Energy drives the U.S. economy and the American way of life. Affordable and reliable energy remains a core national priority, because it is undeniably essential for assuring the nation’s continued prosperity, competitiveness, and ability to sustain a high standard of living for all its citizens.

U.S. energy is produced and marketed in a complex environment in which there are globally traded and priced commodities (petroleum), regionally traded and priced commodities (natural gas), and more local and regional commodities (electricity, petroleum products)— and each fall under varying regulatory and policy regimes. In America’s market-based economy, the private sector owns and controls most aspects of energy production, delivery, and consumption and responds to a vast array of powerful signals and forces that influence investment decisions and shape energy options.1 History proves that markets are generally most efficient and effective at organizing and managing energy systems. But with regard to particular challenges, markets alone are not always well-equipped to provide solutions−in particular, where externalities are not effectively priced in energy markets. This is especially true in the areas of energy security, reliability, environmental protection and research and development.