HIGHLAND, UT |18 June 2008 | While surfing the Internet for interesting news stories I came across an advertisement: “Who is to blame for $4 per gallon gasoline?” It then offered three photographs the reader could choose from for the blame. One was a picture of an Arab, representing the OPEC producers of oil. Another was George W. Bush, representing, surely, himself but probably the American government in general as well. And the third was a photo of BP, representing the fuel refinery companies. I clicked the link to find out what the attitude was; unfortunately, it was a broken link and I did not discover its source. But the question still looms in my head. Who is to blame for these outrageous fuel prices?

Ultimately, to argue about “fault” is a useless endeavor. It does nothing to solve the problem and serves to raise animosity between different camps. Much more productive is to recognize the powers at work in the issue and to see how principles govern the process.

Key Points

• Perspective determines action. The ever important principle: one must be on the lookout for deception, and self-deception is the most dangerous kind. A Free Capitalist will recognize that he is always free to act, and will reject situations in which he is acted upon.
  Regarding gasoline: As the twentieth century wore on and we have moved into the twenty-first, mankind’s seeming dependence upon petroleum based products is increasingly evident. Perhaps, similar to a drug dealer, the producers of petroleum have kept the prices artificially low until we have become addicted to their convenience in our lives. Now that we think we “gotta have it” these producers are letting us “have it” by raising the prices above levels reasonable to most. A proper perspective on the matter allows an individual to recognize the freedom to act in many different ways.
• Human Life Value is the source and creator of all Property Value.The price of oil or gas is never a necessary or natural phenomenon. The price is set by producers and consumers who voluntarily engage in free exchange with one another. The parties involved are always free to ask prices, negotiate better circumstances, or to walk away.
• Exchange creates wealth. This principle ensures that both parties ultimately want the exchange to take place. Both sides wish to prosper.
• Faith (the driving force within individuals) begins with self-interest. The Free Capitalist individual will assess and recognize his self-interest while deciding to pay any price at the pump, and will determine whether to pay, negotiate, or to refuse the exchange. The fact that the individual acts is an indication of his faith.
• Force destroys freedom. The proper role of government in any economy is not to participate but rather to referee. President Bush’s and others’ imploring of OPEC to lower prices or to produce more oil is misguided and inappropriate. The only role is to ensure that both parties enter the exchange voluntarily and that no deception is involved.
  The Organization of Petroleum Exporting Countries (OPEC) is one of force, in that it is a cartel monopoly supported by practically every political government in the world. It reduces the competitive nature of the industry, which in turn could invite lopsided exchanges to occur. Government, in this respect, has failed its citizens by failing to referee situations in which free exchange can take place.
  Still, this is not to say that all exchanges are forced. Individuals are still responsible for their own actions and may choose to either exchange as they see fit, or to refuse to exchange.

Conclusion

Upon checking the link to the question again, I find that it links to an offer for Money and Markets newsletter. The poll, has many other choices than just the three people like to blame the most, though still none of blame answers is appropriate. The matter, ultimately, and most morally, is simply one of market conditions. Producers are free to ask as much as they believe people will pay. Consumers (or buyers) are free to counter that asking price or to find some other solution, thereby lowering the producers’ asking price to a level more acceptable to those consumers. Individuals must remember they are free to enter or refuse the exchange based upon their self-interests.

Action Items

(The following list is not hierarchical; perhaps simply multiple choice)

• Refuse to pay by not engaging in the transaction.
• Ride a bike to work.
• Walk to work.
• Work at home.
• Buy a vehicle that runs on alternative fuel sources.
• Explore ways to increase your own income (i.e. create more value for people) so you can afford the rising cost of fuel.
• If you are one of the very smart ones, create your own alternative fuel source and challenge the premise that the world must only run on petroleum.

MRFC Principles:  (2, 4, 6, 8, 10, 11)

Sources

“Who’s to Blame for $4 Gas” Choose your answer and see what most respondents believe. You may be surprised.

For comments about government being the referee, see Milton Friedman’s Capitalism and Freedom, fortieth anniversary edition, University of Chicago Press, 2002.