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Letters to the Editor

Fortnightly Magazine - April 2009

connection is that the numerous energy programs and regulations have increased prices enough to flatten demand. There is no doubt that the programs and compliance are very expensive.

What are the implications of a price-based rather than a program based response as the cause of flat demand? First, energy taxes are more logical than energy programs. Consumers respond to price and so will suppliers. For Congress this means a carbon tax is better than cap and trade. Second, California could solve its energy and fiscal problems with the stroke of a pen. Finally, we can avoid program proliferation if we recognize that price is the answer.

Charles E. Olson
Professor of the Practice Robert H. Smith School of Business

Editor’s Note: See “ Stabilizing California’s Demand ” (March 2009) for a thorough analysis of the issues Prof. Olsen raises.– MTB

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