Politicization of Electricity (intervention breeding intervention)

The zigs  and  zags  of  state  and  federal  energy  policies  have  caused  massive  mal-investment by both  energy  suppliers  and  users.   The best energy policy is no energy policy. Market forces should replace regulation; supply and demand with unfettered competition should determine energy prices. Proper  energy  prices  will  lead  to  wise  customer  investments  and  practices.  Energy efficiency is its own reward and needs no encouragement from governments.

Master Resource:  

On the Politicization of Electricity (intervention breeding intervention)

“Government-orchestrated retail competition in electricity largely failed. With that failure came the return of regulatory-mandated, utility-administered wasteful energy efficiency programs. This time the programs carried the added justification of countering global warming.”

Prior to the oil shocks of the 1970s, energy was just another input in the management of capital, labor and other operating costs. Tradeoffs were made between energy costs and capital spent to increase efficiency. During the natural turnover of capital equipment, energy efficiency improved along with productivity, quality and waste reduction. Effective energy use was a technical matter where efficiency had to make economic sense.

Oil  and  gas  shortages in  the  1970s  were caused  by  government  price controls, but the news media hyped the concept of “running out” of resources. This brought politics into the use of energy, an example of how the problems from government intervention can breed more intervention.