5 Principles for Energy Abundance
It seems that nearly every day we see a newspaper article or opinion piece on energy. Much of the news concerns growing oil and gas production and related issues. This growth has the potential to reshape our energy and economic future. Instead of having energy policy made in an atmosphere of scarcity and fear, we have the opportunity to recreate our energy policy in a environment of abundance and optimism.
This new supply was not the result of government planning, incentives, or support. It is the result of markets, private investment, and risk taking. From an energy policy perspective, how do we embrace this newfound abundance? How do we learn from this experience that markets can be incredibly effective at innovation and problem solving to turn shortage and high prices into abundance? How can we create an energy policy that provides the greatest value to Americans?
An energy policy relying on a foundation of key principles is the answer—principles applied consistently, regardless of the type or source of energy. By refocusing our national energy strategy on creating a more dynamic and abundance platform, we will maximize the value of our current energy sources and allow the market to develop energy technology that adds future value and opportunity.
Here are some core principles for such a proactive energy policy:
(1) Trust the Market, Maximize Value for Americans
The complexity of the global energy market and the inability to predict technological advances or transformations requires a reliance on markets to make investment decisions. Relying on markets as a key energy policy principle will result in the highest value for the country and individuals.
(2) Straightforward and Consistent Tax Policy; No Preferential or Punitive Treatment
Energy investment decisions are complex and have very long time frames; typically taking 5 to 10 years and having a life expectancy of 20 years or more. In turn, tax policy must be long term, consistent, and globally competitive to attract investment.
(3) Clear and Transparent Regulatory Policy and Processes
It is essential that we steward our environment and protect public health and safety. Regulations are a key part of accomplishing these goals. Unnecessary requirements not only increase costs for consumers, but allocate resources away from greater concerns.
(4) Communicate in Factual and Informative Terms With the Public
The government’s role is to be objective, honest, and fact based. Facts need to outweigh rhetoric in order to understand the reality and potential of what can be achieved through energy development and distribution, as well as the potential risks. Only then can effective and informed decisions be made.
(5) Invest in Long-term Research, Not Short-term Applied Research
The U.S. government has a fundamental role in long-term research, whereas companies need to focus on applied research with near-term commercial opportunities. Research should never be an avenue for short-term political objectives.
These principles and the energy policy history used to identify examples of effective energy policy as well as unintended policy consequences are presented in greater detail in the paper Energy Policy: Building on Abundance. These principles are intended to lay a foundation that would encourage innovation and unlock future energy sources that can further add to our energy wealth and economic growth to power the next American century.