John Lawn Editor-in-Chief

National polls published earlier this month show that 54 percent of the country disapproves of the way President Bush is handling energy policy. While I consider myself part of that 54 percent, it's not because of high gasoline prices.

In fact, while it's an unpopular point of view, I believe higher prices at the gas pump are in our best national interests in the long run. And that they are needed to send the right market and energy-cost signals to the economy and the public. (I told you it wasn't a popular opinion.)

Just like many of FM's readers, I have a significant automobile commute each day. My household suffers just as much from transportation-cost price inflation as that of anyone else. But my view was formed years ago and indelibly when as a young journalist I covered the subject of energy use as a staff writer for Energy Management magazine in the early 1980s.

We focused our editorial largely on public policy and strategies for more efficient energy use. And in recent months I have found my mind turning repeatedly to lessons I learned then, when the country faced what it loosely called the "Energy Crisis."

One thing I learned was that what we mostly faced wasn't an "energy" crisis at all. Then, as now, it was mostly a liquid fuels crisis. More specifically, a crisis formed by excessive U.S. demand for cheap gasoline. While a good part of the current problem is often blamed on increasing demand from other countries like China and India, our own habits and policies are where our attention should be directed.

And, frankly, the price of oil may be the least of our energy problems. Over the last three decades, the U.S. has become increasingly dependent on imported supplies, much of it from parts of the world that are not very friendly to our way of life. That dependence makes us beholden to those countries' political views, exacerbates our trade deficit and compromises our national security. (For the moment, I'll ignore the effect unbridled oil consumption has on the environment).

Yet the risk our imported oil dependence entails is not reflected in the cost of our gasoline. If it were, gas would cost much more. It would be taxed as a way of reducing use and dependence or as a way to fund other sources of supply.

Liberal Americans are fond of calling for "alternate" energy sources as a solution. But how many would be willing make the $20-40,000 investment in solar panels ( assuming they lived in the right part of the country to use them effectively) to electrify their home? How many would be willing to live within the much-reduced energy budget a home like that requires?

For that matter, how many pay much attention to programming the setback thermostat in their homes? Or concern themselves about energy efficiency when buying a new water heater? Or own overpowered vehicles ridiculously matched to their basic use?

Still, despite those last comments, I largely came to distrust the policies promoted by those who want to address energy demand issues by way of government regulation.

I didn't start out that way—when I first began writing about the topic I had very liberal views in this area. Then I covered in detail the passage and implementation of the National Energy Act, the Fuel Use Act, the Natural Gas Policy Act, the Public Utilities Regulatory Policies Act, and many other legislative and regulatory efforts along these lines.

I had the opportunity to visit and write about synthetic fuel plants, coal gasification towers, photovoltaic and windpower farms, biomass conversion systems, cogeneration plants and fluidized bed combustors. I interviewed experts ranging from Buckminster Fuller (a proponent of windpower) to U.S. Rep. David Stockman (at the time, an opponent of The Fuel Use Act). I saw everything from a Stanley Steamer (engine)-powered Chevrolet Vega to state of the art solar panel fabrication facilities.

Yet as I watched the "energy crisis" and our ways of dealing with it unfold, I came to believe wholeheartedly in how much more efficient free markets are at helping us address such issues than is government regulation.

The cheapest source of energy was and is conservation, or as we used to say, "energy management." When the right value is placed on energy (and that ultimately means a price that reflects its total, actual costs, including energy security and environmental risks, not its "regulated" costs)— individuals and businesses are more than willing on their own to invest time and money in strategies that reduce its use.

I will have more to say on this subject in my next column.

To read the follow-up editorial on this subject, click here: Let the True Cost of Energy Drive Strategy