There seems to be a vast desert between the POTUS’ ears upon which he plans to erect wind turbines and solar panels to wean America off the drug that is known as ‘black gold’’. In his first weekly address Mr Obama has called for the US to be energy ‘independent’. His intentions are to double the amount of energy produced from renewable sources, raising it from 7% (2007 fig.) to 14% of total consumed energy. The claim that global warming and the reliance on foreign oil are a threat to the US are hollow.
Energy dependence not independence is what is needed, as David Henderson recently pointed out in an issue of The Freeman . Put simply the cost to the average US citizen of Obama's policies will be exorbitant. With oil prices currently as low as they are it seems facile (to a rational person) to push towards becoming self-reliant in energy production. If someone is producing a good cheaper than you can, why would you not want to purchase it from them. As David Henderson points out, the cost to the American consumer of following the energy independence policy could be as much $1.20 on a gallon of gas (this figure would be based on the removal of all foreign oil).
The proclaimed savings of $2billion, by attempting to make the government offices more energy efficient, are more than offset elsewhere. During these testing times, leveraging these costs onto US consumers is not going to help the economy out of recession. It will merely cause it to stretch out that little bit more. The President could perhaps do with a quick chat with Larry Summers about the basics of economics.