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Mr. Practical on Energy


There is no real free market for energy.


Editor's Note: Who's Mr. Practical? Learn more about him here.

Dear John,

I share your concerns, but when you get as old as me you don't get frustrated. You learn how the world works and why governments are so "ineffectual" (a kind, political word).

On my way to Korea I stopped in Dubai just to see what was going on. One of the most amazing sights I have seen in my ninety years was their indoor ski slope in the middle of the desert, a billion dollar plus work being built with "oil dollars."

Do you think it coincidence that the key governments to world economic production are dragging their feet in addressing the energy problem?

First, any meaningful, albeit necessary for stable long term economic growth, steps to curtail demand for oil in order to set the stage for new energy source development would slow short term growth and reduce these governments' power (for the only power a government has is rooted in controlling its populace). Second, the individuals in power in these governments are almost certainly immensely benefiting financially from higher oil prices.

The lip service being dedicated to saying something is being done while nothing is can only be compared to the lip service we get from the Fed.

Now, you know I abhor government being involved in free markets; how they inevitably make things worse, but I think this a special case. There is no real free market for energy; it is a consortium of artificial tariffs and monopolies where the barriers to entry are designed by fiat. It is a mercantile structure built slowly and insidiously over the years; a structure that has thwarted a free market allocation of energy. A free market can only develop if the artificial one is first torn down.

If I were president of the United States, I would take some pretty logical steps, so by definition they would surprise many. First, I would gather the world's experts and develop a realistic plan of conservation, development, and conversion. This may be a ten year plan, I just don't know, but at least it would be a plan. Next, I would recommend a tax on oil to be phased in over time to fund this development and reduce oil demand to coincide with the plan's agenda for conservation and conversion.

It is simple to conceive but, I admit, hard to implement. But I have found one of the great truths is that almost everything that is hard is worthwhile. It is not a question of do we have the intelligence to accomplish this; it is a question of will.

I only have one question: Will we let the few who are benefiting greatly from a perverse energy market rule the many who will greatly suffer from it?

Yours Truly,

Mr. Practical

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