May 20, 2001
Burn, Baby, Burn
By PAUL KRUGMAN
W ho knew that Dick Cheney had such a sense of humor?
He had us rolling in the aisles after the famous put-down in which he
dismissed energy conservation as nothing more than a "sign of personal
virtue." But the joke got much better Thursday, with the release of
the administration's energy plan. Just for laughs, Mr. Cheney threw in
a few mock conservation measures. Topping the list was a tax credit
for get this people who purchase hybrid gas-electric cars.
In case you don't quite get the joke: during the campaign one of
George W. Bush's favorite gag lines involved making fun of Al Gore's
proposal for you guessed it a tax credit for purchase of hybrid cars.
It got big laughs because it symbolized his opponent's supposed
preoccupation with trivialities. Now, in a fine satirical gesture, Mr.
Cheney has made the very same proposal his lead conservation measure.
Take that, you wimps!
It seems that the pundits, having misjudged Mr. Bush and Mr. Cheney
during the campaign, have done it again. We now know that the moderate
rhetoric Mr. Bush used during the campaign was insincere; but it turns
out that the administration's libertarian rhetoric during the selling
of the tax cut was equally insincere. These guys don't believe in free
markets: what they're really into is heavy metal. Refineries!
Pipelines! Nuclear power plants! That's the stuff!
To justify their lust for tubular steel, Mr. Cheney and his
collaborators have gone to great lengths to fabricate an energy crisis
and they have also suddenly decided that free markets don't work after
all. "Estimates," says the report, "indicate that over the next 20
years U.S. oil consumption will increase by 33 percent." Whose
estimates? We are never told. But that's an awfully high number. In
the 20 years ending in 1999, the last year for which official data are
available, oil consumption rose less than 5 percent. All I can figure
is that Mr. Cheney's people are extrapolating from the abrupt decline
in automobile fuel efficiency over the last few years, as people have
switched from ordinary cars to S.U.V.'s. And what they are saying is
that we should base our energy policy on the assumption that this
quite recent trend will continue unabated for decades.
This doesn't have to happen. In fact, it isn't going to happen, even
in the absence of any serious conservation measures. To burn as much
oil as the Cheney report says we need, everyone who still drives a
mere car would have to acquire an S.U.V., and everyone who now drives
an S.U.V. would have to start driving something the size of a Sherman
tank.
What's behind Mr. Cheney's greasy math? It goes without saying that he
wants to scare us into relaxing environmental regulation. But there's
more: the Cheney plan provides an array of subsidies, explicit and
implicit, for energy producers. Indeed, the libertarian Cato Institute
calls the plan a "smorgasbord of handouts and subsidies for virtually
every energy lobby in Washington."
Strange, isn't it? If you're a low- paid worker, or an energy
consumer, the free market is sacrosanct it would be a terrible thing
if government provided you with any assistance. But energy producers
apparently need special encouragement to do their regular job.
In fact, of course, they don't. Mr. Cheney loves to talk about our
alleged need to build a new power plant every week for the next 20
years, implying that this is a herculean task that can only be
accomplished with a lot of help from Washington. But high prices have
already sparked a huge construction boom in the power industry, which
will add three or four plants per week for the next few years. As some
wags have put it, if the power industry wants to meet Mr. Cheney's
target it will have to slow down its building program.
The truth is that the administration has things exactly the wrong way
around. It claims that we face a long-run energy crisis, and that
there are no short-term answers. The reality is that in the long run
the forces of supply and demand will take care of our energy needs,
with or without Mr. Cheney's expensive new program of corporate
welfare. What we need is a strategy to deal with the temporary problem
of sky-high prices and huge windfall profits. But we're not going to
get it, at least not from Washington.
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