All Commentary
Wednesday, June 23, 2010

Do We Need “Alternative Energy” Because of the Oil Spill?

The crisis isn't going to waste.

See editor’s updates below.

As crude oil continues to pour into the Gulf of Mexico, the politicians are waving the “green energy” shirt again. The logical chain goes as such: (1) crude oil is messy and dirty, especially when it is spilled into water; (2) “green” fuels and energy methods are clean and don’t result in oil spills; (3) therefore, the government should force us to use “green energy.”

The following article highlights that position:

Alternative energy proponents say the time is right for help from Washington. “Our thoughts are with the people living and working in the Gulf as they and other organizations deal with the oil spill,” said Denise Bode, CEO of the American Wind Energy Association. “Americans’ support for pure, clean energy is clear, and events such as this heighten the need for Congress to pass needed energy and climate legislation.”

Not surprisingly, the ethanol crowd has jumped into the mix:

“The Gulf oil spill is a heartbreaking catastrophe, and it demonstrates in stark terms why we need to accelerate the use of renewable energy alternative like ethanol,” said Stephanie Dreyer, spokesperson for ethanol advocacy group Growth Energy.

“The long-term ramifications of the oil spill are yet to be determined, but it definitely indicates a need for us to invest in alternative fuels in a renewable way and move away from oil.”

Throw global warming into the pot, and you have yet another round of government intervention into the energy business, as though there was not “enough” intervention already. To make matters worse, the new plan from President Obama would make gasoline prohibitively expensive, and gasoline price increases no doubt would trigger yet more condemnation of oil and lead to more demands that the government “nationalize” the industry.

Whose Idea Was It?

In reality, government intervention played an important role in the spill’s happening in the first place. As Judge Andrew Napolitano points out, BP originally sought to drill in 500 feet of water, a plan approved by the state of Louisiana but then nixed by the federal government, which demanded the company drill in 5,000 feet depths instead. Judge Napolitano writes:

Never mind that no oil company had ever cleaned up a broken well at that depth and never mind that the feds had never monitored a broken well at that depth and never mind that BP only needed to set aside $75 million in case something went wrong. The feds trumped BP’s engineers and the feds trumped the wishes of the folks who live along the Gulf Coast and the feds decided where this oil well would be drilled.

[See update below.]

Furthermore, the federal government has stymied efforts by local and state governments, along with private individuals, to deal with the spill, and has turned away offers from well-trained and well-equipped outfits from foreign countries because of the Jones Act, which protects American maritime unions. [See update below.]

Is this merely incompetence and protection of special interests? Or is more going on: namely, an opportunity to grease the skids to the less-efficient and much more costly energy “alternatives,” such as windmills and corn-based ethanol, both of which are highly inefficient and kept alive only by massive government subsidies. In a free market consumers would reject these costly sources, but thanks to the magic of political “investing,” they continue to destroy wealth.

So we have a spill the Obama administration and many others hope will change our attitudes toward oil. The fuels that come from crude oil are unmatched in their energy production and cost-effectiveness, so it would take a major event to make American consumers willing to impose huge costs on themselves. We may not need alternative fuels, and we may not want them, but apparently the government and its allies are using this unfortunate event to increase State power and to make us poorer.

Editor’s Updates:

Media Matters disputes claims that the federal government pushed BP into deep waters against its will and that foreign assistance in the spill has been blocked by the government. See this McClatchy story also, which states:

McClatchy reported last week that the MMS under the Obama administration had approved dozens of deepwater exploration plans that downplayed the threat of blowouts to marine life and fisheries. After McClatchy’s inquiries, the administration ordered oil companies to resubmit the plans with additional safety information before they’d be allowed to drill new wells.

  • Dr. William Anderson is Professor of Economics at Frostburg State University. He holds a Ph.D in Economics from Auburn University. He is a member of the FEE Faculty Network.