How Obama and Democrats can screw up energy

Kimberley Strassal:

It isn't yet clear Team Obama understands that it doesn't have the luxury of making a mistake here. Energy is the engine of, and inextricably linked to, the American economy. Environmental policies and regulations that punish energy markets will only deliver a further economic hit.

In the process, this will damage Mr. Obama's own goals. He has picked an economic team that has already successfully discouraged him from proceeding immediately with any tax hikes. Good. But an ill-crafted cap-and-trade program that dramatically escalates energy costs is the same as a giant tax hike. Mr. Obama is promising to save or create 2.5 million jobs. Fabulous. But drowning industries in exorbitant energy prices will only encourage further overseas flight. If the president-elect thinks Detroit is a problem, just wait for the impact an upward march in electricity prices would have on, say, the manufacturing South.

Most of Mr. Obama's decisions so far have reflected the fact that the economy he is taking over is far different from the one he campaigned on. (No one would have thought eight months ago of a Treasury Secretary Timothy Geithner, but $700 billion financial rescues have ways of changing things.) Yet so far, all signs suggest the Obama crew is stubbornly refusing to acknowledge this reality when it comes to its militant past promises on energy and environment.

The transition itself is being handled by John Podesta. After leaving the Clinton White House, he founded the liberal think tank Center for American Progress, where he became deeply immersed in environmental issues. His recent book, "The Power of Progress," ruminates on how one duty of "progressives" is to save the world from climate change. At his side in the transition is former Clinton Environmental Protection Agency (EPA) head Carol Browner, who is as committed a green revolutionary as they come.

Having enraged the left wing of his party with several initial high-profile appointments, Mr. Obama is now under pressure to placate this mob. One obvious, if frightening, choice would be to reward them with the energy-and-environment portfolio, turning it over to a team that shares the grass-roots' green agenda.

The appointments at stake here are big, with the potential for even greater influence. There's chief of the EPA, the prominence of which is growing in the climate debate. Another is secretary of the Energy Department, a body that traditionally serves as a cheerleader for the entire mix of domestic energy sources (including nuclear, oil and coal), but which, with a weak or turncoat head, could easily fail in that duty.

Mr. Podesta is also a fan of creating a National Energy Council (akin to the National Economic Council). This council would presumably include a much-discussed "climate czar," with a straight line to the president.

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When it comes to energy the Democrat's instincts are to screw up, badly. For about 30 years they have been strangling the supply of most energy including oil, gas, coal and nuclear. We can expect them to further inhibit the production of energy with confiscatory taxes under a "cap and trade" scheme. Republicans can probably not block this because McCain is a heretic on the issue.

So, while they try to pump up the economy with a stimulus package, they will depress the economy with their energy policy. It could produce the stagflation of the Carter era.

When it comes to non magic energy, the Democrats are against it. so far their magic is not working either.