Nationalize Industry or Industrialize Wilderness? (or how political footballs lead to bad laws)

Matt Drudge often chooses headlines that overstate and exaggerate to create drama on his website. So when I saw the headline that read "House Democrats Call for Nationalization of Refineries" I knew I had to find out what actually happened, instead of relying on Drudge's banner or the Fox News article that "supported" it. As it turns out, only one Democrat, Representative Maurice Hinchey, suggested that we should consider government owned refineries as a method of increasing fuel production, in lieu of more drilling on the coasts or in Alaskan wilderness.

So Drudge exaggerated again. However . . .

. . . I'm no economist, but it seems pretty clear that the price of goods is best left to the free market. As with most commodities, a decrease in oil's supply leads to an increase in price. But an increase in price should lead to a decrease in use and an increase in the use of alternative goods.

The problem with oil, at least right now, is that it is so much better than all available alternatives. No other alternative energy source combines its efficiency, portability, and potency. Nothing, in fact, comes close right now. Bio-fuels, by some measures, require nearly as much energy to produce as they generate, and may create more of a greenhouse problem than they solve. Solar and wind suffer from a lack of portability, at least until we find the combination of political will and technical wherewithal to build an efficient national power transmission infrastructure. Nuclear is good, if you have a place to store the waste; but Yucca Mountain is at least a decade away from readiness.

So for the next decade, at least, we are stuck with the reality that oil is the essential fuel for our economy. And naturally, when prices soar, politicians want to appear to be in favor of taking steps to lower oil prices; or at least as likely, they want to make their opponents appear to favor unpopular steps. The issue becomes the subject of a political game -- tossed about like a football for the benefit of talking heads and potential voters.

Today, the political game over oil prices was as pretty as last year's Steelers-Dolphins 3-0 debacle. In other words, neither side looked good, and almost no one scored. The Republicans disingenuously called to open up off-shore shelves and parts of the Alaskan wilderness to drilling, claiming (falsely) that this would result in lower prices. The Democrats, meanwhile, correctly pointed out the falseness of the Republicans' claims, but at least one Democrat, Representative Hinchey, appeared to call for government ownership -- nationalization -- of oil production refineries.

Nationalize? Yikes.

Certainly that is not the position of most -- if any -- other Democrats, but that kind of overreaching, ill-considered position, invoking (properly) Republican comparisons to Chavez et al., is a sign that the game has became even more stupid than usual. Government ownership of the means of production is not going to help our economy efficiently deliver energy over the long-haul. Gazprom is not a good model for us.

As is often the case, the best answer is not likely to be an easy one. Probably the answer for the long run is to invest in energy transmission infrastructure that makes alternatives to oil economically feasible, and for the short run to conserve energy. It really is not rocket science. But as long as both sides think they will appear to gain political yardage, we'll continue to see ridiculous posturing. Let's hope neither side is successful in actually passing legislation until after the whistle blows in November. The last thing we need right now is a poorly-gamed national energy policy; neither drilling in nature preserves nor nationalization of industries will do us any good.