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Petroleum limit plan is insanity

By JERRY HEASTER - Columnist Date: 03/23/01 22:15

Has a former economic planner for the Kremlin been hired by Senate Democrats as an energy policy adviser?

That would be the only reasonable explanation for a recently announced Democratic plan to limit petroleum use as a way to force automakers to produce more fuel-efficient vehicles. It's being called a demand-side approach to solving looming energy problems such as power shortages and rising gasoline prices.

It should be called insanity. Rising energy demand is a result of growth. Any action that stifles supply will stifle growth and its benefits.

As for the problem posed by electricity shortages, it's uniquely Californian. It affects neighboring states, to be sure, but the woe facing the West represents a failure of government, not a failure of markets. Specifically, the impending Western power crunch results from California's regulatory barriers to building new power plants.

California not only discouraged producers from building generation capacity but also tried to deregulate the industry by protecting consumers from price increases, which ensured rising demand during a time of static supply.

Speaking of supply, rising gasoline prices are the market's way of telling a consumer society how to allocate resources most efficiently. Any time government policy does anything to short-circuit the market's function of resource allocation, chaos and hassle are a certainty.

Wherever government fiat is used to subvert market mechanisms, economic progress is stopped and living standards stop rising or actually decline. The 20th century history of Russia under communist rule remains the object lesson in this regard.

Government demagogues and their minions love to blame market failure for problems whenever possible, but the era of the Industrial Revolution has recorded many more instances of government failure than market failure.

Is the country's memory so short that America has already forgotten the waiting lines for gasoline in the 1970s? These hassles weren't the result of market failure. They were a result of government regulation that attempted to protect motorists from high gasoline prices.

Have Americans also forgotten the natural gas shortages of the 1970s that resulted from ill-advised regulations that attempted to protect consumers from rising gas prices during cold winters of extraordinary demand?

These were examples of government failures, and once the offending regulations were discarded and markets allowed to work, the prices of oil, gasoline and natural gas all went down.

What about when officious policymakers try to substitute their judgment for that of society and the marketplace? Does anyone remember the intense political opposition to the Alaskan pipeline? Opponents warned it would be a disaster, but the only disaster would have been if it hadn't been built. That opposition, it's worth noting, derived from the same misguided mindset that Senate Democrats are currently displaying.

There's no energy market problem, and there is really no environmental problem. The problem is a few benighted political demogogues trying to sell the idea that they know what's best for 280 million Americans.

Jerry Heaster's column appears Wednesday, Friday, Saturday and Sunday. To reach him, write the business desk at 1729 Grand Blvd., Kansas City MO 64108. To share a comment on StarTouch, call (816) 889-7827 and enter 2301. Send e-mail to,business/37753968.323,.html

-- Martin Thompson (, March 24, 2001


In regrads to the Alaska Pipeline there have been many problems, but not a major catastrophy.
Unless you want to include the Exxon Valdeze, which really is not a huge stretch to include it - that would be no real reason for a super tanker to be hanging out in the part of the pond otherwise.
Please correct me if I'm wrong on this.

-- (, March 24, 2001.

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