So Congress has dropped the provision to drill in ANWR, and is complaining about oil company profits.
Oil company profits are high because supply has been greatly constricted, and demand has increased. No nefariousness on the part of oil companies need be assumed. It’s simple economics. Supply has been constricted by environmentalists, by Middle East oil cartels, and by the high cost of entry.
People tell us we ought not be dependent on Middle East oil supplies. Agreed. But how do we change that? We must either reduce demand, or increase other supplies, of energy broadly understood, not just oil.
Reduction of energy demand is simply not feasible. It’s never been done to any great degree, and short of eliminating a large part of the world’s population, it’s never going to be done. Shifting energy demand from oil to other alternative energy sources is a nice idea and something we ought to pursue. But only one thing is going to drive that shift, and that’s a profit motive.
Congress is now seeing to it that supply of oil will not increase, which will only increase the profits of the oil companies by further raising the cost of entering the market. And so Congress must also see to the next level of socialization, which is to confiscate those profits.
Not only are high profits the motive for other companies to enter the market (if Joe down the street is making fat bank on his lemonade stand, that encourages me to open my own lemonade stand and undercut his price a little, thus taking away some of his business and lowering the price), in a high tech arena like this it is also the means to explore alternate fuels. New, experimental technologies are always very costly and very risky; a great deal of seed money is necessary to make these things happen.
So they’ve taken away the possibility of increasing supply, and they’ve also taken away any motivation to shift to alternate fuels as well as the profits that would be necessary to fund such research. That is, Congress is doing everything it can to ensure that we continue to be dependent on the Middle East, and that every time I fill up gas, I’m supporting a terrorist. Thanks a bunch, Congress.
As this process continues, there will be increasing pressure for government to take over more aspects of this process that they’ve broken. And so there will be cries for more government funding for alternative fuels (already happening), and government regulation of pricing (happening to some extent), and eventually government control over the energy companies (on the way to happening). We really ought to just save ourselves a lot of time, become socialist, have our economy collapse, have some civil wars, kill off half the population, revolt against our government, enter a global dark age, learn our lesson, and emerge with a little bit more wisdom about the efficiencies of a free market. With any luck, we can get it overwith before my kids have to enter the workforce.
Or, the electorate of our country can just stop electing these idiots to Congress, and pick someone who has so much as cracked an economics book before we send them to Washington to lecture us about economic behavior.
Frankly, I’m not that hopeful.
UPDATE! See, I told you so.