A while back I posted a definitive proof that all politicians are idiots. Well, they're at it again. Last night, the U.S. Senate passed a new Energy Bill. And at first glance, it contains more overwhelming evidence of the unwillingness of Congress to pay attention to basic economic principles.
The Senate passed an energy bill late Thursday that includes an increase in automobile fuel economy, new laws against energy price-gouging and a requirement for huge increases in the production of ethanol.
In an eleventh-hour compromise fashioned after two days of closed-door meetings, an agreement was reached to increase average fuel economy by 40 percent to 35 miles per gallon for cars, SUVs and pickup trucks by 2020.
I'm not a fan of CAFE standards. I like targeting the externalities directly (through prices) rather than command and control. If I want to drive a gas guzzler that should be my prerogative, as long as I pay the full social cost of my driving--which I don't currently but that's because nobody is making me. Yeah I know it's childish.
But what really scares me about this excerpt is the casual mention of "a requirement for huge increases in the production of ethanol."
Bad idea--really bad idea.
But the legislation provides a bonanza to farmers and the ethanol industry. It requires ethanol production to grow to at least 36 billion gallon a year by 2022, a sevenfold increase of the amount of ethanol processed last year.
And royally screws consumers of...everything. Higher corn prices means higher prices on just about all food products. I am always stunned--and I know I shouldn't be--when politicians are willing to impose a small cost on a large number of people to provide a huge bonus to a few.
But there's even more nonsense in the bill including:
Price gouging provisions that make it unlawful to charge an "unconscionably excessive" price for oil products including gasoline and give the federal government new authority to investigate oil industry market manipulation.
Price gouging is the most ridiculous idea ever contrived by politicians to create the illusion of action. Rational decision makers can't be gouged--that is, forced to pay prices they don't want to pay. They just can't. Oh crap, why do I bother? I already said all of this here.
