Milton Friedman's Energy Insights

Today we celebrate the 107th anniversary of the birth of economist Milton Friedman (1912-2006). Primarily known for his work on monetary economics, Friedman was a keen observer of energy economics and public policy whose insight remains valid today. Early on, Friedman understood how major energy regulation was sponsored by an industry segment. "Few U.S. industries sing the praises of free enterprise more loudly than the oil industry," he stated in 1967. "Yet few industries rely so heavily on special government favors." Friedman was referring to oil-demand proration in the major oil states (excepting California), as well as federal oil-import limits, two complementary programs that governed from the 1930s through the 1960s. It was this political bias that contributed to the backlash against oil and natural gas in the 1970s that still haunts the industry today.