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Irwin Kellner

Irwin Kellner

March 9, 2010, 1:55 a.m. EST · Recommend (3) ·

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Commentary: Energy conservation rule doesn't accomplish what it's supposed to

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By Irwin Kellner, MarketWatch

PORT WASHINGTON, N.Y. (MarketWatch) -- No, Virginia, your eyes are not getting weaker -- your light bulbs are.

Once again, the American people have to deal with misguided laws foisted on them by policymakers in Washington. A glaring example is laws dealing with the use of energy.

Like so many other rules emanating from the nation's capital, energy conservation does not appear to be accomplishing what it was supposed to. Unaware or perhaps unfazed, the Obama administration wants Congress to pass even more regulations, thinking that these will save energy and help the environment.

If the past is any guide, they will be wrong again.

The most recent example is the Energy Independence and Security Act (EISA) of 2007. Among other things, it calls for phasing out of high-wattage bulbs on the theory that forcing consumers to buy and use dimmer bulbs will conserve energy.

Although most of the provisions don't take effect until 2012 or beyond, the maximum wattage for certain types of light bulbs, so-called high-hats, has already gone into effect.

Not long ago, you could buy hi-hats in wattages of 120 or more. Now the limit is 65. Replace an older high-wattage bulb with a 65 watt model and you will quickly see the difference: dimmer lighting.

As a consequence, many people are installing more outlets for these in-ceiling bulbs, in order to add more light. After all, people have to see where they are going.

You don't have to be a math whiz to figure out that two 65-watt bulbs will use more energy than one high-hat of, say, 100 or even 120 watts. You also don't have to be a genius to conclude that this will also result in more expenses both for homeowners as well as for business.

Kellner's Forecasts
date report forecast previous
July 26 New-home sales 320,000 300,000
July 27 Consumer confidence 50.0 52.9
July 28 Durable-goods orders 0.0% -0.6%
July 29 Jobless claims 460,000 464,000
July 30 GDP 2.0% 2.7% (1Q)
July 30 Employment cost index 0.4% 0.6%
July 30 Chicago PMI 57.5% 59.1%
July 30 Consumer sentiment 66.5 66.5
90342

EISA also dealt with motor vehicles. It increased CAFÉ (Corporate Average Fuel Economy) standards over the coming years, emphasizing greater use of plug-in hybrids and battery-powered vehicles.

Electric cars may help us reduce our dependence on petroleum, since they use little or no gasoline, but they don't conserve energy or clean the environment as much as you would think -- even though they produce fewer emissions than a gas-powered vehicle.

Where do you think the electricity comes from? I'll tell you where; from electric utilities that are powered in good part by oil or coal. So much for reducing our dependence on petroleum and/or cleaning the environment.

If anything, electric cars add to overall energy use. A typical electric car consumes three times as much electricity as an average home.

Those hybrids that run on batteries alone (or are supplemented by a small gasoline engine) have the added expense of being costly, since they must be replaced after only a few years. They also will pollute the environment unless they are recycled.

Non-electric vehicles use less gasoline as well -- provided that they are small and light. But here's another rub; they carry fewer people than a bigger car, forcing many families to buy two instead of one larger vehicle, thus actually using more fuel.

Small cars are also less safe than big cars in most accidents. It's a matter of physics; smaller vehicles have less metal to protect drivers and passengers than larger vehicles.

The bottom line: according to the Dept. of Energy, we are using the same number of British thermal units (BTU) per person as we did back in 1970 -- before these and previous energy regulations were passed -- not less, as was expected.

And since the population has grown, total BTUs used in our economy have risen as well. What has kept energy use from growing even faster is the fact that we are a lighter economy today than we were back then.

Besides being more of a service economy, we rely more on the Internet, computers, smart phones and outsourcing. These factors, not mandated efficiencies, have caused energy use per person to flatten.

Irwin Kellner is MarketWatch's chief economist.

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About Irwin Kellner

Irwin Kellner, MarketWatch's chief economist since 1998, writes a weekly column on the economy and the financial markets. He has been a leading economist for more than 40 years and previously served as chief economist for North Fork Bank, Chase, Chemical and Manufacturers Hanover. Widely quoted by the media in the U.S. and abroad, Kellner regularly addresses groups of business people and community leaders and appears regularly on Cablevision's News 12 Long Island.

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