This energy bill is a lump of coal

The energy bill, now on life support in the US Senate, provides roughly $25 billion of tax breaks to the producers of oil, gas, coal, nuclear power, and alternative energy. Like the farm bill, it is an example of corporate welfare masquerading as economic policy. It will give money to companies that don't need it, produce precious little new energy, and exacerbate the budget deficit. Aside from that it is terrific.

Like the farm bill, the energy bill demonstrates how little faith both political parties have in the free market. That is too bad, because in the case of energy, the free market actually works pretty well over time.

The process is straightforward. When a shortage develops, prices rise. Higher prices encourage consumers of energy to conserve and producers of energy to find more energy. Through wars and revolutions, the energy market has kept the lights on, the gasoline flowing, and prices within a reasonable range. Prices would be even lower if we could find a way to get rid of OPEC, but nothing on the horizon, including the energy bill, is likely to do that.

Washington does have a role to play in energy policy. It has to set standards for the environment and energy efficiency, referee disputes among states, support research on new technology, and provide energy in emergencies. When Washington goes beyond those roles, the results are almost always disastrous.

In the late 1970s, Jimmy Carter wasted billions of dollars on a massive program to extract energy from coal and shale oil. By the time these synthetic fuels projects came on line, oil prices had plunged and the new plants were completely uncompetitive.

A synthetic fuels tax credit from that era that stayed on the books has cost taxpayers another $4 billion just since 1999, according to a devastating expose published recently in Time magazine. Clever business executives figured out that if they spray coal with diesel fuel they can qualify for more than $1 billion a year in synfuel tax credits, which they sell to big firms such as Marriott International, the hotel chain. Everyone makes out great except the taxpayers who get no energy and no value for their $1 billion investment.

Ethanol did not start out as cynically. The corn-based fuel was supposed to produce cleaner energy. Yet after a series of studies showed that ethanol provides puny environmental benefits at a high cost, Congress kept the program alive. The new energy bill boosts spending on ethanol, a sop to Farm Belt states.

Even in the 2003 tax bill, Congress couldn't avoid meddling with energy policy. The bill gave small business owners the right to deduct up to $100,000 toward the the purchase of a vehicle that weighs more than 6,000 pounds, another way of describing an SUV. I can't explain how encouraging Americans to buy gas guzzlers helps our energy security, but maybe that's because I am not a congressman.

Supporters of the energy bill say it will produce jobs and they are certainly right, but at what cost? If the goal of the bill is to create jobs, improve the energy situation and help the environment we'd be better off hiring unemployed people to travel around the country replacing old light bulbs with more energy-efficient ones.

On the House floor, Representative Edward Markey of Massachusetts called the energy bill "perhaps the worst piece of legislation to be brought before this body in many decades." Despite an encouraging Senate vote against the bill Friday, the measure could still squeak by. President Bush, who never met a tax break he didn't like, will sign whatever emerges.

More than a decade ago a presidential candidate named Bill Clinton promised to end welfare as we know it. Wouldn't it be nice if some Democratic hopeful this time around promised to end corporate welfare as we know it? What do you think? Is there a market for such a radical notion?

Charles Stein is a Globe columnist. He can be reached at stein@globe.com.