Earlier today the Hudson Institute hosted a four hour panel discussion titled, “Energy, Water, and Debt: Linked Problems, Common Solutions?” Among the ten panelists was Jim Nussle, a former member of the U.S. House of Representatives for 16 years and now Growth Energy’s COO; Craig Zamuda, a senior policy advisor with the Office of Policy and International Affairs at the U.S. Department of Energy; John R. Lyman, the Director of the Energy and Environmental Program at the Atlantic Council; Sheila Olmstead, an environmental economist, and former Yale University professor; and Jes Munk Hansen, the President of Grundfos North America.
Nussle opened the discussion by giving the audience a recap of his morning routine, explaining how he, and many other Americans, he presumes, take the many natural resources at our disposal for granted. We shower; we turn on the heater; we light up the stove; we put gas in our cars, etc. all without any conscious thought as to where these resources come from and how long they will last. He then went on to explain how Americans can solve potential energy and water shortage problems calmly and soberly, or through war and conflict. Nussle was adamant that energy and water scarcity will be the defining issues of the 21st century.
Zamuda followed Nussle with a presentation on the role of the Department of Energy (DOE) in the areas of energy, water, and national security. He spoke of the challenges the DOE faces as they too are still trying to “enhance their scientific understanding” of the issues. The senior policy advisor closed with the cheerful proposition that we may have the “perfect storm” coming our way, as increased demand for energy and water, population growth, and reduced environmental flexibility (from what he believes to be man-made global warming) will all collide to create a major national security threat.
Then came Lyman; he further pushed what seemed to be the common mantra: something has to be done. The states have to work with the federal government; “some people won’t like this, but it has to happen.” He then went on boldly with a statement proclaiming that all the talk about states’ rights issues is only stopping the progress needed to affect the type of change he is looking for.
Later, Sheila Olmstead spoke about altering the market so that the administration can affect a sort of forced behavioral change in the general public. For instance, she found that when the government enters the marketplace and mandates a 10% price increase on residential water sources (an overt violation of water producers’ right to set their price), the demand responds with a 3-4 percent reduction in the short term, and a 6-7 percent reduction in the long term. Similar results appear when this is done with commercial piped water, creating a reduction anywhere from 1-8 percent in the short term, depending on the industry type. Olmstead also suggested forced change that didn’t involve the marketplace: certain families may only use certain natural resources on odd days, and on even days they may use the remaining resources. This is the height of regulation and a complete slap in the face to the free-market.
Hansen, the Grundfos President, emphasized that we “need a change of behavior.” He does not view building more pipes or more power plants as a viable option; in his view, that simply won’t work.
All the speakers seemed to have one thing in common: they believe the free market has failed to create the “proper” ratio of supply and demand for energy and water. There are “gaps” as they call it. Government subsidies and forced regulation are the only way to solve what they see as an apocalypse. As a free market thinker, and avid liberty advocate, I find these ideas to be not only an extreme invasion of the government into the private sector, but also an expensive, dooms-day prognosis. If true, not even government can save us from ourselves.