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1/21Passage1:SeizethedayJan17th2015|FromtheprinteditionThefallinthepriceofoilandgasprovidesaonce-in-a-generationopportunitytofixbadenergypolicies.MOSTofthetime,economicpolicymakingisabouttinkeringattheedges.Politiciansarguefuriouslyaboutmodestchangestotaxesorspending.Onceinawhile,however,momentousshiftsarepossible.FromDengXiaopingsmarketopeningin1978toPolandsadoptionof“shocktherapy”in1990,boldpoliticianshaveseizedpropitiouscircumstancestopushthroughreformsthattransformedtheircountries.Suchaonce-in-a-generationopportunityexiststoday.Theplungingpriceofoil,coupledwithadvancesincleanenergyandconservation,offerspoliticiansaroundtheworldthechancetorationaliseenergypolicy.Theycangetridofbillionsofdollarsofdistortingsubsidies,especiallyfordirtyfuels,whilstshiftingtaxestowardscarbonuse.Acheaper,greenerandmorereliableenergyfuturecouldbewithinreach.Themostobviousreasonforoptimismistheplungeinenergycosts.Notonlyhasthepriceofoilhalvedinthepastsixmonths,butnaturalgasisthecheapestithasbeeninadecade,barafewpanickedmonthsafterLehmanBrotherscollapsed,whentheworldeconomyappearedtobeimploding.Therearegrowingsignsthatlowpricesareheretostay:therisingchatterofmegamergersintheoilindustryisasuresignthatoilmenarebracingforashake-out.Lessnoticed,thepriceofcleanerformsofenergyisalsofalling,asourspecialreportthisweekexplains.Andnewtechnologyisallowingbettermanagementoftheconsumptionofenergy,especiallyelectricity.Thatshouldhelpcutwasteandthuslowercostsstillfurther.Fordecadesthebigquestionaboutenergywaswhethertheworldcouldproduceenoughofit,inanyformandatanycost.Now,suddenly,thechallengeshouldbeoneofmanagingabundance.CleanupadirtybusinessThatabundanceprovidesthepotentialforreform.Fartoomanyeconomiesarelitteredwiththedetritusofdaftenergypolicies,basedonfearsaboutsupply.EventhoughfrackinghasboostedAmericasoiloutputbytwo-thirdsinjustfouryears,thecountrystillbanstheexportofoilandrestrictsexportsofnaturalgas,alegacyoftheoilshocksofthe1970s—andaboondoggleforAmericanrefinersandpetrochemicalfirms.CongressalsokeepshandingoutmoneytoIowasalreadycoddledcornfarmerstoproduceethanolandhasnotreviewedgeneroussubsidiesfornuclearpowerdespitetheFukushimadisasterandruinouscostover-runsatnewWesternplants.Instead,ithasspentfourlongyearsbickeringaboutwhethertoallowtheproposedKeystoneXLpipelinetoCanadastarsands.InEuropethegiveawaysarealittledifferent—billionshavegonetowindandsolarprojects—butthesamemadnessoftenprevails:GermanysrushedexitfromnuclearpowerendeduphelpingboostAmericancoalandRussiangas.Themoststraightforwardpieceofreform,prettymucheverywhere,issimplytoremoveallthesubsidiesforproducingorconsumingfossilfuels.Lastyeargovernmentsaroundtheworldthrew$550billiondownthatrathole—oneverythingfromholdingdownthepriceofpetrolinpoorcountriestoencouragingcompaniestosearchforoil.Byonecount,suchhandoutsledtoextraconsumptionthatwasresponsiblefor36%ofglobalcarbonemissionsin.2/21Fallingpricesprovideanopportunitytorethinkthisnonsense.Cash-strappeddevelopingcountriessuchasIndiaandIndonesiahavebravelybeguntocutfuelsubsidies,freeingupmoneytospendonhospitalsandschools.Butthebigoilexportersinthepoorworld,whichtendtobethemostegregioussubsidisersofdomesticfuelprices,havenotfollowedtheirlead.Venezuelaisclosetodefault,yetpetrolstillcostsafewcentsalitreinCaracas.Andrichcountriesstillunderwritetheproductionofoilandgas.WhyshouldAmericantaxpayerspayforExxontofindhydrocarbons?Allthesesubsidiesshouldbebinned.WhatabetterpolicywouldlooklikeThatshouldbejustthebeginning.Politicians,forthemostpart,haverefusedtoraisetaxesonfossilfuelsinrecentyears,onthegroundsthatmakingdrivingorheatinghomesmoreexpensivewouldnotonlyannoyvotersbutalsohurttheeconomy.Withpetrolandnaturalgasgettingcheaperbytheday,thatexcusehasgone.Highertaxeswouldencourageconservation,dampenfuturepriceswingsandprovideamoresensiblewayforgovernmentstoraisemoney.Anobviousstartingpointistotargetpetrol.Americasfederalgovernmentleviesataxofjust18centsagallon(fivecentsalitre)—afigurethatithasnotdaredchangesince1993.Evenbetterwouldbeataxoncarbon.Burningfossilfuelsharmsthehealthofboththeplanetanditsinhabitants.Taxingcarbonwouldnudgeenergyfirmsandconsumerstowardsusingcleanerfuels.Asfuelpricesfall,acarbontaxisbecominglesspoliticallydaunting.Thatpointstothebiggestblessingcheaperenergybrings:thechancetoinjectsomecoherenceintotheworld’senergypolicies.Governmentshavealegitimateroleinmakingsurethatenergyisabundant,cleanandsecure.Buttheyneedtolearnthedifferencebetweenpickinggoalsanddecidinghowtoreachthem.Broadincentivesarefine;second-guessingscientistsandinvestorsisnot.Acarbontax,inotherwords,isamuchbetterwaytoreduceemissionsofgreenhousegasesthansubsidiesforwindmillsandnuclearplants.Bythesametoken,inthenameofsecurityofsupply,governmentsshouldbeencouragingthegrowthofseamlessglobalenergymarkets.Scrappingunfairobstaclestoenergyinvestmentsisjustasimportantasdispensingwithsubsidies.Themorecross-borderpipelinesandpowercablesthebetter.AmericashouldapproveKeystoneXLandliftitsexportrestrictions,whileEuropeanpoliticiansshouldmakeitmucheasiertoexploittheoilan