Show I i m fR III III i III IDEAS ON REDUCING THE EXPENSE OF ENERGY by Baine Balne P. P Kerr Many economists have discovered something sur sur- The federal government govern govern- government ment can help the economy by a simple change in policy polley It is no accident that as governmental regulations of oC private enterprise have increased In Increased In creased the relative productive productive pro pro- capacity of this country cO has diminished We Weare arc are told furthermore that we are now entering upon a anew anew anew new era of oC less and less rather than more and more and that we must be satisfied satisfied satis satis- fied with a lower standard of living and less opportunity for Cor adv advancement Is IsIt Isit Isit it not time for thoughtful citizens to ponder the unhappy unhappy unhappy un un- un- un happy thought that to the extent that our system is distorted in the direction of go government controlled ve rn controlled economies the resulting deterioration parallels the experience of socialist states And is it not time to give consideration to whether we wish to be led further in the direction of oC such Intense governmental domination of our economic economic economic eco eco- system Kevin Phillips theorizes that as as capital accumulation accumulation tion becomes increasingly difficult in a mature highly highly- industrialized society we weare weare are I seeing the rise of a new k knowledge n 0 education ns I cy power complex Once in authority this group finds how easy it is to control votes and maintain job security security security rity by subsidizing con con- The economic impact of these new in influences influences influences in- in is' is is to shift resources and expenditures away from business and national nations defense defense de de- de- de Cense to welfare tic research pro pro- It is contended that th the surge surge of oC these expenditures expenditures and arid the transition to toa toa toa a a service economy have been major ingredients in soaring taxation and in- in in Whatever the cause however however however how how- ever we do know that the governmental sector of oC our economy has been growing at the expense of the private sector and that private enterprise has become inI in- in I iii ui PR VATS o cI HELPING TO MA MAKE America free an and d energy inexpensive sive are those e concerned ned legislators w who t try to prevent govern governmental men I intervention e into a free ree market ar t economy subject t to governmental governmental govern govern- governmental mental supervision and con con- control Governmental enterprise enterprise enter enter- enterprise prise financed by deficit spending is ranging far tar and wide while private enterprise enterprise enterprise enter enter- prise constrained by the necessity oC of financing its operations out of profits and limited by governmental governmental govern govern- governmental mental command is under constant attack for failure to accomplish more What To Expect Assuming that at this stage of our national history we do not intend to consign our economic system to the ideological tinkering of what is we hope an activist minority we can properly inquire what should business business business busi busi- ness expect of its government government govern govern- ment In what ways can government and business conduct their respective affairs for the common good I would like to suggest sug suggest gest a few changes in attitude attitude atti atti- tude or approach which I believe would be for the benefit of ns us all First of all all those in government and in business alike should understand how our free Cree market system operates and take pride in it They should support that system as the only system which allocates people and resources by individual free Cree freewill freewill will will and choice rather than by byan an an autocratic central authority They should be mindful that we cannot maintain a free society in an ordered economy They should endeavor to tomake make that system work effectively and not to subvert it for Cor in In- gain or to hobble it with unnecessary burdens and restrictions Let me be sp specific For some years now we have had governmental controls over petroleum prices and for a somewhat lesser period period period peri peri- od controls over many other aspects of the petroleum petroleum petroleum petro petro- leum business Since the Phillips Decision in 1954 we have had federal control over the well head price of natural gas While free market market mar mar- ket forces have not been permitted to operate with respect to domestic gas and oil competing energy sources foreign and domestic domestic domes domes- tic have not been subject to price control The domestic coal and nuclear energy in industries industries In in- have however been subject to other forms of severe governmental re re- re What do we have to show for these governmental interventions interventions in in- into a free Cree market market market mar mar- ket economy First of all we have found Cound it irresistibly attractive to squander our r ronce once plentiful supplies of irreplaceable irreplaceable ir ir- Ir- Ir replaceable ceable natural gas Because Because Be Be- cause we had no free inter inter- fuel competition because the price of gas was governmentally governmentally governmentally govern govern- mentally imposed at a level tar far below its minimum value as a of heat domestic domes domes- tic coal cos and domestic oil were shouldered aside in the mad rush for Cor the bargain counter We heedlessly used up the cheap readily available available available avail avail- able supplies of natural gas and let letour our coal and oil resources resources resources re re- sources sources languish Since we established governmentally all energy values at the lowest common common com com- mon denominator the controlled con con- controlled controlled trolled price of natural gas we had no incentive or practical ability to develop alternative but more expensive expensive ex ex- expensive pensive energy sources Fools Fool Paradise At the same time re regional regional reo re gional political considerations considerations considerations consider consider- and sad to say private private private vate gain for some in individuals individuals In in- and companies dictated the virtually unlimited unlimited un un- unlimited limited Importation of what were then cheap foreign petroleum products without any regard to the damaging consequences to our domestic domes domes- tic energy resource base In a fools fool's paradise of both artificially cheap natural natural nat nat- ural gas and temporarily cheap foreign oil we stepped up our extravagant use of energy We built our cities our cars and our industries upon the implicit assumption assumption assumption tion that there would al always always al- al ways way be plenty of fuel and its cost would always be trifling Having been slow to perceive our mistakes we have been even slower and more foolish Coolish in doing anything anything anything any any- thing about them It Is clear r I think that no matter what course we had pursued we would have had at some point to face up to higher fuel costs and to the need to develop non non- fossil sources of oC energy These adjustments however however how how- ever would have been far easier and less painful if we had avoided special interest and politically motivated po lit I cally governmental We might still not have all the natural gas we would like to have but higher prices would have maintained maintain maintain- ed our level of production and at the same time reduced reduced re Ie re- re discretionary consumption consumption con con- Coal production would have increased as would have nuclear generation generation gen gen- of electricity An effective oil imports program program program pro pro- gram would have kept domestic crude oil production production pro pro- at an optimum level Mr Kerr is General Counsel and Chairman of the Executive Committee of the 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