Ronald Reagan famously said that government’s view of the economy could be summed up in a few short phrases: “If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.”
The last part is funny because it exposes the backward thinking of government. If a product or service can’t make it in the market and “stops moving,” why would government prop it up with our tax dollars even though we’ve already determined it doesn’t deserve our money?
A new comprehensive study from my colleagues at TPPF shows how this dynamic is working to prop up wind and solar energy, and how things are about to get a lot worse.
The study reviewed cumulative energy subsidies over the last 14 years for solar, wind, oil and gas, coal, and nuclear. Wind and solar, which are intermittent and unreliable, each received more than twice the subsidies of oil and gas, which provides most of our energy to keep the lights on and machines running.
The situation is particularly galling considering how little energy wind and solar produce, just 5.5% of our total energy compared to 80% of our energy that comes from oil, gas, and coal. The study shows wind has received 48 times and solar 168 times more subsidies per unit of electricity generated than oil and gas.
This disparity incentivizes the expansion of wind and solar generators, at the expense of more reliable thermal sources, which adds more uncertainty into energy markets and drives up prices. The Inflation Reduction Act, which spends over $1 trillion on energy infrastructure and programs, is set to pour truckloads of fuel on these problems.
“We should stop repeating the mistakes of the past and eliminate all state and federal energy subsidies so that energy markets can do what they have done well for decades,” the report concludes, “namely, creating wealth and environmental quality for billions of people around the world.”
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