Blog author: jballor
by on Wednesday, January 11, 2006

Arnold Kling at the excellent EconLog says that “the government should empty its strategic petroleum reserve and buy energy futures contracts instead. At some point, the futures market has to be taken seriously.”

He concludes, “The government has all sorts of subsidies for alternative energy. However, the most efficient subsidy would be to buy oil futures contracts. If we must have an energy policy, it should consist solely of strategic futures market purchases.”

This on the heels of the announcement by Whole Foods Market Inc. that “the company is buying enough wind power credits to cover energy use at all of its U.S. stores, bakeries, distribution centers, regional offices and its Austin headquarters.” For Acton research fellow Anthony Bradley’s take on wind power, click here (and listen here for a radio interview [mp3] with Bradley on the subject). Read here about offshore wind farms.

I’m all in favor of the market determining what alternative energy sources there are and who decides to use them. Good for Whole Foods, I wish them luck. I’m not convinced, however, that I need to help pay for their switch to wind power, which government subsidies for such ensure that I do. Nuclear energy deserves a second look, and the harsh realities of energy markets is forcing even Europe to recognize this, as various European nations slate the construction of new nuclear reactors.

  • http://www.schlacks.org John Powers

    Hi Jordan,

    A pariticular charm of the free-market is free-choice.

    If you don’t want to pay for Windpower at Whole Foods, you can shop somewhere else.

    JBP

  • http://blog.acton.org Jordan

    John, yes that’s right.

    But you and I and every other taxpayer are already paying for it through governmental windpower subsidies. (much more indirectly, but still paying). I’m virtually certain that the government is subsidizing the wind farm(s) from which Whole Foods is ultimately getting the energy, with Renewable Choice Energy Inc. as the middleman.

  • http://www.schlacks.org John Powers

    Yes, of course, there are all kinds of subsidies out there. Hard to keep track of them all.

    But if you see a noticeable boost in prices at Whole Foods because of their reliance on windpower, maybe it is time to shop at Kroger.

    JBP

  • http://www.dmagroupmi.com Dave Hodge

    For shame, John. Saying the problem is simply too big is not an excuse for the ongoing failure to rein in excessive federal spending. We’ve done that for 40 years with Social Security & Medicare & Medicaid, and despite our collective ignorance the problem has only gotten worse.

    And the point regarding federal subsidies is that it would have the net effect of making WFMI goods cheaper, not more expensive than those at Kroger.

  • http://www.schlacks.org John Powers

    Yes Dave,

    But there is no reason to keep track of subsidies when shopping at Whole Foods. The total costs are refelected in the prices, which is a charm of the private market. If you don’t want to pay it, don’t shop there.

    I’ll take up the cross with you anytime you want to kill subsidies, but till then, I will enjoy shopping wherever I like and let the market decide whether Whole Foods gimmick is working.

    JBP