David Lazarus - US Addiction to Oil puts it at mercy of risky characters

michael · June 9, 2004, 8:47pm

Dear Business Editor,

In David Lazarus's June 6th article, "US Addiction to Oil puts it at
mercy of risky characters", he and UC Energy Institute's director Dr.
Borenstein advocate "tough love" in the form of higher gas taxes as a
remedy to our "addiction to oil". Unfortunately, tough love and taxes
will not put gas in our tanks nor will it reduce our dependence on
"risky characters".

To be fair, Mr. Lazarus and Dr. Borenstein are half right. Rising prices
will reduce consumption. But price increases from taxes do nothing to
increase a producer's ability to expand supply. We've been hearing that
production would peak and fall and that crisis is nearly upon us since
1956. But rising prices and expanding production have consistently
proven the doomsayers wrong.

The real risky characters are those who consume tax money, the
government. Instead of encouraging peaceful production and trading, they
use our tax-funded military to force their will on others. This leads to
strife that destabilizes our energy supply which raises the cost in so
many ways. Think of what gas would cost if it included military expenses
in the region.

Oil producers and profits are not the problem. Government and their
mercantilist cronies who operate their lucrative "protection racket"
between consumers and producers are the riskiest characters of all. They
thrive on and encourage the conflict. Yes, Halliburton comes to mind.
The only way to rid ourselves of them is to starve them out. End the
taxes, free the market and stop the fighting now.

The market delivers the only effective form of "tough love". When prices
get high enough, there will be plenty of incentive to reduce
consumption. There will also be plenty of money in the transaction to
encourage entrepreneurs to try to make a buck by peacefully providing
alternatives and showing us how to conserve. You'll never see government
or taxes do anything like it.

Michael Denny

2435 Lake Street

San Francisco, CA 94121

(415) 986-7677 x123 wk

(415) 750-9340 home

mike@...

tradergroupe · June 9, 2004, 9:42pm

Dear Mike;

Good LTE Business Editor. However, there is one thing missing from your LTE equation - a corrollary on the cost of the petroleum to make the gas. The Mises Institute had a recent article : Profits Do Not Cause Higher Prices. Part of the article used a Lemonade Stand simile to show how rising costs of products to make the lemonade did not necessarily create more profits. In addition, higher cost are also associated with environmental and zoning laws. And as the author pointed out it has been 30 years since a brand new petroleum refinery has been built.

http://www.mises.org/fullarticle.asp?control=1520&id=69

A previous article: A Rite of Spring, had even more on the gas prices, gouging and OPEC.
http://www.mises.org/fullarticle.asp?control=1485&id=68

His final analysis: the government not the market is the problem why we have a problem with gas prices and higher taxes willnot solve the problem.

Ron Getty
SF Libertarian

Mike Denny <mike@...> wrote:

Dear Business Editor,

In David Lazarus�s June 6th article, �US Addiction to Oil puts it at mercy of risky characters�, he and UC Energy Institute�s director Dr. Borenstein advocate �tough love� in the form of higher gas taxes as a remedy to our �addiction to oil�. Unfortunately, tough love and taxes will not put gas in our tanks nor will it reduce our dependence on �risky characters�.

To be fair, Mr. Lazarus and Dr. Borenstein are half right. Rising prices will reduce consumption. But price increases from taxes do nothing to increase a producer�s ability to expand supply. We�ve been hearing that production would peak and fall and that crisis is nearly upon us since 1956. But rising prices and expanding production have consistently proven the doomsayers wrong.

The real risky characters are those who consume tax money, the government. Instead of encouraging peaceful production and trading, they use our tax-funded military to force their will on others. This leads to strife that destabilizes our energy supply which raises the cost in so many ways. Think of what gas would cost if it included military expenses in the region.

Oil producers and profits are not the problem. Government and their mercantilist cronies who operate their lucrative �protection racket� between consumers and producers are the riskiest characters of all. They thrive on and encourage the conflict. Yes, Halliburton comes to mind. The only way to rid ourselves of them is to starve them out. End the taxes, free the market and stop the fighting now.

The market delivers the only effective form of �tough love�. When prices get high enough, there will be plenty of incentive to reduce consumption. There will also be plenty of money in the transaction to encourage entrepreneurs to try to make a buck by peacefully providing alternatives and showing us how to conserve. You�ll never see government or taxes do anything like it.