“Perhaps the main failure of rationality is that of the regulators themselves.”
-Ted Gayer and W. Kip Viscusi, authors, Overriding Consumer Preferences with Energy Regulations
In a working paper for the Mercatus Center titled Overriding Consumer Preferences with Energy Regulations, economists Ted Gayer and W. Kip Viscusi examine several energy use regulations and the accompanying Benefit-Cost Analyses (BCAs). They find the regulations would not pass a BCA (provide net benefits) without two assumptions: first, that individuals make systematic and financially significant mistakes in their energy consumption choices, and second, that government policies can correct these mistakes.
The regulations cited in the paper include mileage requirements for vehicles and energy efficiency standards for household appliances and light bulbs. The BCA numbers are telling – the authors show, for example, that the vast majority (about 85 percent) of the estimated benefits of the mileage requirements proposed in 2011 accrue to the individual user, mostly in the form of avoided fuel costs.…
[This piece, which originally appeared in the (Canadian) National Post, can be read in conjunction with MasterResource posts on “peak oil” here and here. A brief bio of Mr. Foster appears at the end of this post.]
The great petroleum geologist Wallace Pratt famously said that “Oil is found in the minds of men.” Discoveries depend on visionary theory, technical innovation and commitment to risky drilling. Plus luck. Peak Oil theory, by contrast -which asserts that global oil production has, or soon will, peak, and that this has powerful policy implications — is found in the limitations of the minds of men. It is less geological theory than unevolved intellectual shortcoming, although it certainly has its political uses.
The fruits of the “greatest resource,” as economist Julian Simon dubbed the human mind, appeared yet again this week with the announcement by BP that it had found a “giant” field at unprecedented depth in the Gulf of Mexico, an area that twenty years ago was regarded as played out.…
A death announcement last week in the Houston Chronicle caught my eye. I never met the late Stephen Simon, but what I read made me realize that the quiet heroes and heroines of free-market capitalism need to be saluted now and then. For they are the wealth creators and real philanthropists versus the political system’s wealth redistributionists and wealth destroyers.
Here is the essence of this man. An engineer. More than 40 years with a major energy company in a variety of advancing positions at home and abroad. Successful. Private sector philanthropist with his time and money.
And through it all, a “heroic capitalist” in the Smith-Smiles-Rand tradition (see Part I of my Capitalism at Work). A practitioner of Principled Entrepreneurship ™.
Think of what Julian Simon would have said about Stephen Simon (no relation): He created more than he consumed to leave us resource richer.…