Points Summer Book Club

Paul D. Perry takes on the issue over at DallasBlog and asks an interesting question.

British Petroleum predicted that we had found all major oil that could be found by the early 1980s. They said global production would peak around 1985, yet oil production increased by around 25 percent from 1985 to 2005. The large integrated oil companies have not been as successful finding oil as smaller companies that specialize in drilling and exploration. Was this prediction by BP merely consistent with the major oil company's lack of ability to find new reserves, or was it an effort to keep prices up by underestimating supply in an era (around 1985) when prices were going to trend down? It is always fair to ask who is profiting from a concept.

So says John Stossel over at Realclearpolitics, and I find both his argument and mustache compelling.

What's best is when he points out how flawed McCain and Obama's plans to invest in energy independence.

McCain and Obama talk constantly about how much they will "invest" -- with money taken from the taxpayers, of course -- to achieve energy independence. "[W]e can provide loan guarantees and venture capital to those with the best plans to develop and sell biofuels on a commercial market," Obama said.

What makes Obama think he's qualified to pick the "best plans"? It's the robust competition of the free market that reveals what's best. Obama's program would preempt the only good method we have for learning which form of energy is best.

Has he learned nothing from the conceits of his predecessors? Jimmy Carter, saying that achieving energy independence was the "moral equivalent of war," called for "the most massive peacetime commitment of funds ... to develop America's own alternative". Then he wasted billions of our tax dollars on the utterly failed "synfuel" program.

McCain promises a $300-million prize to whoever develops a battery for an electric car. But the free market already provides plenty of incentive to invent a better battery. As George Mason University economist Donald Boudreaux writes, "Anyone who develops such a device will earn profits dwarfing $300 million simply by selling it on the market. There's absolutely no need for any such taxpayer-funded prize".

That's the case made for more Alaskan and offshore drilling at Reason today, and why we oil only appears to be in short supply.

Outside of developed Western countries, the single largest reason for oil "shortages" is government incompetence and ownership of the subsoil rights so that landowners don't benefit from oil discoveries. In Patagonia, Argentina (a nation with abundant oil), I was told how it was common for landowners to try to hide any evidence of oil seepages from underground, lest the government oil company come in and ruin their lands with no benefit to themselves. Private mineral rights ownership is the reason some 90 percent of all oil wells drilled have been in the U.S. Scientific advances and innovative engineers keep coming up with ways to both discover new fields and keep old ones in production almost indefinitely.