Don’t Mess with Texas Energy

The free-marketeers at the Texas Public Policy Foundation rolled out yet another policy paper yesterday presented by Steven Hayward of the American Enterprise Institute. Hayward is a fellow at the American Enterprise Institute and a well-known conservative commentator—right up the TPPF’s ideological alley.

The 28-page paper, entitled “Texas Energy and the Energy of Texas: The Master Resource in the Most Dynamic Economy,” will certainly please Gov. Rick Perry. 

The presentation was short and sweet—and Texas was the sweetheart.

In the report, Hayward helpfully summarizes his findings: “If It Ain’t Broke, Don’t Fix It.” As in, the Texas economy is just fine and dandy and ought not to be tinkered with by legislators or regulators. Hayward attributes Texas’ success, in part, to the state’s robust energy sector. Par for the course as far as TPPF’s policy papers go.

Things got more interesting when Hayward warned Texas not to overly favor natural gas over coal with government incentives. Texas is currently the leading coal consumer in the country, and consumes almost twice as much as the second leading state, Indiana. Hayward’s comments come in the same week that Lt. Gov. David Dewhurst said he is “considering incentives to get power companies to either upgrade or replace old coal plants with natural gas.” That came as welcome news to the natural gas industry and as well as some environmentalists.

While Hayward conceded that natural gas could eventually surpass coal in Texas’ energy mix, he said that shift should be left up to the marketplace. In a sense, he was defending coal from its rival. Coal, he argued, was a cheaper and less price-volatile resource than natural gas. By suppressing coal through mandates, he said, energy costs will rise both directly and indirectly.

Hayward also offered some unsolicited advice to the natural gas industry, warning that ““environmentalists who now advocate for gas will eventually turn on gas in the same way they are presently opposing coal, and for the same reason: climate change orthodoxy demands it.”

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