Millions of Americans saw ads in the recent “Coal is Filthy” campaign against permits for new coal-fired electric generating plants. The ads seemed to promote a clean environment.
But companies behind the campaign weren’t environmental groups. They were energy companies–specifically, natural gas companies. Why were they trying to get voters to pressure politicians against coal? Economists call it rent seeking: lobbying government for policies that enrich one group at the expense of taxpayers generally or of competing businesses.
What the ad campaign didn’t say was that natural gas is more expensive than coal. While there’s nothing wrong with using it, the notion that shifting from coal to natural gas will be of net benefit is dubious. Modern coal-fired plants are amazingly clean, and the small amounts of pollution they emit pose extremely low risk to health.
But every dollar increase in natural gas prices costs American consumers $22 billion per year for heating, air conditioning, food, consumer goods, and services–leaving them with $22 billion less for health care, education, and other uses. And as more electricity production shifts to natural gas, rising demand will cause rising prices, hurting American consumers.
