Energy prices

With its new Inflation Reduction Act (IRA), the government is pulling one of those infomercial tricks where they throw in a third bottle of OxiClean ABSOLUTELY FREE! Acting as if the cost of everything hasn’t already been calculated and passed onto the consumer. The IRA, you see, contains a “Methane Emissions Charge” that will impose a $900-a-ton tax on oil and gas producers that will increase to $1,500 after two years. The left is patting itself on the back for their valiant work to cut greenhouse gas emissions drastically by 2030. But here’s the thing: the energy industry is already working hard to cut emissions; it’s in their interest to do so. And when the government fines them for not capturing enough methane, guess who gets to foot the bill?

History suggests that when the state expands in a crisis, it doesn’t go back to its pre-crisis level once the emergency is over. After the first world war, the Lloyd George government extended unemployment insurance to most of the workforce, fixed wages for farm workers and introduced rent controls. The second world war led to Attlee's nationalisations, along with the creation of the NHS and the modern welfare state. In the magazine this week I ask if Covid will lead to a permanently bigger state. There is another danger in all this intervention: can the country afford it? Last year, state spending exceeded 50 per cent of GDP for the first time since the end of the war.