Posted on 07/27/2007 1:09:07 PM PDT by Raymann
"It is taken for granted," said Alex Epstein, a junior fellow at the Ayn Rand Institute, "that OPEC, a despicable cartel of tyrannical regimes that coercively limits their oil production to raise prices, can manipulate our energy future on a whim. But such a state of affairs is completely unnecessary; it is a product of U.S. environmental regulations that strangle domestic energy production.
(Excerpt) Read more at theobjectivestandard.com ...
We should drill more but we’ll never drill enough to offset oil purchases - nuclear is the only path to energy independence.
You got that right.
I agree but the Dems won’t let it happen. Personally, I believe that the oil here in this country belongs to the people. Government should “allow” or license the oil companys to drill and then control the price of that oil and gas.
***Liberate American Energy Producers, Neuter OPEC***
No can do! They might make a “profit” and that is “obscene!”
You like socialism ?
I guess you also think the airwaves and land belong to the people too, and we should just allow government to control everything.
The article neglects to mention the one monopoly power that OPEC has which the US Government could do something about without direct control over the oil market.
OPEC can stifle new oil development by non-OPEC countries through a few years of increased supply — dumping to wipe out competitors. As prices fall, the capital investment of other producers dries up, leaving them in a bad position when OPEC chooses to reduce supply and take advantage of higher prices again.
The US Government could use its power as a large customer and guarantee a price for long-term bids to buy oil. By long-term, I mean 50 years. A guaranteed price of $30/bbl for domestically produced oil would remove the capital investment risk that OPEC might use dumping to squeeze out non-OPEC competitors. With no OBLIGATION to sell to the government, but a guaranteed OFFER TO BUY, domestic producers would be free to try to get as high a price for their oil as the market would bear, while being protected from OPEC undercutting.
Of course, you still have to get the envirowhackos to stop interfering with the use of domestic resources.
I agree. OPEC, as much as they’re a collection of tyrannical organizations, is only acting for profit. An understandable, almost noble pursuit, if not for their other proclivities, OPEC might even have been respectable.
OPEC only has their power and influence because we have hamstrung our own energy industry. Unable to seek viable alternative energy sources (cornered into seeking non-viable, politically correct alternatives), and unable to exploit our own oil/coal/shale/natural gas resources to their most effective, our situation has only grown less tenable over time. If anything, we should’ve exploited the artificially higher prices brought about by OPEC, by unleashing our energy companies to use the resulting profits to fund new exploits, and to seek viable alternatives.
Instead, all we seem to get from our government is a discussion on “windfall taxes”.
Remove the terrorist funding. Start be destroying the producing Iranian Oil Fields.
As per the rules of conduct at FR I will not flame you.
Are you aware that oil & gas and lots of other stuff are bought and sold worldwide? If our government dictated a maximum price that was below the world price for these commodities the oil companies would simply not sell it in the US. Such a scheme could not last a single day.
Socialism 101
Then why not use the threat of or the actuality of bringing more supplies online to get OPEC to lower their prices ? No taxpayer would be on the hook, but the same end would occur.
Why are free market solutions so difficult for some to fathom ?
For a real life example, look at the farm industry. The taxpayer subsidies, because that’s what you’re talking, cost us all in taxes, and then we pay the higher prices at the grocery store. Do you want to screw the taxpayer twice ?
Bringing more supplies online how ? That is the question. How do you get private enterprise to invest in something when OPEC can create unprofitable prices by dumping and wipe out their capital investments ? Dumping is how near-monopolies bankrupt new entrants and retain their monopoly. They can afford to take a loss for long enough to discourage new entrants. That is my point.
A free market can only exist where the barriers to entry are low. Once a producer has achieved a near-monopoly (as OPEC has) where they can manipulate prices and make the barriers to entry very high, you no longer have a free market.
What I am talking about is not a subsidy, it is a price guarantee.
It would cost the taxpayer NOTHING unless the world market price for oil fell below $30/bbl. If the market price remains $75, obviously nobody would sell to the government for just $30.
If the market price for oil fell below $30, then it would begin to cost the taxpayer. But for that to happen, the entire world economy would first benefit hugely from lower energy prices than the $75/bbl now. And the OPEC countries would see a huge drop in revenue.
As a matter of economic and military security, it is the proper role of government to make sure we do not lose the CAPABILITY and INFRASTRUCTURE for certain activities and to limit DEPENDENCE on foreign supplies. It can do that without nationalizing or controlling industries, or through tarrifs on foreign products, but simply by being a willing buyer offering a stable longterm price to counter the effects of foreign monopolies.
Since the price would only be offered for domestically produced oil, the practical limit to the government’s liability would be less than 2 billion barrels per year. So if the world market price for oil fell to $10, it would cost the government $40B per year. The economic benefits to the non-OPEC countries of having $10/bbl oil would be worth far more than $40B in tax dollars. At the same time, $10/bbl oil would be COSTING the OPEC countries $390B in lost revenue each year.
If, instead, the result was simply $30/bbl oil, then it would cost the government NOTHING. It would still cost the OPEC countries $270B in lost revenue while benefiting the non-OPEC economies via lower energy prices.
Your idea of proper gov’t function and mine are worlds apart. I don’t believe the government has a proper function or should exert any influence in the economy, period.
If we didn’t have government artificially restricting energy supply, like oil,LNG and nuclear power, oil would not be anywhere near $75 bbl, and it would happen without a bunch of expensive bureaucrats, price subsidies, and the like.
It’s called the market price. You need to read some Ludwig von Mises and his entire treatise on the total inability of governments, commissions, and the like at figuring out a price. After all, it’s the reason the USSR collapsed, and no socialist system is sustainable because of it.
http://en.wikipedia.org/wiki/Ludwig_von_Mises:
“His other notable contribution was his argument that socialism must fail economically because of the economic calculation problem—the impossibility of a socialist government being able to make the economic calculations required to organize a complex economy. Mises projected that without a market economy there would be no functional price system, which he held essential for achieving rational allocation of capital goods to their most productive uses.”
Here’s an interesting question I don’t think I’ve ever seen brought up.
Given that it is in OPEC’s best interests to prevent American domestic oil production, is OPEC funding the envirowhackos in the US ? Is ANWR and our Coastal waters not being drilled because OPEC has hired stooges to block it ?
Your comparison to the USSR is completely fallacious. The USSR owned, operated, and dictated prices to industries. That is completely different from the government just being another customer in a free market and signing long-term price agreements. In my proposal, the industry would be free to sell their oil anywhere they want at whatever price they can get for it. No government ownership. No government operation. No dictated prices.
Either you haven’t read anything I’ve written, or you don’t understand it and insist on trying to squeeze it into your preconception of socialism.
No government, which uses the threat of force to extract tax dollars, is “just another consumer”.
What government program can you name that has not expanded far beyond its original mandates ?
Look into the history of the department of energy and tell me what has happened to it since its inception.
Farm subsidies for oil, anyone ?
And lastly, tell me what section of the Constitution provides for the government providing support for oil prices, any more than support for farm crop prices ?
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