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Friday, October 21, 2011

Governor Perry's Energy Plan

There's no real secret about what's needed on the policy front to expand domestic energy production and make energy more affordable and reliable for consumers and the business community. Namely, we need to remove barriers to energy exploration and development; reduce government imposed costs; and let market incentives drive investment, innovation, entrepreneurship and production.

Unfortunately, too many in the political arena feel the need or desire to manipulate energy markets according to political preferences.

Therefore, it's rare indeed to come across an energy plan from an elected official that illustrates an understanding of the basic economics of energy. That's exactly what has been supplied by Governor Rick Perry's presidential campaign.

First, the Perry plan ably identifies a variety of problems with current energy policy. For example, during the Obama years in the Gulf of Mexico, "the median days pending approval for combined deepwater exploration and development plans has increased by more than 400 percent, while deepwater exploration and development plan approvals have dropped by nearly 80 percent."

In addition, Environmental Protection Agency (EPA) regulations threaten lost output and jobs. Consider that assorted Obama EPA regulations "would lead to net employment losses of 183,000 jobs per year, with 1.65 million jobs lost by 2020, and would increase average U.S. electricity prices by 6.5% (with 30 states facing peak year cost increases over 10%)."

To its credit, the Perry plan is comprehensive. As Perry writes in the introduction: "I believe in an ‘all of the above' energy plan that encourages the development of all our conventional and renewable sources. I will not tolerate the federal bureaucracy's war on natural gas and coal generation - which are responsible for two-thirds of American electricity generation - because America needs all forms of energy to keep prices stable and meet the demand of our growing population."

So, on domestic energy development, the Perry plan calls for returning to pre-Obama levels of permitting in the Gulf of Mexico as well as "making more of the Gulf available for energy production"; allowing development in the ANWR Coastal Plain, National Petroleum Reserve Alaska, and the Alaskan OCS (Beaufort and Chukchi Seas); opening Southern Atlantic OCS offshore resources to exploration and production; approving the Keystone XL Pipeline; and expanding onshore development in Utah, Colorado, North Dakota, Montana, New Mexico, and Wyoming.

As for electricity generation, the Perry plan focuses on suspending and reconsidering the assorted new, costly Clean Air Act regulations; repealing EPA authority over greenhouse gases; eliminating "all current and planned EPA programs to restrict carbon dioxide emissions (including taxes or cap and trade schemes)"; and opposing national Renewable Portfolio Standards.

The plan also calls for dramatic, and much-needed, reform of the EPA. This would include a moratorium on new regulations; applying rigorous cost-benefit analysis to existing regulations; dismantling the current EPA and rebuilding the agency as "an organization that addresses issues requiring national or regional solutions rather than state-specific issues" with a budget reduced by 60%.

In addition, permitting reform would be undertaken to stop costly bureaucratic delays; legal reform would redress lawsuit and consent decree abuses; and tax reforms would be undertaken to "eliminate subsidies and mandates that punish consumers and skew the energy marketplace, leveling the playing field for all energy industries."

It's hard to find much wrong with this agenda. The essence is to free up U.S. businesses and entrepreneurs so they can help serve the energy needs of American consumers and industry, with the market open to any and all competitive sources of energy.

In the end, no matter who is elected president in November 2012, this should be the nation's energy agenda.


Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. His new book is "Chuck" vs. the Business World: Business Tips on TV.

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