“A review of energy developments in 1976, published in RFF’s Resources magazine (Jan–March 1977, p. 3) reached a Hotelling-like conclusion: ‘Nonrenewable and exhaustible fuels supply most of our needs now,’ the staff article stated, ‘but they will be increasingly expensive to obtain and use, until, around some distant corner, they will be replaced’.”

In its first half century, RFF’s central message has gone from energy optimism to energy pessimism, complete with an embrace of major government intervention in energy markets. The transformation began in the 1970s with a fixity/depletion view of mineral resources, which spawned conservationism (less energy usage for its own sake, with a government role).

And when the energy-short 1970s turned into the energy surplus of the 1980s, RFF’s angst shifted to issues surrounding a human influence on global climate, primarily from carbon dioxide (CO₂) emissions from the burning of coal, oil, and natural gas.…

F. A. Hayek made many contributions to the social sciences in his lifetime. This post shares his thoughts about natural resources–really mineral resources–from his 1960 book, The Constitution of Liberty. His thinking is contained in the section, “Conservation of Natural Resources,” (pp. 367–71).

The question Hayek addresses is whether self-interested free-market decisions overuse important, even ‘depletable,’ resources, leaving less for posterity from an economic viewpoint. Hayek argues against what might be called conservationism, or conservation for its own sake where present-value analysis does not apply.

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Hayek employed familiar reasoning to explain how privately owned resources had a capital or salable value, which was particularly relevant to mineral deposits for which, ceteris paribus, present production meant less future production. [1] In his words:

If the owner can get a higher return by selling to those who want to conserve than by exploiting the particular resource himself, he will do so.

Economic conservation of energy consists of voluntary actions and investments that make sense to the decision-maker in a free-market setting. Political conservation is  government-directed energy reduction measures. The later, conservationism, is energy savings for its own sake through monopolistic coercion or special favor (tax beak, crony regulation, or public check).

Demand-Side Management (DSM) programs by electric utilities are a major element of conservationism. Those who support reasonable efficiency and the elimination of waste should let the energy-efficiency politicos have the DSM term and use other words to describe what is favored.

DSM rose to regulatory prominence during the late 1980’s following the disastrous nuclear generation construction programs of the electric utilities. The confidence of the utility industry and its regulators in high-cost building programs shaken, they listened to new other approaches to meet future energy demand.…

Editor note: Yesterday’s post summarized The American Energy Renaissance Act of 2014, introduced by Senator Ted Cruz (R-Tx) and Representative  Jim Bridenstine (R-Ok) last year. Today’s post summarizes a model bill authored by the Institute for Energy Research/American Energy Alliance several years ago. The logic of free-market policy does not change but becomes stronger with time and change. But judge for yourself–and add (in comments) any suggestions you might have.

The Obama Administration has been implementing an anti-energy agenda since becoming President. For the last six years, Obama’s “dream ‘green’ team” has worked to increase the cost of traditional energy to reduce usage and try to make uneconomic consumer-rejected energy (wind, solar, ethanol, electric vehicles) more economic.

Even before Obama, multiple-hundred-page interventionist legislation has been signed time and again by Republican presidents.…