no third solution

Blogging about liberty, anarchy, economics and politics

Free Markets Put and End to Deep Sea Drilling

August 19th, 2010

In a free market, transnational oil companies (among others) that are destroying Nigeria, the Gulf Coast, parts of South America, and contributing to endless war in the middle east would’ve probably long ago been supplanted by something better, cleaner, safer and more efficient.

Jim Mulva, ConocoPhillips’ chief executive, says that the unlimited liability some are proposing in Congress to punish operators for further spills in the Gulf of Mexico is inappropriate… He said to analysts:

We will not develop the resources if we have that situation.

… Mulva’s intent, of course, was to argue against imposing unlimited liability for oil spills. But assuming his statement was more than bluster, his implicit admission is that the risks of oil spills are so great that in a free market, the costs of paying for spill damages would outweigh the benefits of developing the resources.

via Financial Times

Because they could not afford to obtain and refine oil-based products if they had to bear the true costs.  Their costs would rise, and they’d have to raise prices in-step.  Yes, high prices suck. No, we wouldn’t have to put up with them (and stagnation) forever, because as the adage goes, necessity is the mother of invention.

The more expensive is oil, the less costly becomes the tradeoffs for alternative energies and other methods of lighting up the lightbulbs and motoring the cars and microwaving dinners.  And the less burdensome (relatively) is that opportunity cost, the more innovation and effort flows in to those alternatives. This is what’s known as competition.  It is not a dirty word.

It’s how shit gets done.  And it’s a process of discovery in which some people are inevitably wrong.  And that makes everyone better off.

The sooner governments stop subsidizing, bailing out, and propping up these monsters, the sooner the rest of us can get on with building a better tomorrow.

no third solution

Blogging about liberty, anarchy, economics and politics