The Public Policy

Flower Power

That must be what Obama expects the economy to run on, after his planners get through with it.

By 8.14.08

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Barack Obama proposes that we seize the profits of the oil companies and use them for $1,000 "energy rebate" checks to every working family in America. That is what he said in his speech in Lansing, Michigan on August 4, 2008, entitled "New Energy for America." Economist Donald Boudreaux pointed out that seizing all oil profits would still not be enough to fund these $1,000 giveaway checks.

If the government is going to target an industry it has vilified in the public mind, loot all its profits, and then use the money for giveaway checks to buy votes, then what has our nation become?

If the government can do that to the oil industry, then why can't it do the same to any other industry, or group of people, that it successfully paints as unpopular? What then has happened to the whole notion of private property?

Why couldn't President Obama then decree that every owner of a four bedroom home take in two homeless people? Surely there would be room for them somewhere. Why couldn't he just seize every gas guzzling SUV, sell them for scrap metal, and use that money for $1,000 rebate checks to every Democrat voter as well?

This is why people say Obama is a socialist.

MEANWHILE, WE might ask how seizing the profits of the oil industry is going to get us more oil and gasoline, and bring down prices.

Who is going to invest the hundreds of billions necessary to find the oil, drill for it with such incredibly expensive technological wonders as offshore oil platforms, pay for the multibillion dollar oil tankers and pipelines, and finance the distribution to gas stations across America?

After Obama demonstrates that he and his merry band of thieves will then just steal the resulting profits to buy votes, investment in domestic oil and gas production will collapse.

But that is not a problem for Obama. If you read his energy speech, which is on his website, you will see that he has no plan to bring down prices for oil and gasoline. He nowhere even sets that as a goal.

What he does set as a goal is the following: "For the sake of our economy, our security, and the future of our planet, we must end the age of oil in our time."

His energy speech was reported as conceding a willingness for increased offshore oil production as part of a broad compromise. But there will not be a drop of any such increased oil if he is President.

Just look at the legislation Obama has introduced in the Senate. The Oil SENSE Act, S. 115, would repeal the authorization in the 2005 Energy Policy Act for the Interior Department to study and inventory how much oil might be available under America's Outer Continental Shelf. Moreover, the bill would prohibit expanded use of 3-D seismic technology to locate and measure offshore oil deposits, even by the oil companies.

As columnist Deroy Murdock explains, "Obama's Don't Ask, Don't Drill policy spurns [modern technology] and embraces outdated information gathered with obsolete instruments. This is the audacity of ignorance."

SO IF AMERICA'S economy is not going to run on oil and gas, what is it going to run on?

Don't bet on nuclear power. In another recent speech, Obama said, "there is no future for expanded nuclear power without first addressing four key issues: public right to know, security of nuclear fuel and waste, waste storage, and proliferation."

In an Obama Administration, all the key energy related positions will be filled with environmental extremists, not evil energy "executives." Don't expect them to allow a single new nuclear kilowatt to be produced anywhere.

Those same extremists are today trying to shut down the nuclear plant at Indian Point on Long Island, which has operated safely for 30 years. They are vigorously opposing required relicensing for the plant by New York state regulators.

Obama makes clear in his speech how he, with his all-seeing central planning brilliance and insight, would power America's future economy. "It's in the chemistry labs that are laying the building blocks for cheaper, more efficient solar panels, and it's in the re-born factories that are churning out more wind turbines every day all across this country."

That's right, he will "encourage the production of renewable energy like wind power, solar power and geothermal energy." He enthuses, "Experts have said that Michigan has the second best potential for wind generation and production in the entire country. And as the world's largest producer of the material that makes solar panels work, [the Production Tax Credit] would also help states like Michigan grow solar industries that are already creating hundreds of millions of jobs."

Obama dreams of a future where, "working with farm owners to develop this state's wind potential and developing nanotechnology that will make solar cells cheaper," we will reach the promised land where "we can see shuttered factories open their doors to manufacturers that sell wind turbines and solar panels that will power our homes and businesses."

YES, OBAMA AND his legions of aging hippie flower children are going to liquidate reliance on the evil Terminator technology of oil and nuclear power, and fuel the modern, high technology, American economy with joyous windmills and happy sun power. Oh happy day.

Accomplishing this, Obama recognizes, "will take nothing less than a complete transformation of our economy." You betcha. But not to worry, because Obama is going to pull this off with his new neo-socialist, central economic planning from Washington, where the wise bureaucrats will see it all through.

Under this all-knowing leadership, "we will get one million 150-mile-per-gallon plug-in hybrids on our roads within six years." That is because, "We'll invest more in the research and development of these plug-in hybrids, specifically focusing on the battery technology."

Also, "by 2022, I will make it a goal to have 6 billion gallons of our fuel come from sustainable, affordable biofuels."

Under the Obama Five Year Plan, he will be "directing billions in loans and capital to entrepreneurs who are willing to create clean energy businesses and clean energy jobs right here in America." Those "entrepreneurs" will consequently be bought and paid for Obama supporters.

Under an Obama regime, America will "invest federal resources, including tax incentives and government contracts, into developing next generation biofuels" and "raise our fuel mileage standards four percent every year."

Except for Hugo Chavez and Barack Obama, the whole world learned in the last century that central economic planning does not work. Yet, that is where we are today in our national energy policy. That is why it is all such a mess.

Under Obama, it will all get much, much worse.

INDEED, WE HAVE just experienced a huge central planning disaster with the ethanol fiasco. Ethanol production consumes at least as much energy as it produces, still costs more than oil counting all of its never ending subsidies, actually harms the environment on net, and causes sharply rising food prices.

Food riots have broken out in poor Third World countries, where people are starving because so much land is being used for ethanol production rather than food production. Yet our central planning geniuses in Congress have "mandated" sharply increased use of ethanol over the coming years. This is precisely the model for Obama's energy policy.

Obama promises millions of new jobs producing all of those happy solar panels, lovely wind turbines that are already slaughtering bird populations, and biofuels that are already starving poor countries. But we cannot build a prosperous economy based on industries that are kept alive through billions and billions in federal life support subsidies.

That means Obama's $150 billion in increased federal spending to create "green technology" jobs, $7,000 tax credit for each of those one million wonderful plug-in hybrid cars, "billions in loans and capital," and "federal resources, including tax incentives and government contracts."

Note that when Obama uses the words "invest" and "investment," he means increased federal spending, financed by all the federal taxes he says he is going to raise.

OBAMA IS RIGHT about one thing. His flower power "transformation" of the economy "will be costly." He will not pretend, he says, that it can be achieved, "without cost, without sacrifice, or without the contribution of almost every American."

What it will cost is the sacrifice of the standard of living of the middle class and working people. Contrary to Obama's false posturing, the federal government has been providing billions and billions in subsidies to "alternative fuels" like wind, solar and biofuels since the late 1970s. Not much good has come of it, surely not an alternative fuel source that can power our modern American economy and maintain our standard of living and economic growth.

The new flower power technology is a pipe dream for now. Trying to force it on the economy today rather than trying to increase production and reduce costs for proven oil, gas and nuclear power will sharply raise costs for business.

That will mean less jobs, lower wages, and lower economic growth, probably declining growth and a declining economy. Manufacturing jobs will flee overseas where they can find lower cost reliable energy, in countries that are still happy to produce as much oil, coal, gas, and nuclear power as they can.

Because of the inadequacy of the new Flower Power, in many cases both business and consumers will simply have to do without. For businesses, that means they just close their doors, and lay off their workers, because they can't get reliable energy supply. In the case of consumers, that means they suffer with less.

Obama and the Left in general just love the so-called CAFE fuel economy standards, requiring production of cars meeting a certain miles per gallon standard.

Conservatives have rightly pointed out that results in the production of smaller and lighter cars that are less safe, with greater injuries and death arising from auto accidents. But there is an even more fundamental problem with these CAFE standards: They deny consumers freedom of choice.

Consumers cannot choose cars with power, performance and safety that achieve less miles per gallon than the government requires. The government through these requirements is imposing its choices on consumers, rather than leaving them free to make their own choices. Consumers are perfectly capable of deciding what cars they want with what features. It amounts to a loss of liberty as well as a loss of prosperity for the government to impose its preferences on them instead.

But that is the essence of the economic policies of the Left across the board. Obama's insistence on increasing the fuel economy standards by 4 percent every year, his maintenance of high oil and gasoline prices, and the inadequacy of his flower power alternatives, are all going to force the middle class and working people out of the powerful, spacious, safer automobiles they enjoy today, into the little, weak, dangerous cars that are driven in Europe and the Third World.

Already American car manufacturers are starting to shift the cars they have been producing for the European market to the American market. This is what I mean by a declining standard of living.

Moreover, as Obama's flower power technologies fail to produce adequate supplies, American consumers will simply have to cut back on their driving altogether. Expect that under a President Obama gas rationing will eventually be imposed, limiting each driver to a certain number of miles driven each week. That can be forced by requiring rationing cards for the purchase of gasoline.

OBAMA PROMISES as well "to call on business, government and the American people to meet the goal of reducing our demand for electricity 15 percent by the end of the next decade."

Just maintaining our economic growth and relative standard of living will require sharp increases in electricity production in future years. Under Obama's flower power transformation, expect eventual periodic blackouts. Americans again will be forced to do without for regular periods -- without all those desktops, laptops, cell phones, flat screen TVs, even modern appliances. Another decline in the standard of living.

Obama promises as well that his central planners will lead us to a new age of conservation through government imposed energy efficiency standards on all of our buildings, homes, appliances, and consumer technologies. But if those efficiency standards were worthwhile, if they produced savings to compensate for costs, without sacrificing qualities consumers desired, consumers would choose them on their own. The government would not need to impose them.

Check out the government mandates on the water levels for new toilets. More declines in the standard of living.

The love affair of Obama and his flower children with biofuels will lead to further increases in food prices. This will affect not only the price of corn and tortillas, but the price of grain feed for cattle, and so the price of meat as well. Americans will not even be able to enjoy their hamburgers without more suffering imposed by Obama. Less meat, lower living standard again.

Eventually the American people will suffer enough under Obama and his central planners that they will vote the whole lot of them out of office in an overwhelming landslide. Free markets will then be restored in energy, and prosperity will eventually be restored.

But how much will the American people have to suffer before that happens?

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About the Author
Peter Ferrara is Director of Entitlement and Budget Policy at the Heartland Institute, General Counsel of the American Civil Rights Union, Senior Fellow at the National Center for Policy Analysis, and Senior Policy Advisor on Entitlements and Budget Policy at the National Tax Limitation Foundation. He served in the White House Office of Policy Development under President Reagan, and as Associate Deputy Attorney General of the United States under President George H.W. Bush.