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Energy Policy Akin to a Cheesecake Factory Menu: Is It Needed?

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If nothing else, the Cheesecake Factory, a mall favorite sit-down restaurant with Gaudi-esque décor, offers an all-of-the-above menu. Want Asian? There's pad thai and orange chicken. Americanized Italian? Pizza and pasta dishes abound. Meat? There are decent steaks and burgers. And yes, for dessert, there are even a bunch of choices besides a bazillion types of cheesecake. But, even if you're one of those people who is willing to wait two hours for a Cheesecake Factory table on a Saturday night, you probably don't think that every restaurant should try to serve "all of the above." Heck, you probably have favorite places that serve just one of these dishes. But politicians of both left and right take it as an article of faith, at least in public, that they want Americans to get their electricity from a menu of choices that looks a lot like the Cheesecake Factory menu: something that includes "all of the above."

Consider: Even as Republicans, rightly, accuse of him waging a "war on coal," President Obama has spent millions running commercials criticizing Romney's own past anti-coal statements. Romney, while criticizing President Obama's subsidies for alternative energy, runs on a platform that promises "to aggressively develop alternative sources for electricity generation such as wind, hydro, solar, biomass, geothermal, and tidal energy" and has been mostly silent about ending alternative energy subsidies.

"All of the above" sounds nice, and may win votes, but the evidence shows it certainly doesn't reduce prices -- at least in North America. (U.S. and Canadian power grids are integrated along North-South lines, so energy discussions should consider the continent as a whole.) Big political subdivisions like New York, California and Ontario that have a mix of coal, gas, hydro, nuclear power plants have the highest energy costs in North America. (Click here for U.S. data and here for Canadian.) On the other hand, locales like Idaho, Quebec, and Manitoba (almost all hydro), West Virginia and Missouri (almost all coal) had much cheaper power. Major sub-divisions like Pennsylvania that had just two major sources of power (coal and nuclear) had lower power rates than those that tried everything. Of course, any number of geographic, resource and regulatory factors, determine power rates but, at minimum, it's clear that broad power portfolios don't reduce prices.

Of course, price isn't everything -- environmental consequences matter too. Here, however, it's worth noting that heavy use of emissions-free hydro power correlates strongly with lower power rates. (Capacity for hydro in the lower 48 states is essentially tapped out, but there's a lot left undeveloped in Canadian rivers that already export a lot of power south of their border.) The other two genuinely promising emissions-free energy sources, nuclear and wind, also need significant economies of scale to be at all effective.

All-of-the-above isn't necessarily more robust either. The things that generate almost all power, are either available in ample quantities right at home (coal and gas), or are renewable (wind, water and, in breeder reactors, uranium). There's no harm in relying on a power source that's sure to be there in the future.

Furthermore, if mere diversity of energy sources was a legitimate end in itself, then one would expect politicians to flock to well-proven sources like kerosene, animal power, whale oil, waterwheels turned by local streams, manure, and wood -- that, despite their demonstrated utility, have been surpassed by more useful ways of getting the heat, light, and gadget power that people need. But, of course, nobody particularly cares about these (almost universally lousy) ways of getting power.

"All of the above" may be nice on a restaurant menu. But evidence shows that it's a lousy energy strategy.