“ America’s energy markets, . . . are clogged with the debris of almost a hundred years of state and federal regulation. This “regulatory cholesterol” is as damaging to our economy as the “cholesterol” analogy suggests.” (“De-CloggingEnergy Regulation” by AndrewMorriss, National Review Online, September 27, 2007)
National Review Online
By Andrew P. Morriss
Thursday, September 27,2007
Energy bills are a dime a dozen in Washington and many state capitals. They are the multipurpose solution reputedly solving every energy problem; they do everything from raising taxes for oil and gas companies, to subsidizing ethanol and plug-in hybrids, to threatening oil company executives with prison for “price gouging,” to promoting wind power (except, of course, when it might spoil Ted Kennedy’s sailing). Every gasoline price spike yields a cascade of proposed legislation and an outcry from politicians.
Politicians are right in suggesting that America faces certain serious energy problems, but they’ve misdiagnosed both the problems and the cure. America’s energy markets, including the infrastructure that makes trading in energy possible (made up of pipelines, oil and gas terminals, and refineries), are clogged with the debris of almost a hundred years of state and federal regulation. This “regulatory cholesterol” is as damaging to our economy as the “cholesterol” analogy suggests. [Readmore]
Markets work best when they are broad and deep. Unfortunately in many energy markets, a combination of limited infrastructure and regulation limit the extent of the market. From the early twentieth century, both federal and state governments have been heavily involved in energy markets. John D. Rockefeller’s Standard Oil helped create a national market for petroleum-based fuels, both standardizing product quality (the inspiration for the company’s name) and building infrastructure like pipelines that broadened local markets into regional and national ones. [Readmore]
Andrew P. Morriss is H. Ross & Helen Workman Professor of Law and Business and professor of the Institute for Government and Public Affairs at the University of Illinois, and a senior fellow at the Institute for Energy Research, Houston, Tex. His book on gasoline markets is forthcoming from Yale UniversityPress in 2009.
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