Throughout this review, the governmental role in energy production incentives has been assessed against standards of efficient resource allocation; and an attempt has been made to determine whether actual policies can be seen as responses to divergences between private and social costs. With a few exceptions, the answer appears to be in the negative. It is concluded from this that both past and present energy policy has not had the objective of promoting a more-efficient use of our scarce resources. This prompts a very interesting question: if not to promote efficiency, what has been the purpose of US energy policy. This unavoidably cursory review of energy-supply policy suggests that current policy is having the following net effects on production incentives: oil and natural gas policy remain dominated by restrictive price controls; coal policy is dominated by environmental considerations; and nuclear power is the only energy source considered in this study which currently appears to be receiving a net subsidy to production. The fallout from the Three Mile Island accident may reverse this policy direction, but to date the principal nuclear initiatives have been substantial subsidies to research and development and sharply limited liability for nuclear power plants. This study gavemore » little attention to synthetic fuels and exotic energy sources such as solar because there was little policy to review. This situation is changing rapidly, and future reviews of this type will apparently give increasing attention to alternative energy sources. It remains to be seen how policy affecting these energy sources will perform. 43 references.« less
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Kalt et al. (1980) studied this question.