Political Energy: We All Lose

A crew works on a drilling rig at a well site for shale based natural gas on Monday, June 25, 2012 in Zelienople, Pa. Oil pri
A crew works on a drilling rig at a well site for shale based natural gas on Monday, June 25, 2012 in Zelienople, Pa. Oil prices are expected to keep falling through 2013, trimming profits at some of the world's biggest petroleum companies and slowing a boom in North American production, analysts said Monday. Natural gas prices haven't fared much better: while higher since May, the price is still near 10-year lows. (AP Photo/Keith Srakocic)

In a familiar sign of the times, another major U.S. coal company recently announced layoffs. Alpha Natural Resources, which has mines in Virginia, West Virginia and Pennsylvania, is cutting coal production and terminating 1,200 jobs, accounting for nearly a tenth of its workforce.

Alpha CEO Kevin Crutchfield tied the cuts to "a regulatory environment that's aggressively aimed at constraining the use of coal." To keep the company viable, Alpha will switch from mining thermal coal for U.S. power plants to metallurgical coal for steelmaking overseas.

Alpha's announcement illustrates the here-and-now effects of Washington, D.C.'s regulatory war on coal, not only increased competition from natural gas and lost demand from the Great Recession. Meanwhile, Obama's energy policy allocates taxpayer monies to time-disproven "green" (perpetually green?) technologies in a special-interest ruse.

Two special interests are benefitting from an energy policy that results in higher energy prices, less energy reliability and rising federal deficits. One is politically connected business that "rent-seek" in political venues. The profitability of ethanol, wind power, (off-grid) solar power, and electric cars is all about such special political favor, not underlying consumer demand. The second beneficiary is agenda-driven environmentalists who remain stuck to ecologically controversial energies to limit the natural growth of free-market capitalism.

No longer are the best energies determined by their BTU content, cost and chemistry; rather, the energy mix is stacked by lobbyists and politicians who tout "all of the above" so that the worst can edge-in with the best. Today, between four and five percent of U.S. energy is politically enabled rather than market-determined.

To understand how politics is distorting energy policy, witness the campaign ads flooding the airwaves and print media. According to the New York Times, more than $153 million has been spent on energy-related television advertisements so far. That figure is nearly identical to the amount of money spent on green-energy campaign ads alone in the last presidential election.

This year, the American Petroleum Institute has invested an estimated $37 million in television ads, and the American Coalition for Clean Coal Electricity has spent $12 million. Green energy has lagged, reflecting the "withering" problems in that sector with bankruptcies and layoffs.

The good energies are politically advertising for less regulation, mainly, and the bad energies want to keep their lifeline government subsidies. In a depoliticized free market, neither side would be spending. Instead of paying for lobbyists and television buys, monies would be retained by companies to benefit shareholders and workers. The foregone political money would be applied to dividends or reinvestment. Just about all of us as consumers and taxpayers would be a little richer.

Americans need economic growth. The Census Bureau reports that median family income declined 8.1 percent from 2007 to 2011. Last year 9.5 million families were living below the poverty line.

Think of the opportunity cost in terms of domestic energy development. The money spent on energy-related campaign ads could have financed 367 U.S. natural gas wells (at $4 million each) supporting 400 jobseach. That's nearly 150,000 jobs.

Just about everyone talks about energy efficiency. Well, energy-versus-energy dueling in Washington, D.C. is energy inefficiency on stilts. How about some political conservation instead? With government more restrained, voluntary consumer decisions would pick winners and losers. The massive D.C. energy money game would shut down. Surely this is a win-win for the 99 percent.

Robert L. Bradley is CEO and founder of the Institute for Energy Research and author of seven books on energy. He blogs at www.masterresource.org.