Congress Should Let Market Take Care of Energy Industry

Solyndra scandal shows why government need not meddle in energy industry.

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Daniel Kish is the senior vice president for policy at the Institute for Energy Research.

There's nothing particularly special about room 1324 in the Longworth Office Building or even the Subcommittee on Water and Power that calls it home. In fact, everything you'd imagine it to be is there: portraits, a handful of policy wonks in an otherwise empty gallery, and a few elected representatives seated behind microphones providing lectures on subjects on which they were just briefed. In essence, this is how sausage is made and from time to time the American public gets a taste.

In this particular sampling, I want to draw your attention to a recent exchange between Rep. John Garamendi and Competitive Enterprise Institute scholar William Yeatman. The moment was fleeting, but illuminates why our energy policy is broken:

Rep. Garamendi: "Who's going to build the transmission line?"

Mr. Yeatman: "I trust the market to deliver that power. "

Rep. Garamendi: "Do you know of any [private] organization that wants to build these transmission lines [without the aid of the federal government]?"

Rep. Garamendi apparently believes that Congress is needed to direct a large share of economic activity, including the building of power lines. In other words, nothing would get done if the federal government didn't plan it or fund it. Of course, this type of thinking is nothing new.

[See a collection of political cartoons on energy policy. ]

Austrian economist F.A. Hayek pushed back on this idea of central planning when he quipped in his book The Fatal Conceit that "curious task of economics is to demonstrate to men how little they really know about what they imagine they can design." Members of Congress like Rep. Garamendi hold a grand vision for the economy and want to direct economic activity, but the problem is that they are using our money. Our tax dollars are the "meat" that gets grinded in order to make the sausage called laws.

The reason many of us have accepted the idea of central planning with energy policy is because we have been told we are running out of affordable and reliable sources. President Obama confidently tells Americans that we only have 2 percent of the world's proved oil reserves as if that's all the oil we have. The term "proved reserves" has a technical definition. It only includes oil that we've currently found. If we never drill any more wells, he's right. But since 1980 we have produced two and a half times the "proved reserves" the government said we had in 1980. So it isn't as if "proved reserves" counts all of our oil, but President Obama would like you to think it does.

The reality is that the United States has the world's largest supply of fossil fuels. That stunning statement comes from not from an industry funded research paper, but the Congressional Research Service based upon government studies. We have enough domestic energy for hundreds of years, and others believe that to be conservative.

[Read: How Much Oil Is There?]

The sad thing about this is that people like President Obama know better. Our potential for energy development is greater than any other country on earth, but admitting that hurts the scarcity narrative. With scarcity, the government can justify energy intervention; without it, no such luck, grand visions or new powers. No justification for taxes that can be used for things like the Solyndra debacle.

For too long we've been complacent in accepting the wisdom of a few elected officials instead of relying on our own God-given talents to create value. Into the vacuum have stepped politicians of every stripe, each wanting to experiment with your money and liberty on their favorite idea. And usually their ideas come from vested interests or groups promising a photo-op at a ribbon-cutting.

The American people don't need Congress or the president to tell us where to build power lines, which sources of energy we can use or the kind of cars we drive. We are citizens, not subjects.

The collapse of the green energy program is a fortuitous "memo to self." The future is bright, if Americans decide what sources of energy we use and how we use them. We don't need Rep. Garamendi to tell us.