Yesterday’s election clearly demonstrates that the American people reject President Obama’s handling of the economy.  Just as the 2008 elections were interpreted as a repudiation of President Bush’s agenda (particularly with respect to foreign policy), the 2010 mid-term election shows that America does not support President Obama’s domestic priorities.

Specific to energy and the environment, one clear message from the election is that cap-and-trade, top-down, command-and-control regulations are a losing argument with the voters.  Candidates who voted for cap-and-trade, with few exceptions, ran away from that vote.  Voters understand that cap-and-trade is a national energy tax.

With respect to energy policy, the election results will likely yield a modest and marginal improvement.  While it will certainly not be the “environmental doomsday” that the national environmental lobby claims, unless the Republicans have truly changed their stripes, it will also not be the dramatic improvement that some predict or hope.…

[Editor Note: This letter by Koch Industries’s CEO Charles G. Koch, addressed to Fortune Editor-in-Chief Hedley Donovan, provides a pro-free market rebuttal to ARCO’s CEO Thornton Bradshaw’s “My Case for National Planning” (Fortune, February 1977).

Koch’s scholarly effort is reproduced below as a historically important document in the energy debate. It is authored by a rarity of rarities, a principled free-market capitalist. The context and timeliness of the rebuttal was stated in the Libertarian Review at the time:

While this essay was only the latest in a series of attacks on a free market economy and defenses of National Economic Planning to appear over the past few years by intellectuals, businessmen and labor leaders alike, Bradshaw’s piece deserves special scrutiny. For it comes to us from a man who both is a leading representative of American major oil companies, and was a member of Jimmy Carter’s task force on energy during the 1976 presidential campaign.

A new frontier for the world energy market is atop the world where thawing sea ice (a positive externality in this case) has opened up the possibility of major energy and other mineral production. The U.S., Canada, Russia, Denmark (via Greenland), and Norway have stakes in the Arctic domain:

Estimated potential resources are substantial (see below). The challenge is to turn potential resources in proven and probable reserves of both oil and gas.

New Developments: One Bad, One Good

Unforeseen events can have an enormous impact on the development of new markets and on public policy. Two such events occurred in April 2010.…

Modern technical innovations operate unlike the traditional, pre-industrial advances: they too have their phases of gradual improvements based on tinkering and everyday experiences with running a machine or a process. But the initial accomplishments result almost invariably from deliberate and systematic pursuits of theoretical understanding. Only once that knowledge is sufficiently mastered the process moves to its next stage of experimental design followed by eventual commercialization.

That is precisely how Charles Parsons, Rudolf Diesel, and their collaborators/successors invented and commercialized the two machines that work–unseen and unsung–as the two most important prime movers of modern economies:

steam turbo-generators, which still generate most of the world’s electricity and

diesel engines, which power every tanker and every container ship besides energizing most of the trucks and freight trains.

The process of process is also how we got gas turbines (jet engines) and nuclear reactors, and many other taken-for-granted converters and processes.…