-oiled machine, in this case the Federal Energy Regulatory Commission (FERC).

To its credit, FERC has generally given favorable treatment to market-based solutions opposed to top down control. [1] However, the push for green energy has changed how many markets behave for the worse. Far from a well-oiled regulatory machine, we have a Rube Goldberg device that produces curious outcomes. One great example is the way utilities gladly overpay for wind power.

In “Profile Costs as a Component of Integration Costs in Wind Energy”, published in Stanford University’s Comparative Advantage (Vol.…

“IER’s philosophy and research reflects a number of academic traditions, from natural-rights philosophy to market-process economics to Public Choice. We are heavily influenced by the lessons of history, given the extensive role of government intervention in energy markets (remember, for example, the 1970s energy crisis?). We are not a public relations firm but one based on classical liberalism, better known today as libertarianism.”

Former Obama advisor and Democratic operative David Axelrod recently tweeted: “Donald Trump cites energy analysis from The Institute for Energy Research, notorious as the climate change-denying arm of the oil industry.” In fact, Trump cited an IER-sponsored study that predicted that legalizing energy production on federal domains could result in a half-million well-paying jobs annually and economic benefits of more than $100 billion annually.

What was the study that Trump cited and Axelrod decried?…

“Perhaps the most distressing characteristic displayed by the pushers of soft energy was the intellectual poverty of their grand designs, their impatient dismissal of all criticism, their arrogant insistence on the infallible orthodoxy of their normative visions.”

“There is little doubt about the origins and the real message of soft energy dogma: the roots are in the muddled revolts of young Americans in the late 1960s and the early 1970s, the goal is a social transformation rather than simply a provision of energy. The latter fact explains the widespread appeal of soft energy sources among zealous would-be reformers of Western ways.” 

Vaclav Smil is one of the leading energy scholars of our day. He has, time and again, tried to inject energy reality into energy fantasy. Some of his previous posts at MasterResource (see here) include ‘The Limits of Energy Innovation’: Timeless Insight from Vaclav Smil and the five-part Power Density Primer.…