The Market for Energy

Our current energy policy rests on an expensive bet that oil prices will rise, while the cost of renewables comes down. Unfortunately, crucial uncertainties remain over the path of oil prices, the political realities in emerging nations, the climate and the future cost of renewables. Given this uncertainty, markets remain the best way to increase energy supply and manage climate change. Rather than try to plan future technologies, the government would do better to restrict itself to subsidies and prizes for advances in basic research.