Category — Free Market Energy Overview
[Ed. note: Milton Friedman's views will be further explored in Part II on energy and Part III on political capitalism.]
“Our central theme in public advocacy has been the promotion of human freedom … [It] underlies our opposition to rent control and general wage and price controls, our support for educational choice, privatizing radio and television channels, an all-volunteer army, limitation of government spending, legalization of drugs, privatizing social security, free trade, and the deregulation of industry and private life to the fullest extent possible.”
- Milton and Rose Friedman, Two Lucky People (1998), p. 588.
Today some 150 events are taking place in the U.S. and internationally to commemorate the 100th anniversary of the birth of Milton Friedman (1912–2006). I will be hosting a Houston event this evening with presentations by myself and University of Houston economist Thomas Mayor on Friedman’s many contributions that, in sum, opened the door for libertarian thought in academia and within the wider public.
The Wikipedia entry for Friedman begins as follows:
Milton Friedman (July 31, 1912 – November 16, 2006) was an American economist, statistician, and author who taught at the University of Chicago for more than three decades. He was a recipient of the Nobel Memorial Prize in Economic Sciences, and is known for his research on consumption analysis, monetary history and theory, and the complexity of stabilization policy.
As a leader of the Chicago school of economics, he influenced the research agenda of the economics profession. A survey of economists ranked Friedman as the second most popular economist of the twentieth century behind John Maynard Keynes, and The Economist described him as “the most influential economist of the second half of the 20th century…possibly of all of it.”
Many other biographies can be accessed on Friedman; this post will continue with some Friedman quotations of import on various topics except for those to come in Part II (energy) and Part III (political and special-interest capitalism). [Read more →]
July 31, 2012 8 Comments
“In the U.S. energy sector, market reliance has produced economic coordination, fostered economic growth, and democratized wealth. Government intervention, on the other hand, such as oil and natural gas price controls in the 1970s, has produced shortages, civil strife, and bureaucratic waste.”
Energy is the master resource. Without energy, other resources could neither be produced nor consumed. Even energy requires energy: There would not be usable oil, gas, or coal without the energy to manufacture and power the requisite tools and machinery. Nor would there be wind turbines or solar panels, which are monuments to embedded fossil-fuel energy.
Just how important are fossil fuels relative to so-called renewable energies? Oil, gas, and coal generate the electricity needed to fill in for intermittent wind and solar power to ensure moment-to-moment reliability. Renewable energy is dependent on nonrenewable energy–short of (prohibitively expensive) battery technology assuring the flow of electricity.
As a component of all products and services, energy needs to be affordable, convenient, and reliable. To this end, public policy should respect consumer preferences and allow energy producers to meet the demands of the marketplace. This requires a respect for private property rights, voluntary exchange, and the rule of law to facilitate the global exchange of energy and its innumerable infrastructure components. Such are the key to energy sustainability.
In this election season, all political parties, candidates, and voters should revisit the fundamentals of a market-driven, versus government-engineered, energy sector.
Global energy supplies are primarily owned by governments rather than by individuals, giving rise to ‘energy security’ problems for some nations and regions. In state-run economies, political elites make the decisions that otherwise would be made by the market transactions of millions of people. Win-win voluntary exchanges are supplanted by government-dictated win-lose transactions. Wealth is redistributed rather than created. Pure waste results from the intervention of (political) third parties into what otherwise would be mutually advantageous self-interested exchange. [Read more →]
April 3, 2012 4 Comments
“It’s time to move the debate past the dogmatic view that carbon dioxide is evil and toward a world view that accepts the need for energy that is cheap, abundant and reliable.”
- Robert Bryce, “Five Truths About Climate Change,” Wall Street Journal, October 6, 2011.
“Every [energy] policy objective should be viewed through the lens of affordability.”
- John S. Watson, Chairman and CEO, Chevron Corporation
Remarks at the Peterson Institute for International Economics, Washington, D.C., October 19, 2011.
Chevron CEO John Watson delivered a major address last month in Washington, D.C. that reorients energy sustainability from controversial neo-Malthusian notions toward consumer affordability and reliability. As such, it marks an end to the ‘apologetic’ era launched by BP’s John Browne in his 1997 Stanford University speech, which proclaimed that fossil fuels were problematic in relation to anthropogenic climate change. The moral high ground of consumerism also points to market capitalism in place of political capitalism.
Watson’s speech follows verbatim with subtitles added.
This is one of those places in our nation’s capital where serious minds turn to serious matters. The spirit of the Institute is to take the long view, to look past election cycles to the fundamentals of good policy, in this country and beyond. That’s an attitude that serves us well in any place and time, and certainly right now, in this fourth year of low economic growth, high unemployment and many other challenges.
This room is filled with people who spend a lot of time analyzing these problems, and advocating policy prescriptions to deal with them. And few policy issues are more contentious than energy.
There’s a reason for that. When it comes to energy policy today, we’re talking past one another. We all want a secure source that
minimizes adverse environmental impacts. But we’re failing to be clear about what our central priority ought to be among our energy objectives.
Today, I’d like to share what I believe that priority should be. I submit to you that affordable energy is the priority that should underpin all of our actions. Every policy objective should be viewed through the lens of affordability.
To make the case, think back over the last 150 years. We’ve seen the greatest advancements in living standards in recorded history because we have developed abundant, affordable energy. Light, heat and mobility have been made available to billions of people.
Agriculture has been mechanized, freeing populations to spend time developing other industries and toiling less for the very basics of life.
The evolution of energy supply over that time period has been just as stunning. As late as 1910, about a quarter of all U.S. farmland was still devoted to feeding horses used for transportation. Today, we use half as much land for all of our roads and highways, oil pipelines, refineries and wells combined.
Since Edison switched on his first generators in 1882, the average price of a kilowatt hour of electricity has fallen almost without interruption. Markets have driven a diverse portfolio of affordable energy sources that is anchored by oil, natural gas and coal, but also includes nuclear, hydropower and other renewables.
And we’re using our energy more efficiently. It takes 60 percent less energy today to produce a dollar of GDP than it did in 1949.
Affordable energy supports the very foundation of American life. Americans love their mobility, whether for business or pleasure. The population has roughly doubled since 1950, but gasoline consumption has quadrupled, even as gas mileage has improved. And we’re flying more. U.S. airlines use about 80 percent more fuel today than when I was in college, even as they have became more fuel efficient. [Read more →]
November 25, 2011 2 Comments
It was five years ago that I began to become aware of energy and the importance of its role in everything. Now as a regular contributor/columnist for many online commentary sites and newspapers, as well as a regular guest on radio and TV programs, people often comment on my passion for the subject of energy. They wonder how I became so engaged in a topic few people even care about.
My newest book, my twentieth but the first in the current affairs genre, explains my passion. Energy Freedom attempts to present energy in such a way that it becomes a subject everyone is aware of, can understand, and wants to influence.
I do not come from an energy, science, or public policy background. I’ve spent my life in speaking and writing either as a communicator or a trainer of communicators. When circumstances in my personal life mandated that I get a real job, I never imagined that I could be so enthusiastic about something not of my own making.
In September 2006, I accepted a position at Citizens’ Alliance for Responsible Energy (CARE) and became Executive Director on January 1, 2007. Back then, like most people, I knew little more about energy than putting gas in my car or flipping a switch on the wall. Since then, I’ve had some great teachers and been an eager student.
In my personal energy education, I’ve read many exhaustive tomes offering a thorough treatment on the subject. Engineers or professors wrote the books. If you want to understand the difference between a watt, horsepower, and a joule, I can recommend several books for you—but not Energy Freedom. My book is for the average American energy consumer who knows that energy costs are going up, but doesn’t understand why; and for the person who is newly politically engaged out of concern for the direction America is heading. [Read more →]
October 28, 2011 5 Comments
[Editor note: This is a revision of a previous post at MasterResource last year. Part II highlights a federal free-market energy bill created for discussion by the Institute for Energy Research. Part III examines the Cato Institute's (Jerry Taylor and Peter Van Doren) federal energy priorities.]
Energy is the master resource. Without it, other resources could not be produced or consumed. Oil, gas, and coal could not be replenished without the energy to manufacture and power the requisite tools and machinery. Nor could there be wind turbines or solar panels, which are monuments to embedded (fossil-fuel) energy.
And just how important are fossil fuels relative to so-called renewable energies? Oil, gas, and coal generate the electricity needed to fill in for intermittent wind and solar power to ensure moment-to-moment reliability. So renewables, ironically, codepend on nonrenewable energy given that battery storage to firm the flow of electricity is prohibitively expensive.
As a component of all products and services, energy is the fourth factor of production in addition to the textbook triad of land, labor, and capital. Ubiquitous energy must be affordable, convenient, and reliable for economic progress, which requires that public policy respect consumer preference and allow energy producers to meet the demands of the marketplace. Enter private property rights, voluntary exchange, and the rule of law to facilitate the global exchange of energy and its innumerable subcomponents.
Global energy supplies are primarily the product of government, not the free market. In state-run economies, political elites make the decisions that otherwise would be made by the multitude. Win-win voluntary exchanges are supplanted by bureaucratic command. Without incentives to minimize costs, and without competition between firms for the same resources, wealth is redistributed and wasted that otherwise would go to better uses.
Government intervention with privately held resources also has unintended negative consequences. For example, a state law (such as in Texas) may force electric utilities to buy wind power, solar power, or another politically correct energy under a state law. A mandate is required because a free marketplace would not support such expensive, unreliable—noncompetitive—supply. [Read more →]
May 6, 2011 1 Comment
Energy is the master resource. Without it, other resources could neither be produced nor consumed. Even energy requires energy: There would not be usable oil, gas, or coal without the energy to manufacture and power the requisite tools and machinery. Nor would there be wind turbines or solar panels, which are monuments to embedded fossil-fuel energy.
And just how important are fossil fuels relative to so-called renewable energies? Oil, gas, or coal generates the electricity needed to fill in for intermittent wind and solar power to ensure moment-to-moment reliability. So renewable energy, ironically, is dependent on nonrenewable energy short of prohibitively expensive battery technology assuring the flow of electricity.
As a component of all products and services, energy needs to be affordable, convenient, and reliable. To this end, public policy should respect consumer preference and allow energy producers to meet the demands of the marketplace. This requires a respect for private property rights, voluntary exchange, and the rule of law to facilitate the global exchange of energy and its innumerable subcomponents. [Read more →]
July 16, 2010 38 Comments