In his classic book "Economics in One Lesson," Henry Hazlitt states one of the most fundamental -- and overlooked -- principles of economics: "The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups."

The energy bill passed by the House of Representatives last weekend is a good example of the ongoing ability of policymakers to ignore the broader effects of a tax increase. The bill, which passed the House by a vote of 221-189, imposes $16 billion in taxes on oil companies while providing billions of dollars in tax breaks and incentives for renewable energy and conservation efforts.

Supporters of the bill argued that the measure will spur investments in renewable fuels and help address global warming as utilities use less coal. The bills co-sponsors proclaimed that ultimately the bill will save consumers money.

Critics claimed that the bill was nothing more than "pure venom" directed at the oil and gas industry and that eventually energy prices would rise.

Political posturing aside, an attempt to use the tax system to advance an energy policy is nothing new. Therefore, the more expansive consequences of increased taxes on one energy sector and the subsidization of another are reasonably predictable.

First, taxes on the oil industry already are high. In 2005, ExxonMobil paid $23.3 billion in corporate net income taxes on $59.4 billion in earnings, for an effective tax rate of 39.2 percent. During that same year, ConocoPhillips had an effective tax rate of 42.1 percent, while Chevron's effective rate was 44 percent.

Moreover, federal and state gasoline taxes nationwide average 46 cents per gallon. In Chicago, the addition of a local gasoline excise tax raises the price of a gallon of gasoline 80 cents.

Thus, high taxes on profits in addition to federal and state excise taxes on retail sales increase the price of gasoline substantially. The additional $16 billion in taxes included in the House's bill adds to the burden.

So, as the theory goes, high gasoline prices coupled with tax breaks for energy sources such as biofuels will increase investment in those areas, thus increasing production and supply resulting in lower prices.

In this regard, it should be noted that even without the new law, biofuels already are heavily subsidized. Federal subsidies for producers of ethanol cost taxpayers about $2 billion per year. Past congressional action protects these producers by imposing a 2.5 percent tariff and a 54-cent-per gallon duty on imports. In addition, the federal government gives plants that produce up to 60 million gallons of ethanol each year a production incentive of 10 cents per gallon on the first 15 million gallons produced. Furthermore, at least 15 states provide ethanol producers with additional subsidies, and seven states have adopted ethanol mandates.

As a result of these subsidies and mandates, ethanol production has gone up. However, ethanol costs more to produce than gasoline, not less. As a result, federal and state mandates have caused prices at the pump to increase by 25 to 30 cents per gallon. Additionally, ethanol has lower energy content than does gasoline, which means for the consumer it is a poorer value than traditional gasoline.

The rise in ethanol production has increased demand for corn. As a result, there is less corn available for food production and, consequently, the price of corn has increased dramatically.

There are other economic -- and environmental consequences -- of a government induced market shift toward biofuels such as ethanol. Biofuels are renewable resources that supporters say will make fuel usage more environmentally friendly. This approach fails to look at the energy that is consumed in making biofuels through the process of planting, fertilizing, irrigating and harvesting corn, as well as the heat used during the fermentation process (Ironically, the source of most of the energy used to facilitate these processes is fossil fuels).

Because ethanol absorbs water, it cannot be transported by pipeline and must consequently use more expensive methods of transportation, such as trucks or train.

Another reason supporters cite for tax hikes on the oil industry is to end our dependency on foreign oil. Ethanol is "homegrown" and renewable as an energy source. Nevertheless, the fact is that the reason we import 56 percent of our oil is simply that it's cheaper than its domestic counterpart. Accordingly, the ethanol that is produced mostly supplants the oil for domestic producers, not foreign producers.

There are other consequences that would be felt closer to home. Naturally, government coercion that moves activity away from fossil fuels will have significant impact on the coal and natural gas industry and the thousands of employees who work in those sectors in West Virginia. Whole communities that are centered on coal and natural gas are impacted by this type of government action.

Proponents contend that this action is necessary in the face of a deteriorating environment. We are currently engaged in a national conversation on the economic impact of policies that embrace this position. In light of Hazlitt, such a conversation should include the long-term effects of such a direction and the impact it will have on everyone concerned.

Rob Capehart, president of West Liberty State College, was secretary of the West Virginia Department of Revenue from 1997 to 2000 and chairman of the Governor's Commission on Fair Taxation.