Market Green

In my column for the National Post, I explain how to use market forces to give America a green economy:

Gasoline prices are rising in the United States — always bad news for an incumbent president.

Accordingly, President Barack Obama traveled yesterday to Miami to repeat his energy message, which can be summed up as follows: Help is on the way. The U.S. government is investing in new energy technologies — and in time, those investments will pay off in the form of cheaper energy and new jobs: “Our job is to help outstanding work that’s being done in universities, in labs, and to help businesses get new energy ideas off the ground — because it was public dollars, public research dollars, that over the years helped develop the technologies that companies are right now using to extract all this natural gas out of shale rock.”

The implicit promise here is that new forms of energy will preserve the familiar American way of life. Electrical motors or fuel cells may replace internal combustion engines, but Americans will continue to commute long distances to work in individual vehicles — or so this kind of talk suggests.

But what if the most cost-effective energy solution is not to change the energy we use, but rather to change the way we use energy?

After the oil shocks of the 1970s, the United States succeeded in reducing its use of oil. As late as 1995, the United States was using no more oil than it had used in 1978. Not its use per person, or use per vehicle, but its use, period.

This progress was not accomplished by reinventing the internal combustion engine. It was accomplished by (1) shifting homes from oil to gas heat; (2) ending the burning of heavy oil by electrical utilities; and (3) shifting freight traffic from trucks to trains. No government official planned these changes. They just happened, in response to market forces. Result: Even as Americans put more cars on the road — and drove further in them — they successfully decreased their oil reliance.

Click here to read the full column.