[Gary Hunt, President of Scalable Growth Strategy Advisors, posts on energy issues at  his website, Zap! Crackle! Pop! Disruptive Technology, Global Competition and our Energy Future.]

The drama that raised the national debt ceiling without increasing taxes is sending warning shots across the bow for many industries.  The message for energy subsidies, including the tax credits and treasury tax grants for wind and solar, as well as tax credits for oil and gas companies, could not be clearer.  The gravy train is ending because the Government cannot afford it, and political realities won’t tolerate it much longer.

The debt deal did not cut renewable energy subsidies. But it set up a super committee of Congress that must produce $1.3 trillion in spending cuts by Thanksgiving.  This sets up a ruthless competition between all the special interest causes that now get subsidies or tax supported benefits.…

Editor Note: Dr. Ebeling’s two-part post (Part I yesterday) provides the necessary background to understand how debt reduction is driving energy policy. Regarding the budget fight, E&E News (see Appendix) reported yesterday: “As the proverbial eleventh hour looms for the nation’s maxed-out debt limit, this week brings energy-policy battles of all sizes — from how to divide offshore-drilling revenue to the lessons gleaned from recent oil spills — that will play out amid the larger fiscal showdown.”

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“Austria was successful in pushing through policies that are popular all over the world. Austria has the most impressive records in five lines: she increased public expenditures, she increased wages, she increased social benefits, she increased bank credits [monetary expansion], she increased consumption. After all these achievements she was on the verge of ruin.”

[Editor Note: Carter’s April 1977 energy speech was also reproduced and commented upon at MasterResource.]

Thirty-two years ago today, President Carter and his energy advisor James Schlesinger got it all wrong in an emergency television address to the nation. Their neo-Malthusian, government-as-engineer moment should never be forgotten but stand as timeless warning about the anti-market, anti-energy mentality.

In the summer of 1979, many Americans were stuck in the gasoline lines. There was a lot of lost time and nervousness. There was fighting and worse. The market as a buffer of civility was gone. Americans were not used to such a predicament and had the common sense to know that something was very abnormal and not to be tolerated. They were mad.

Here is the background of his energy speech, considered as the most important speech of his presidency:

On June 30, 1979, a weary Jimmy Carter was looking forward to a few days’ vacation in Hawaii, as Air Force One sped him away from a grueling economic summit in Tokyo.

In two recent posts (here and here), I examined EPA’s and the National Highway Traffic Safety Administration’s (NHTSA’s) rationale for establishing first-ever fuel-economy standards for trucks. Today’s post provides additional evidence that what the agencies call the trucking industry’s “under-investment” in fuel-saving technology is an unintended (although not unforseen) consequence of EPA’s ever-tightening diesel-engine emission standards. The declining fuel economy of 18-wheelers is a case of government failure, not market failure. Conveniently, EPA’s role in holding back heavy-truck fuel economy is never discussed in the agencies’ proposed rule.

The trucking industry is highly competitive, profit-margins are thin, and fuel is the single biggest operating expense. Consequently, truckers, especially those who haul freight long distances in “combination tractors” (semis), have a strong incentive to purchase vehicles incorporating cost-effective improvements in fuel economy. …