Julian Simon’s The Economics of Population Growth (1977) was hailed as a “path-breaking work” that offered “a new paradigm in the Kuhnian sense” (Joseph Spengler, quoted in Simon, 2002: 256).

The overused term “paradigm” must be applied with caution, however, because few new ideas really create paradigms, and paradigms can be wrong. Also, contra Kuhn, there are examples of science cumulatively approaching the truth short of revolution (Weinberg). Still, Simon put together the parts of an alternative worldview that continues to penetrate its way into the scientific orthodoxy, particularly in economics (Bradley, 2000: 19–20).

Simon’s extraordinary science (in Kuhnian terms) reached two major conclusions:

(1) a growing population can improve virtually all environmental welfare indicators; and

(2) scarcity measures of mineral (“depletable”) resources are not qualitatively different from that of other economic goods.…

“Compared to Ford and Carter, the SPR experienced a ‘Reagan Revo­lution’ – although hardly of the free-market variety. Two reasons explained Reagan’s bullish SPR [buy and fill] policy. First, the reserve was the centerpiece of Reagan’s ‘free market’ energy policy, which precluded the need for stand­by price and allocation controls to deal with future emergencies. Second, the reserve was an instrument of foreign policy should U.S. intervention and confrontation lead to re­prisals by oil-exporting countries as it had in 1973 and 1979.”

“With the Reagan acceleration at a time of record crude prices, the reserve program became a major cost item, and with budget deficit problems, a group of pro­posals came forth to reduce cost while maintaining fill rates. Global settlements with refiners accused of product price overcharges was one tapped source.”…

The Strategic Petroleum Reserve (SPR) is in play. The 695 million barrel inventory, stored in four storage locations in Texas and Louisiana with a capacity of 713.5 million barrels, never found its purpose; it is still waiting for the third oil crisis (after the 1973/74 Arab Embargo and the 1979 Iranian Revolution). Not surprisingly, the SPR is on the verge of becoming a piggy-bank offset for lawmakers. At $50 per barrel, SPR inventory is worth about $35 billion.

This week, MasterResource reviews the history of state and federal oil (and natural gas) storage regulation and ownership. Part I today is early (pre-SPR) regulation. Part II tomorrow will review the prehistory and beginnings of the SPR.

Part III will examine early problems with the federal storage program; Part IV early fill and financing controversies.…

“Regulation did not originate as a goodwill gesture from enlightened attorneys who wanted to spread their notions of the public interest…. It emerged in its current shape largely as a way to enforce Samuel Insull’s efforts to protect his empire from competition for the long term….”

Attorney and author Scott Hempling makes his living testifying before regulatory commissions, often on behalf of public interest and consumer groups. He is the author of “Certifying Regulatory Professionals:  Why Not?” recently posted on ElectricityPolicy.com, (Part I here; Part II here), from which I quote below.

Hempling’s argument is straightforward.  Today, policy and technology are always in flux, which changes the boundary between efficient and inefficient practices. People should know more. Things would surely be better if only regulation were driven by both facts and expertise, an “independent force that aligns interests of the regulated with the public interest.”…