Last week, President Obama addressed the nation on the BP oil spill in the gulf of Mexico.  In addition to the immediate problem, the president also discussed long term energy policy, saying,

“For decades, we have known the days of cheap and easily accessible oil were numbered.  For decades, we’ve talked and talked about the need to end America’s century-long addiction to fossil fuels.  And for decades, we have failed to act with the sense of urgency that this challenge requires.  Time and again, the path forward has been blocked — not only by oil industry lobbyists, but also by a lack of political courage and candor.”

There is some truth in those statements, but there is also plenty to disagree with.  I am old enough to remember a time when my parents were only allowed to buy gas for their cars on certain days of the week — A time with gas lines so long that people ran out of gas while waiting in line to get to the pump.  During those years, we were assured that the end of oil was just around the corner.  Having lived through those experiences, I don’t need to be convinced that running out of oil would be unimaginably painful.

Here is one place where I disagree with that excerpt, though.  The truth is that the federal government has not “failed to act”, as President Obama says.  The reality is that the federal government, captured by the fossil fuel industry, has acted aggressively on behalf of the fossil fuel industry.  Subsidy policies are designed to encourage fossil fuel production and consumption, not to discourage it.  Blogger and science policy expert, Dr. Roger Pielke, Jr., provides this chart.

At the same time Uncle Sam is demanding more money from us in order to create subsidies to, “break our addiction to fossil fuels”, he is spending more than twice as much more for fossil fuel subsidies than for ”traditional renewables”, carbon capture and corn ethanol combined.  We don’t need to increase taxes and subsidize alternative energy.  All we need to do is stop subsidizing fossil fuels.  Imagine the boost that the alternative energy industry would get from being able to compete on a level playing field against “big oil”!  Yes, our fuel costs might go up, but the increase would be more than offset by the corresponding decrease in taxes or national debt (remember, any time the federal government taxes us to subsidize something, it skims a little for itself.)

We have already talked about the so-called “interstate commerce clause“; Article 1, Section 8, clause 3 of the United States Constitution.  Judge Andrew Napalitano, in various writings informs us that in the meaning of language at the time, the congressional power to regulate interstate commerce meant to “make regular”.  Tipping the balance in favor of the fossil fuel industry is exactly the opposite of making commerce regular.  It makes commerce irregular, favoring states with fossil fuel reserves and limiting states with favorable conditions for alternative sources of energy.  The commerce clause was intended to prevent tariffs and trade policies that basically amounted to economic warfare between the states.  When we consider that some states have abundant fossil fuels and others don’t, these federal subsidy policies create the exact problem that the commerce clause was intended to prevent (as with agriculture subsidies, a topic for a different day).

So we just stop the subsidies, right?  Unfortunately, it’s not quite that easy.  As noted above, we are up against the problem of capture.

“Capture Theory” refers the fact that most citizens are too busy with survival and life to worry about every permit and hearing taking place before a government agency. A vested interest, however – such as BP before the MMS, or a pharmaceutical company before the Food & Drug Administration – has evry reason in the world to know exactly what is on the agency’s agenda, and who is making the decision on their application, and what the secretary’s name is and how the agency decision-makers like their steak cooked. Because the potential benefits of favorable treatment are so lucrative, it makes sense for corporations to hire lobbyists who wine and dine the agency officials. In the end, (to quote myself), “A vested interest will always capture the agency designed to regulate it, and then use that agency for its own advantage.“

The cost of these subsidies to any individual is small enough to be unnoticed, but the total amount of subsidies is big enough to incentivize the beneficiary.  With the system we have today, the special interest is destined to win the legislative contest.  There simply isn’t sufficient return on investment for a large number of individuals to dedicate the time it would take to eliminate any particular subsidy.

To repeat,

“A vested interest will always capture the agency designed to regulate it, then use that agency for its own advantage”.

What if we turn it around?  Instead of talking about fossil fuel subsidies or tobacco subsidies or agriculture subsidies or any of a hundred other Tenth Amendment violations, we stay focused on the Tenth Amendment.  The cost to an individual of any particular Tenth Amendment violation is small.  However, the combined cost of all Tenth Amendment violations is enormous!  We the People are a vested interest.  We can take advantage of capture theory just like any other special interest.  Our interest is not in any of those particular issues, but in enforcement of the Tenth Amendment — across the board — without exception.  If we reframe the problems this way, suddenly the incentives change.  I don’t know if a study has been done, but I have to believe that if the combined cost to the individual of all Tenth Amendment violations were known and communicated, it would be big enough to motivate a large number of people and organizations to action.

Thomas DiLorenzo said,

“The purpose of government is for those who run it to plunder those who do not.”

Federal subsidies for fossil fuels and other types of energy confirm this principle.   Our founders would not have been surprised by DiLorenzo’s observation.  To guard against federal plunder, they gave us the Tenth Amendment.  It is time that we dust it off and make regular use of it.

Steve Palmer is the State Chapter Coordinator for the Pennsylvania Tenth Amendment Center.

Copyright © 2010 by TenthAmendmentCenter.com. Permission to reprint in whole or in part is gladly granted, provided full credit is given

Now, they want to tell us what kind of light bulb we should be “allowed” to use in the privacy of our own homes.

EagleAg at the 1Declaration Blog gives a good overview and analysis:

Republican House Member Ted Poe from Texas has brought out his Constitution and asks Speaker Pelosi where in the Constitution it says that the federal government has the authority to make us use a certain type of light bulb, the compact fluorescent (CFL). They don’t!

Where will it stop? If you have not read the Constitution in a long time, try reading it. Take special note of the 10th Amendment, which delegates any authority not specifically granted the federal government to the states. Tell me where it says the federal government can tell me what type of light bulb I can use.

Bring back the Constitution!

Watch the Video:

httpv://www.youtube.com/watch?v=e-LOtKIIKcg

Unfortunately, not many people in this country have actually read the Constitution. But if they did, the only way they could find anything about “light bulbs” would be to completely make it up – like the Congress and Supreme Court have routinely done over the years.

Oil prices are on the minds of many Americans as gas hits $4 a gallon, and continues to surge.  How high can prices go?  How can we solve these problems?  What, or who, is to blame?

Part of the answer lies in understanding bubbles and monetary inflation, but especially the Federal Reserve System.  The Federal Reserve is charged with controlling inflation through interest rate manipulation, however, many fail to realize that creating money, and therefore inflation, is really its only tool.  When the Federal Reserve inflates the dollar as drastically as it has in the past few decades, the first users of the newly created money go in search of investments for their dollars.  They must invest this money quickly and aggressively before it loses value. 

This causes certain sectors to expand beyond what would naturally occur in the free market.  Eventually the sector overheats and the bubble bursts.  Overinvestment in dotcoms eventually led to a collapse of the NASDAQ.  Next we had the housing bubble, and now we are seeing the price of oil being bid up in the creation of another new bubble.  Investors are now looking to commodities like oil, for stability and growth as they pull capital out of real estate.  This increased demand for investment vehicles related to oil contributes to driving up the price of the actual product.

If the Fed continues with its bubble blowing policies of the past, the new commodities bubble will continue to grow, gas prices will continue to go up, as the value of your dollars go down.  We will see an overinvestment in these commodities as solutions are desperately sought for a supply shortage, which is only part of the problem.

Make no mistake, though, this is not the free market at work.  Government manipulations have added levels of complication and unintended consequences to the marketplace.

This is not the time for members of Congress to take political potshots at each other, or to imagine that the free market is somehow to blame.  This is the time to understand and fix problems.  That begins with making sure the decision makers have a firm grasp on the causes of the problems and possible effects of their decisions.  This is absolutely crucial if we want to get it right this time.  That is why I am in the process of calling for hearings on Capitol Hill on how the falling value of the dollar affects energy prices.

Governments need to get out of the way and let the people get back to work so that we can get our economy back on stable footing.  Our destructive regulatory environment, confiscatory tax policies, and managed, rather than free trade have chased many businesses overseas.

The bottom line is average Americans are being seriously hurt by these flawed policies, and they are not getting good information about the true dynamics at work.  The important thing now is to get the diagnosis absolutely correct so we can administer the appropriate treatment and move on to a healthier economic future. To do this it is absolutely necessary to address the subjects of central banking and fiat money.