Government-Mandated Energy Conservation is Unnecessary and Wastful, Study Finds

  Washington, DC -- The energy tax and subsidized energy-efficiency
  measures supported by President Clinton and Energy Secretary Hazel
  O'Leary are based on faulty assumptions, a new study from the Cato
  Institute points out.

    According to Jerry Taylor, Cato's director of natural resource studies,
  we are not running out of sources of energy. The world now has almost 10
  times the proven oil reserves it had in 1950 and twice the reserves of
  1970. Proven reserves of coal and natural gas have increased just as
  dramatically.

    When standards of living, population densities, and industrial
  structures are controlled for, the United States is no less energy
  efficient than Japan and more energy efficient than many of the Group
  of Seven nations.

    Energy independence provides little protection against domestic oil
  price shocks because the energy economy is global. Moreover, since the
  cost of oil represents only about 2 percent of gross national product,
  even large increases in the price of oil would have little impact on the
  overall U.S. economy.

    Market economies are, on average, 2.75 times more energy efficient per
  $1,000 of GNP than are centrally planned economies.

    Utilities' subsidized energy-efficiency measurs, known as demand-side
  management programs, encourage free riders, overuse of competing resource
  inputs, an competitive inequities. Furthermore, DSM programs do not
  reduce demand.

    Taylor concludes that government-mandated energy conservation imposes
  unnecessary costs on consumers and wastes, not conserves, energy; that
  subsidizing energy-conservation technologies will stymie, not advance,
  gains in energy conservation; and that central control over the lifeblood
  of modern society--energy--would transfer tremendous power to the state
  at the expense of the individual.

    "Energy Conservation and Efficiency: The Case Against Coercion" is no.
  189 in the Policy Analysis series published by the Cato Institute, an
  independent public policy research organization in Washington, DC.



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