Cap and Pain

There's a room where the light won't find you
Holding hands while the walls come tumbling down
When they do I'll be right behind you
--Tears for Fears

The in-process energy bill is a prime example of the role of government ineptitude in driving lower standard of living over time. Should this bill become law, we can confidently forecast a number of things:

-->energy production costs will increase

-->consumer energy costs will go up, as producers pass costs along ('companies' don't pay taxes, people do)

-->domestic jobs will decrease (not increase) as operating costs go higher

-->capital will be misallocated toward projects with little commercial viability

-->domestic energy capacity will decline

-->dependence on foreign producers will increase

Although bureaucrats can be counted on to periodically foray into value-destroying initiatives, it's hard not to marvel at the timing of this particular bill. We're experiencing a slowdown on par with the Great Depression. Yet, on the table is legislation guaranteed to significantly drag down economic activity. The timing suggests either utter cluelessness or an agenda dark enough for me to bite my toungue (for now).

It's hard to see how this legislation is not bullish for energy commodities. While firms may see their profits compromised by the new rules, supply destruction of the underlying commodities seems an obvious outcome.

Should it become more apparent to me that this bill will pass the Senate, I'll be increasing my position in the energy commodity space.

position in energy