Ban. Import. Subsidize.

Ban. Import. Subsidize.

by Mark Luedtke

On July 1, the International Energy Agency reported that speculation had not distorted the price of oil in the short term. I hope they like eating crow. Over the weekend, the price of oil dropped nearly $20 from the record high price set July 11. Gas prices follow oil prices. The only thing that changed is the pressure on Congress to drill.

Just talking about drilling drove down oil prices by $20 a barrel.

Of course drilling for oil will drive down oil prices. Speculators aren't fools. They make their living examining the long-term prospects of markets, analyzing future supply and demand, and investing in the commodities that will rise in price. And it doesn't take a brain surgeon to recognize that the demand for oil is rapidly outstripping supply. Drilling for more oil will accelerate growth in supply, putting downward pressure on the price of oil futures, and that in turn will drive down the price of oil. Talking about drilling causes the price to fall. Removing the ban on drilling will cause oil prices to fall further. Beginning drilling will cause the price to fall further. Producing oil will cause the price to fall even further.

Free people are free to speculate. Speculators perform 2 important roles in our markets. They insulate suppliers and consumers from abrupt changes in price that would otherwise result from abrupt changes in supply and demand. They also serve as canaries in a coal mine. For decades, experts have been telling us that demand for oil would one day outstrip supply, but Congress continued its Imperial ways regardless. It wasn't until speculators drove up the price that our representatives were forced to acknowledge they're supposed to work for us, not vice-versa. Because of that, government aristocrats want to remove the canaries.

Democrats say it will take 7 to 10 years to extract oil from new drilling. I doubt that's accurate, but so what? We'll want affordable oil in 7 to 10 years too. We'll want prices to drop along the way. If we had started drilling 7 to 10 years ago, we wouldn't have this crisis today.

And who is Congress to ban drilling for oil anyway? This used to be a free country, where free people could identify opportunities and develop them in their pursuit of happiness. Thomas Jefferson championed the idea that a man owned not only the surface of his own land, but what was underneath it – mineral rights. The United States led the world in mineral and oil production because of that revolutionary innovation.

Now a medieval aristocracy controls Congress, it controls what's under our territory, and it bans citizens from extracting oil. We've come full circle from the medieval idea that the aristocracy owned all mineral wealth, through enlightened revolution declaring the people owned their own mineral wealth, back to the medieval view that aristocrats in Congress, not the people, control our oil reserves.

Congressional Democrats have twice tried to pass a bill forcing oil companies to drill on already leased land, whether it is productive today or not, or lose the lease. You can't help but envision congressmen making Americans kneel before them and kiss their signet rings, thanking them for the privilege of ephemeral Congressional grants to some few pieces of land for oil exploration.

We would have cheap energy if not for government. Our Founding Fathers fought a revolution to overthrow tyrannical government. Now we've empowered an Imperial Congress, and we're suffering the consequences of surrendering so much freedom. While China and Cuba plan oil platforms off the coast of Florida, Congress has a different energy policy. Ban. Import. Subsidize. Like the commercial says, in the 70s, we imported 24% of our oil. Today we import 70%. We spend 4 times as much money on foreign oil as we spend on the Iraq war every day. Congress makes communists look good by comparison.

Developing cheaper energy to reduce demand is a wonderful goal, but there is no magic energy source to replace oil. If some energy wizard waved a cheap energy wand today, oil would still be our major source of energy for the next 20 years because it would take that long to transform our infrastructure. Concern over anthropogenic global warming is a fraud. Americans need to drill. Exxon's $1 billion penalty for the Exxon-Valdez spill will guarantee environmentally sensitive drilling.

To develop alternate energy faster, we should end all subsidies. Subsidies pervert the market, waste limited resources, and hamper the development of viable alternative energy sources. Taxpayers pay for subsidies twice. First we pay the taxes out of our pockets. Then we pay higher prices for products like food in the perverted marketplace. This double burden hurts the economy, inventors, entrepreneurs and investors. Abolishing the income tax, which punishes work, investment, and savings, in favor of the FairTax would also greatly benefit the development of alternate energy.

This land is our land, not the aristocrats'. The oil under it belongs to the people who risk their investment to extract and sell it. Taking back our freedom from Congress is the solution to our energy crisis - freedom to increase supply and reduce demand for oil by drilling, building nuclear, coal and other power plants, and developing renewable energy. Ronald Reagan's words ring louder every day. “Government is not the solution to our problems. Government is our problem.”