Who wouldn't want to save money on their heating bills? There are lots of questions to answer before we figure out the answer. This editorial argues that
Members of the Vermont Senate have made a good start on fulfilling their promise to address the problem of global warming while also helping Vermonters handle the skyrocketing costs of heating oil usage.
The first question is why Vermonters themselves are unconcerned about the costs of heating oil usage and need someone to tell them how to save money.
If there are tremendous savings to be had by insulating a house, closing open windows, or turning your thermostat down from 85 degrees to 70 or 65 degrees, most people can be trusted to make good decisions that benefit themselves. If there are profitable opportunities for businesses to provide home energy audits that will cost homeowners money up front but save them money long term, there will be businesses in Vermont that will provide that service--at a fee, of course.
But the fee will be paid by those who benefit from the service, just like every other service people and businesses buy in the market. The government does not need to tax Peter to pay for Paul's house to become more energy efficient if Paul would do it anyway, especially if Peter has already paid to make his house more energy efficient.
If the problem is that some low income people can't afford the up front energy audit costs and the capital costs of insulating their house or replacing a boiler, then the real issue is one of what economists call capital market imperfections; the inability of people to gain access to credit.
But most people in Vermont are not poor, and certainly businesses aren't, and they don't have a problem gaining access to credit. That argues for a specific state program to target low income people for assistance, not the public or businesses at large.
The editorial goes on to note that
One downtown Burlington housing building saved $8,000 a year at 2003 fuel oil prices. The owner of one old farmhouse saved 475 gallons of fuel oil a year for a saving on his bill of $1,200 annually.
If the Burlington building was a multi-unit apartment building, that brings up the problem of who pays for heat. If the landlord pays for heat, as many do, there is no incentive for the tenants to keep windows shut or thermostats turned down, no matter how much the landlord spends on insulation or an energy-efficient boiler. And the old farmhouse may be owned by a low income rural farm family, in which case the issue is one of poverty, not energy efficiency. We should not confuse those two issues. If the farmhouse was owned by a middle or upper income family, they could surely afford to pay for the energy efficiency measures themselves.
Finally, the editorial argues that
The state-initiated program would help home and business owners invest in insulation, sealing and more efficient heating equipment. Backers of the bill say this infusion of money would stimulate businesses involved in carrying out these tasks. So the bill would not only save money for users of fuel oil; it would also give a boost to an important segment of the state's economy.
This is an example of Frederic Bastiat's "broken window" fallacy, written in 1848. Briefly, if giving a boost to this industry is the reason we should mandate this type of program, then logic would say that we should also pay people to break windows in houses and businesses in order to give more business to glazers and window installers. And why stop there. The construction industry in Vermont will soon begin to decline as the state experiences a housing downturn. We could also pay people to burn down houses (after getting people and pets out). That would stimulate the construction industry, providing much-needed jobs to unemployed carpenters. And teenagers would love to be paid to paint graffiti on buildings. We could then employ people to clean the buildings. The possibilities certainly are endless.
Curbing the consumption of fossil fuel may be a very good idea. But we should acknowledge that people are not stupid and, given the opportunity to significantly reduce their fuel bills, they will. They don't need the state to tell them how to save money.
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