Creeping toward oil as a social good | csmonitor.com: "The list of answers to higher priced energy, viable or not, is endless. What the US really needs first, though, is a consensus on just how much more government intervention is needed in the private business of oil. Yes, Congress passed another energy bill last year. But tell that to someone who just paid more than $3 a gallon.
A creeping federal role in oil has been taking place for decades, primarily for two reasons: One, foreign governments control more than three-quarters of oil reserves through national oil companies. And two, oil prices rise steeply when a crisis hits one of these often-unstable governments, or one of them uses energy as a weapon.
Look at recent months: Oil prices rose when terrorists tried to bomb Saudi Arabia's oil infrastructure. Militants in Nigeria shut down a fifth of that nation's pipelines. Iran threatens an oil export cutoff. Iraq's oil industry struggles with attacks. Venezuela plays politics with oil exports. Russia restricts exports of natural gas. China's government-controlled oil importers, meanwhile, are roaming the earth to lock up new oil supplies, as Japan did before it.
These nonfree market forces can easily kick up prices in a laissez-faire oil economy. Last year, Americans paid 17 percent more for energy than in 2004, making energy the largest driver of inflation. Another oil shock like that in 1973 could cost $8 trillion, or almost two-thirds of GDP. Such a potentiality pushes even free-market conservatives to ask for a larger federal role in oil, simply for national survival."
Someone e-mailed me recently regarding the Exxon boycott, and he described oil as a fungible commodity. That's true, but it's also a finite commodity, it will become evermore valuable as there is less and less available and becomes harder and harder to extract and refine. It's not a good example for free market capitalism, especially given the examples in this interesting article.