HIGHLAND, UT | 12 May 2008 | Effects of improper use of governmental powers last for many decades. The current energy crisis is a good example of that. Associated Press writer, H. Josef Herbert, reports that Congress is considering two bills this month in an effort alleviate soaring gas prices. He warns, however, “don’t wait for anything that will drive down prices at the pump.” The rest of his news report reveals that government control (force) has stopped energy progress virtually dead in its tracks, and that any further government action will stifle progress even more.

Key Points

• Republican solutions are said to be too little too late and more geared for the long term, thus not able to help the current gas prices.  
• One solution to the most recent so-called oil crisis, is the proposal to drill in the Alaskan National Wildlife Reserve (ANWR), an issued hotly debated for nearly 30 years. Critics say any drilling in the region would not increase production for another 10 years.
• Congress passed a bill in 1995 to allow this drilling but it was vetoed by President Bill Clinton. Had it not been disallowed at that time, perhaps our current oil supply would enjoy a surplus which would result in corresponding lower prices. Since that was vetoed 13 years ago, it put our nation behind by another decade. Regulation in this respect has been a detriment to our economy.
• The Democrat bill is replete with further sanctions and regulations that would stifle progress even further. They wish to confiscate profits from oil companies because they are excessive. They also propose new laws against price gouging and market speculation. Experts, as reported in Herbert’s report, say this would “do more harm than good.”
• The reason being, any time government gets involved with regulating markets, it slows them down and discourages exchange.

Conclusion

Collective action is generally very short sighted. The current energy crisis is the result of many years of regulation and ignoring America’s lack of self-reliance. Had government acted with more prudence in earlier decades, we may have been looking at surpluses now that allow for better market conditions for all involved. As it turns out, the condition is one in which producers of energy find little incentive to meet the demands of the growing market. In many respects Congress treats the American people like helpless little children who are unable to make decisions between rational options. Gas prices are not “unconscionably excessive” as the story reports the Democrats’ perspective. The market (the people involved) have the ability to decide that on their own. If the price is too high, demanders will refuse to exchange at that price. If the price is too low, suppliers will refuse to sell their goods. Both of these pressures in the market tend to drive the price of any good toward the equilibrium. Currently fuels and other energies are in high demand. The suppliers of those energies have every right to push the price until they discover the price equilibrium. But when the market gets involved, it distorts the market. The result of such is a disadvantage for everyone involved.

The current crisis will take many years to be truly overcome. The nation has waited far too long for a solution on this matter. Only when the rulers of force divorce themselves from the regulations of these types of industries will we see improvement.

Action Steps

1. Quit looking to government to solve your problems. 
2. Recognize that the individual has agency and therefore an abundance of solutions. As an individual, explore your own solutions, especially if the price of gasoline seems “unconscionably excessive” right now.
3.  Discuss with your friends, when the topic arises, the basic concepts of supply/demand economics, and that a lower demand for fuel would result in lower prices.
4. Communicate with your Congressman, your desire to have the force of government out of the oil sector by relaxing regulations on harvesting and production of oil products.

MRFC Principles  (3, 4, 7, 9, 11, 12)

Resources

H. Josef Herbert (AP) “Congress divided on energy plan” Yahoo! News, May 12, 2008.