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Category — Bradley, Robert L. (Jr.)

“Julian Simon and the Triumph of Energy Sustainability” Revisited: Part II

“Greater energy consumption, higher economic growth, and more people are not increasing air pollution but reducing it in the world’s leading capitalist societies. More people mean more solutions …. What appears to be a paradox is really a Simon truism.”

- Robert Bradley, Julian Simon and the Triumph of Energy Sustainability, p. 85.

This concludes a two-part (Part I yesterday) look-back at the major points made in Rob Bradley’s 2000 primer on energy sustainability inspired by the worldview of Julian Simon.

Energy Affordability

“In terms of work-time pricing, conventional energy has become dramatically more affordable throughout this century … for electricity. The average U.S. worker needed over 20 minutes of labor to purchase a gallon of gasoline in the 1920s. In the 1990s a less polluting, higher performing, and more taxed gallon of gasoline cost a worker close to 6 minutes on average. The work time price of 100 kilowatt hours of electricity (approximately the power needed to run today’s average home for three days) dropped from over ten hours in the 1920s and 1930s to under a half hour in the 1990s.”

Robert Bradley Jr., Julian Simon and the Triumph of Energy Sustainability, p. 50.

“There is little reason to believe that natural resource prices behave differently than a basket of other (non-depletable) goods over long time periods. And even if real prices increase in certain periods, work-time prices can be expected to fall in a growing economy.”

Ibid. p. 53.

Energy Intensity

“Energy intensity (measured as energy used per unit of Gross Domestic Product) dropped by one-third in the U.S. between the 1950s and the 1990s. Yet energy consumption per person has increased almost 50 percent in the same period.”

Ibid., p. 54.

“Next generation gas-fired turbines will crack the 60 percent efficiency threshold—called the ‘four minute mile’ of turbine efficiency—compared to existing aged gas and coal units that average around 40 percent efficiency.”

Ibid., p. 55. [Read more →]

November 27, 2013   No Comments

“Julian Simon and the Triumph of Energy Sustainability” Revisited: Part I

“Innovation does not appear to be a depleting resource but an expanding, open-ended one. Instead of encountering diminishing returns, new advances appear to be expanding the horizon of new possibilities.”

- Robert Bradley, Julian Simon and the Triumph of Energy Sustainability, p. 40.

A  decade ago, I worked for the American Legislative Exchange Council (ALEC) as Director of the Energy, Environment, Natural Resources, and Agriculture Task Force.  Energy was a critical part of this area for state legislatures, covering such issues as

  • Global warming issues such as the Kyoto Protocol, carbon pricing schemes (cap-and-trade, etc.) in light of the precautionary principle;
  • Oil and natural gas affordability for  domestic industry (U.S. manufacturers were going overseas for cheaper labor and fuel); and
  • Gasoline taxes

ALEC was a free-market resource for state legislators. My task force’s crucial energy work had been done by Ross Bell and Chris Doss before me, and Dan Simmons and Todd Wynn came after me. It is still active today on such hot-button issues as state mandates for politically favored renewable energies and net metering mandates.

A highlight of my tenure at ALEC was a book project, a rarity for us. It is with pride and a sense of celebration that I recall the publication of  Bradley’s Julian Simon and the Triumph of Energy Sustainability in 2000.

The 150-page primer originated from some conversations I had with Rob the year before. We lamented the lack of an effective, concise primer that countered the still-popular notions of increasing resource scarcity and other negative notions that too often became a rationale for government activism. We also missed the great Julian Simon, who had recently died. [Read more →]

November 26, 2013   1 Comment

Energy Realism, Energy Optimism: Julian L. Simon Memorial Award Remarks

“I might add a prediction—that the hydrocarbon energy age could still be young, even quite young. The much-hyped emergence of a new renewable energy era by mid-century is less our energy future than our energy past…”

I am honored to receive the [2002] Julian Simon award tonight. My thanks go to the Simon family and the Competitive Enterprise Institute for having this annual award to recognize and encourage new contributions in the “sustainable development” field that Simon pioneered.

My appreciation also goes out to a number of groups within the classical liberal “structure of production” that have supported my intellectual development over the last quarter century, and in particular the Institute for Humane Studies at George Mason University, the Cato Institute, and the Atlas Economic Research Foundation.

Julian Simon was very interested in energy and energy-environmental issues. I have identified six of his themes in this area:

  • Energy is “the master resource” because energy is pervasive in industrial activity, and energy allows us to transform resources into more valuable goods and services (such as turning salt water into drinking water, a very energy-intensive process)
  • Natural resources originate from the mind, not the ground, and therefore are not depletable. Thus energy can be best understood as a pyramid of increasing substitutability and thus supply and not a “bell curve” with any particular hydrocarbon energy.
  • The average person in market settings creates (transforms) more inanimate energy than he or she consumes.
  • The average person in market settings improves the natural environment more than he or she despoils it. [Read more →]

February 14, 2013   3 Comments

“Not Cheap, Not ‘Green’” at the California Energy Commission

“In my period at Cato (1990–present), “Renewable Energy: Not Cheap, Not ‘Green’,” is probably our most important Policy Analysis in the energy/environment area. Bradley’s thorough review and analysis (60 pages, 325 footnotes) was a real pushback against the viability of ‘green’ energy in theory and practice.”

- Jerry Taylor, Senior Fellow and Director, Natural Resource Studies, Cato Institute.

On the fifteenth anniversary of “Renewable Energy: Not Cheap, Not ‘Green’” (yesterday), I recall, with no little pride, a lot of hard work that went into supplying the author with information about California’s wind and solar experience.

At the time I was working in the belly of the beast, the California Energy Commission (CEC) in Sacramento. The Commission was a major proponent of all things renewable, almost to the point of fanaticism. Well, actually far beyond that point (and that persists to this day), and therein lies a story about how I met a particular Texan and became the silent author of a major public policy study that still reads well today.

Three Amigos

Back in the 1980s and 1990s, I was fortunate to work alongside Richard Bilas, Vice Chair of the Commission, who was our ‘F. A. Hayek’ (think 1944 and Road to Serfdom). Dick Bilas was schooled in Austrian School and Public Choice economics and a real rarity–a free-market California energy regulator (and not wannabe energy planner).

And the third person in our group was Manual Alvarez, principal advisor to Commissioner Bilas, who actually cared about energy consumers. The three of us were rather wide-eyed at what can only be described as postmodern energy policy, a sort of ‘anything goes and is good if you really want it.’ [Read more →]

August 28, 2012   4 Comments

“Renewable Energy: Not Cheap, Not ‘Green’” Turns 15

[Ed. note: On August 27, 1997, the Cato Institute published Policy Analysis #280, which criticized the government push to subsidize politically correct renewable energy, particularly solar and windpower. Today and tomorrow, different authors revisit what was the free-market-movement's first full-scale rebuttal, on economic and environmental grounds, to so-called "green" energy policy .]

“The policy implication of [a thorough examination of renewable technologies] is, stop throwing good money after bad. All renewable energy subsidies from all levels of government should cease.”

Such is the conclusion voiced today by a rising chorus of energy experts, economists, even politicians, after many years of failed renewables projects and more expensive utility bills in the growing shadow of a $16 trillion national debt ($140,000 per taxpayer). But, remarkably, fifteen years have passed since Rob Bradley crafted this statement for the Cato Institute as the bottom line of his comprehensive six-part policy alarum, Renewable Energy: Not Cheap, Not ‘Green’

An Opening Shot

Few knew about or shared Bradley’s concerns at the time. Even more remarkably, his analysis was at odds with the policy direction of his employer, Enron, as Ken Lay’s political capitalism began promoting renewable investment as sustainable tax shelters.

By taking his concerns public, even as a scholar, Bradley risked much as Enron’s director of public policy analysis. Sparks flew as executives within Enron Wind Corporation digested Bradley’s external work (see these internal memos).

Bradley’s one-person stand also challenged the (Enron-directed) energy policies of Texas governor George W. Bush (and what would be the policies of his successor, Rick Perry). For Bradley, there was indeed a problem in Houston…. [Read more →]

August 27, 2012   6 Comments

The Essential ‘Oil, Gas & Government’ (Kudos to a treatise in the age of the blog)

While recently researching energy history for a writing project, I was reminded of how valuable–and underrated–Robert Bradley’s Oil, Gas, and Government: The U.S. Experience is. While there are countless books covering the history of energy from one angle or another, very few, in my experience, can be counted on for precision and accuracy.

The majority of books I read that reference early petroleum history, for example, tell a radically oversimplified narrative of petroleum replacing whale oil. However, if one reads Harold Williamson and Arnold Daum’s definitive two-volume The American Petroleum Industry, [1] one learns about a far more intricate and interesting progress, including the one-time dominance of camphene, a turnpentine-based illuminant that preceded petroleum–or the story of “coal oil,” which was once believed to be the illuminant of the future. (I discuss this history in my essay Energy at the Speed of Thought: The Original Alternative Energy Market.)

What distinguishes Williamson and Daum–and Oil, Gas, and Government–is the systematic use of primary sources. For a researcher, this certainly makes life more difficult as it is far easier to use popular accounts as jumping-off points.

But the researchers who undergo this difficult task give the rest of us an enduring resource. Williamson and Daum present the essential technological and economic history of the industry through the 1950s, with exact quantitative data and contemporaneous images throughout. Bradley’s book gives us the essential political and political-economic history of the oil and gas industry through the 1980s, with pains-taking attention to detail. [Read more →]

May 25, 2012   2 Comments

‘Crony Capitalism and Energy Policy’ Lecture at the U. of Rochester

[Editor note: This introduction was given on March 28 at the University of Rochester where Dr. Rizzo is assistant professor of economics. An increasing number of colleges and universities are becoming 'freedom friendly,' creating opportunities for free-market guest speakers such as Robert Bradley on energy.]

Welcome to Liberty Week at the University of Rochester hosted by the Alexander Hamilton Institute for the Study of Western Civilization. We want to again thank the College Democrats for co-sponsoring the opening event with Robert McNamara of the Institute for Justice. His sobering and inspiring presentation was on the fight to protect the right to freely choose to enter into occupations and consume from businesses of their choosing, to pursue their own destinies, in the face of overreaching by governments and interest groups.

Tonight, we focus on the forces operating the other side of this coin – the businesses and governments who cozy up in bed to benefit themselves at the expense of all Americans. We are pleased  to have Robert L. Bradley Jr., founder and CEO of the Institute for Energy Research to talk to us about how this process works, with a particular focus on how this operates in the energy sector.

We’d like to thank the College Republicans for co-sponsoring our event this evening.

Institute for Energy Research

Rob Bradley joins us from the Houston office of the Institute for Energy Research. IER is a scholarly non-profit that studies the economics and politics of energy markets from Houston and its main office in Washington, D.C.

The scholars (profiles here) who write/research for IER are accomplished and prolific economists, lawyers, mathematicians and policy experts from a wide variety of backgrounds, including Mary Hutzler a former head of the U.S. Energy Information Agency; Andrew Morriss, a lawyer and economist who has written widely on Common Law and the Environment, Green Jobs programs, and the history of property rights; and Robert Murphy– financial consultant and one of the leading purveyors of basic economic knowledge in America today. The full-time staff of the Institute has extensive experience in a variety of positions on Capitol Hill.

Check out IER’s website, where you will find neat short summaries of almost all possible forms of energy supply and see infographics and links to the work from their scholars. [Read more →]

April 11, 2012   6 Comments

Bradley’s Political Capitalism Project (Part IV: Who is John Galt?)

In the closing act, we have the protagonist foisting on the world a set of insights, which we proceeded to dissect in Act II and Act III. Is there a happy ending to our play? Alas, it is a tragedy.

The Bradley Project, which can be overviewed at his website Political Capitalism,  brilliantly narrates the ethos of what he calls “Heroic Capitalism” in contrast with “Political Capitalism.” As applied to energy policy, Bradley is largely correct in his insights that the energy industry has become so mixed up with the mixed economy that corporate leaders legitimately fear that capitalist advocacy will be punished.

As an out-of-the-closet energy policy market advocate, I have often been privately besieged to take public positions that corporations were loath to take publicly because of their fear of regulatory retribution.

Thus, we have lost any truly national champions for the views expressed in the Bradley Project. We have bit players. I have run small pro-market energy think tanks for more than a decade, after a career of almost 20 years in government advocating pro-competitive energy policies. Bradley has run the Institute for Energy Research even longer. We have been on the front lines, as have some others in the think tank community, credit the Cato Institute, Heritage Foundation, American Enterprise Institute, and even to some extent, Brookings Institution.

But Bradley names only one nationally recognized corporate advocate of pro-competitive energy policies: Charles Koch. I would argue, however, that while Mr. Koch has applied his pro-competitive thinking to his company and has generously supported some think tank efforts, he has not really taken on the mantle of the national leader of a free-market-in-energy movement. [Read more →]

February 5, 2012   2 Comments

Bradley’s Political Capitalism Project (Part III: The Place for Government Intervention)

Act I finds the protagonist boldly proclaiming an original and bold explication of the economics and history of the gas and electric industries. In Act II, we use the weapons developed by our protagonist to render much that passes for sound energy policy both tragic and comedic.

In Act III, we search deeply within ourselves to discern if the protagonist provides answers to the modern vexations that ail us. Come let us listen to Friedman Milton as he disarms the protagonist.

Black and White–or Gray?

The Bradley Project seems to dichotomize the world into free market capitalism and political capitalism. To paraphrase George Orwell, free markets good; political markets bad.

I have no quarrel with Bradley’s conclusion that both energy generally and natural gas and electricity in particular have been victims of political capitalism in all its hoary forms. I disagree, however, with the Bradley Project’s hostility to addressing market failures.

The energy industry, more than any other industry I can think of, has some serious market failures in the classic sense defined by economists. For example:

· Market power problems in gas and electric transportation and distribution;

· Externalities in every supply option, including renewables;

· Public goods issues in basic research and some free rider problems;

· Information asymmetries in various industry segments (let a marketer try to get customer load information from a regulated utility).

Finding the right policy in light of these market failures, while not compromising market forces, is what makes energy policy so treacherous and complex. [Read more →]

February 4, 2012   8 Comments

Bradley’s Political Capitalism Project (Part II: Energy Policy Today)

Yesterday, I fawningly reviewed Robert Bradley’s Political Capitalism Project for providing information and insight to where much of our economy has gone wrong in the last 80 years, i.e., allowing companies to succeed by using political muscle instead of free market acumen.

The Bradley Project provides a sturdy worldview for thinking about energy policy. Today, I will critique both recent and historical energy policy by relying on Bradley’s framework for assessing the implications of political versus market capitalism. Tomorrow I will argue the legitimate role of government in energy markets and give an example where active government policy is needed.

Back to 1973

The modern era of energy policy began on October 17, 1973, the day that OPEC announced an oil embargo against the U.S. With very few exceptions, since that day, energy policy, on both sides of political aisle, deteriorated until finally, and literally, it fell off a cliff with the Obama Administration’s embrace of the “green economy” and its hostility to carbon energy.

We have had our share of “energy crises,” and I would agree with the Bradley Project that all have been self-inflicted by bad government policy advocated and adopted on a bipartisan basis, Democrats supporting distortions on a soft path and Republicans on a hard path.

Unfortunately, we are headed for more crises in energy markets. Washington makes two fundamental mistakes when it comes to energy policy. The first is it focuses on problems that don’t exist (today’s discussion). The second is it ignores problems that do exist (tomorrow’s discussion).

Washington’s Energy Meddling

The Bradley Project does an excellent job of providing the intellectual framework that shows that many of the things that Washington is focusing on are not problems. Here is a brief list: [Read more →]

February 3, 2012   2 Comments