John Ransom

FROM THIS MONTH'S TOWNHALL MAGAZINE:

Let’s get to the truth about energy security.

The biggest problem with our energy policy in this country isn’t the lack of direction by the federal government. Nor is it speculation. Sure loose money policies by the Fed have pushed prices up this year substantially. But that  not our biggest problem either.

No. Instead, it’s lack of free markets for energy. We lack free markets because the federal government gets involved in our energy decisions. The feds, in short, act as a kind of monopoly for the energy supply.

Let’s start with OPEC.

OPEC is a cartel, not a monopoly. Yet, OPEC engages in behavior that US Congress would never tolerate by monopoly sports leagues that enjoy anti-trust exemptions.  

At cartel is, by definition, anti-free market. A cartel engages in activities, which, were they to happen in the US by any industry group, would be deemed illegal. OPEC fixes prices, regulates supply and acts in concert with their members to control the market for oil. While Congress wrings its hands over AT&T and NFL anti-trust matters, they ignore the anti-trust implications of our OPEC allies have on 5 percent of our economy as measured by GDP.

Our involvement in several wars because of oil isn’t a dirty secret, but a geopolitical reality. In the larger context, however, free markets for oil in the Middle East must be one of the reforms the US demands from our Middle East partners. A free people can not exist without free markets. For years, regimes in the Gulf States have clung to power by clinging to manipulated markets in oil. The oil money has allowed them to paper over a lot indiscretions, including the indiscretion of shutting out the modern world.

But all of that seemingly is coming to an end for regimes from North Africa to Persia. And our substantial investment in the region in money and blood demands that we get free markets for oil in return for our commitment to the security of the region.

Or we leave. 

We have more energy in shale oil and gas under the Rocky Mountains states of Colorado, Utah and Wyoming than Saudi Arabia has proven reserves. However, the markets don’t work because the US owns much of the land in the Rockies under which that energy is found. 

Even before Obama became president the national government was hostile to our most abundant source of energy, coal. Obama openly bragged about bankrupting the coal industry if he became president.

It might be time to take those boasts seriously.


John Ransom

John Ransom is the Finance Editor for Townhall Finance.