Politicians should let the market solve the energy crisis

What policies should the government adopt in response to the energy crisis? When thinking about any policy, the correct place to start is to consider what kinds of solutions the market would produce absent any government intervention.

Markets will always produce some kind of answer, and the market answer will often be very good in many respects. Policymakers should not assume they are intervening in a void, where almost any well-intentioned action might be better than nothing. Instead, they should always be more humble, seeking to understand what the market might do, accept that the market response is likely to be pretty good, and think about how, if at all, they can make that market response better and how to be careful not to impede the good features that a market response would produce.

In the case of the energy crisis, let’s imagine that the market is left alone, and believes the government will not interfere.