THE USE OF TAXES, REGULATION AND PRICE CONTROLS IN THE ENERGY SECTOR

The use of taxes, regulation, and price controls by the federal government alters the pattern of resource allocation which occurs when the time distribution of resource use maximizes the present value of the flow of expected net revenue throughout all time. From a resource conservation point of view, federal policies over the last 50 years have been counterproductive. If prices had been allowed to seek their competitive level, unaided by tax subsidies and unrestrained by price controls, resource conservation in the economic sense would be more advanced in the U.S. The political process is responsive to the dominant organized interests which exert pressures on it. The historical power of the oil industry can be seen in their persuading Congress to exercise monopoly power in the form of market demand prorationing, and in obtaining restrictions on foreign competition in the form of import quotas.