Considering their track record, could it be the answer to the energy problem is for government to stop trying to solve it?

Successive Administrations and Congress (with supplements from state governments) and lots of help from lobbyists have proposed and adopted dozens of tax breaks, credit programs and other subsidies that have had enormous impact on capital investment and other energy market decisions.  The US EIA recently issued a report that identifies more than 60 “federal financial interventions and subsidies in energy markets” that were in place during 2007.

In truth, these well meaning “interventions” are now distorting energy markets and, in particular, capital investment decisions.  Anyone with significant money to invest now understands that the safest investment with the highest return is to find something that qualifies for federal and/or state tax breaks and subsidies or qualifies under a credit program.  It make little sense for them to invest in (a) producing energy — e.g., from oil or natural gas — because the risks are higher and returns less assured, or (b) investing with some entrepreneur who might develop a new energy technology that could turn out to have commercial applications — which is also risky.

So, the smart money people “mine” Washington and state capitals for tax breaks, subsidies, and credit programs and, of course, they hire lobbyists.  A prime example of “mining in Washington” was T. Boone Pickens announcement that he was going to make a 25% return by building a $10 billion “wind farm”  — which current tax breaks will permit him to do.  Mr. Pickens has advertised both his planned “wind farm” and then his grand “energy plan” to make money by pursuing wealth via government subsidies.   Others (e.g., GE, FPL, Goldman-Sachs) follow the same strategy but “fly under the radar” while they capture tax breaks and subsidies.