Congress Heads for Energy Policy Train Wreck

Washington, D.C., June 20, 2007—As the Senate continues to debate major anti-energy legislation and the House prepares to take up its own anti-energy legislation, the Competitive Enterprise Institute has published four new studies on major elements of the proposed legislation. The studies explain the case against proposals to: criminalize gas price “gouging,” increase federal fuel economy standards, require greater use of renewable energy sources and mandate increased production of ethanol. Each study is listed below with an excerpt.

Why Price Gouging Doesn’t Exist by Iain Murray:

“Price gouging is generally defined as a vendor using unusual market conditions to exploit demand and extort unreasonably higher payments from his customers. Yet, outside the black market, price gouging is unlikely to exist in practice.”

First, Do No Harm to Motorists by Sam Kazman:

“CAFE [the federal Corporate Average Fuel Economy rule] has many things wrong with it. It raises new car prices, forcing some consumers, especially those with low incomes, to hold on longer to their old cars. It restricts consumer choice, since manufacturers are forced to pay more attention to what the law requires rather than to what consumers want. It is highly questionable at a time of rising gas prices. And worst of all is CAFE’s lethal impact on auto safety. When these are taken into account, the case for making this program even more stringent falls apart entirely.”

Gone with the Wind: Renewable Portfolio Standard Threatens Consumers and the Industrial Heartland by William Yeatman:

“As part of comprehensive legislation to raise energy prices, the Senate is once again considering proposals to set a renewable portfolio standard (RPS) for electric utilities.  Such a requirement would raise electricity prices for consumers and industry, but would  negatively affect some regions of the country much more than others.” 

Corn-Based Ethanol: A Study in the Law of Unintended Consequences by Fran Smith:

“With tax incentives, grants, and loans for biofuel development and mandates for greatly expanded biofuel use, farmers are rapidly shifting to corn production for ethanol to feed the expanded, government-driven demand for corn as an ethanol feedstock.

“However, this demand has already created unforeseen problems—which are likely to be exacerbated by new energy proposals to dramatically increase biofuel use mandates and production subsidies. Experts predict an increase in soil erosion, increased use of fertilizers leading to greater runoff, decrease in water quality, and more fuel used in the transportation of ethanol.”

The first three studies are OnPoint issues briefs, available here. The last is an Issue Analysis, available here.