“We’ve got to go after the oil companies,” says President-elect Barack Obama in response to high oil and gasoline prices. “We’ve got to go after [their] windfall profits.”1 Explaining the purpose of recently proposed energy legislation, Senate Majority Leader Harry Reid says: “We are forcing oil companies to change their ways. We will hold them accountable for unconscionable price-gouging and force them to invest in renewable energy or pay a price for refusing to do so.”2 Calling for government seizure of private power plants, California Senate Leader John Burton insists: “We have to do something. These people have got us by the throat. They’re making more money than God, and we’ve got to fight back—not with words, but with actions.”3

 

This attitude toward energy producers, which is practically unanimous among American politicians today, is wreaking havoc not only on the lives and rights of these producers, but on the lives and rights of Americans in general. It leads to laws and regulations that prohibit producers and consumers from acting on their rational judgment with respect to energy. It causes energy shortages, brownouts, and blackouts that thwart everyone’s ability to be productive and enjoy life. And it results in higher prices not only for energy, but for every good and service that depends on energy—which means every good and service in the marketplace, from food to transportation to medical care to sporting events to education to housing.

Energy producers, like all rational businessmen, are in business to make money. Profits are what motivate them to exert the requisite brain power, to engage in the necessary research, and to invest the massive amounts of money required to produce and deliver the energy we need to light, heat, and cool our homes, and to power the factories, workplaces, and tools required to produce the goods on which our lives depend. Their profit motive is to our benefit.

Moreover, energy producers, like all human beings, have a moral right to act according to their own judgment so long as they do not violate the rights of others. They have a moral right to use and dispose of the product of their effort as they see fit. They have a moral right to contract with customers by mutual consent to mutual benefit. In other words, they have a moral right to life, liberty, property, and the pursuit of happiness. And it is only by respecting these rights that we can expect energy producers to produce energy.

So let us examine the assault on these producers, count the ways in which this assault is both impractical and immoral, and specify what must be done to rectify this injustice.

How Government Thwarts Oil and Gas Production and Raises Prices

The recent decline in oil and gasoline prices is a welcome reprieve, but the oil industry is still replete with problems that, if not solved, will lead to shortages and unnecessarily high prices. The proximate cause of these problems is the U.S. government.

One way in which the U.S. government thwarts oil and gasoline production is through the limitations it places on oil drilling. The government severely restricts drilling on the continental shelf and declares “conservation areas” such as the Arctic National Wildlife Refuge (ANWR) completely off limits to new drilling. If oil companies were free to drill in ANWR, the estimated 0.5 to 1.5 million additional barrels of oil they could produce each day would increase available supplies and help insulate Americans from the actions of oil cartels controlled by foreign governments.4 Government limitations on oil drilling result in reduced supplies of oil, increased reliance on foreign oil, and, not surprisingly, higher prices for oil and for everything that depends on it.

Insofar as the government does permit oil companies to operate, environmental regulations and lawsuits subject them to higher costs and great financial and legal risk. The Environmental Protection Agency (EPA) has brought numerous lawsuits against oil producers, increasing by billions of dollars their cost of doing business and, in turn, the price of their product. Given that increasing their production would result in increasing their exposure to lawsuits, it should not be surprising that oil companies have built no new refineries in the United States in the past thirty years. In fact, fewer U.S. oil refineries exist today than in 1976 when the last refinery was built—and total refinery capacity actually has declined since the early 1980s.5 Meanwhile, excess oil refining capacity has declined since the 1980s, rendering refiners ill equipped to handle sudden spikes in demand or unscheduled supply outages.6 By saddling oil producers with environmental lawsuits and regulations, the U.S. government has severely curbed their output—and left Americans susceptible to sudden spikes in prices that would not occur were producers free to produce.

The government’s mandate that oil refiners add renewable fuel to gasoline sold for automobile consumption further increases America’s energy costs. Ethanol, the most widely used renewable fuel (due largely to government subsidization of its production), cannot be produced in oil refineries; and because it does not travel well through pipelines, it must be shipped by truck from factories in the Midwest, an expense reflected in the price we pay per gallon of gasoline. Further, because ethanol’s properties prevent refiners from adding as much of it to gasoline as they could other additives, more gasoline must be used per gallon sold at the pump, further increasing the cost per gallon and decreasing gasoline supplies. One petroleum engineer estimates that the U.S. government’s ethanol mandate alone adds thirty-five to forty cents to the cost of each gallon of gasoline.7

State and federal taxes add further to the cost. The average combined taxes imposed by state and federal governments on each gallon of gasoline are forty-seven cents—more than 24 percent of the current average price of regular, unleaded gasoline in the United States.8 Although politicians such as Barack Obama and Harry Reid cite high prices as a reason for greater controls on the oil industry, the taxation they support is partly responsible for those higher prices.

Government-imposed price controls—which are not now in place but are being pushed by many politicians (e.g., the Consumer-First Energy Act of 2008)—further thwart oil companies’ ability to produce. When gasoline is in short supply, as it was in the 1970s during the Arab oil embargo, oil companies logically need to raise the price of their product to reflect the fact that their supplies are low relative to demand. These higher prices signal consumers to reduce consumption and give producers an incentive to expand their capacities—both of which contribute to the eventual normalization of supplies and prices. When the government imposes price controls, it violates the rights of oil companies to price their product according to their own judgment of the relevant facts; it removes their incentive and ability to expand production as well as the incentive and ability of would-be entrepreneurs to develop new sources of oil; and it shields consumers from relevant market data, which in a free market is conveyed by the market price, thus leading them to consume more oil and gasoline than they would if they were privy to that crucial economic information.

During the Arab embargo, American oil companies could have profited from the higher prices necessitated by the decreased gasoline supply. And their profits would have given them the incentive and capital with which to expand production and increase supplies of available oil. But because U.S. politicians imposed price controls—thereby forcibly preventing oil companies from raising their prices as required by market conditions—the demand for gasoline exceeded the available supplies. A shortage resulted, and innocently ignorant people attempting to purchase the good found themselves in long lines at gas stations and subject to government rationing. Had U.S. politicians not prevented oil producers from raising their prices as necessitated by the reduced supplies during the embargo, the higher prices would have given oil producers the incentive and ability to expand production and consumers the cue to reduce consumption. And, had prices risen in accordance with market conditions, foreign oil producers who were not participating in the embargo would have shipped more oil to the United States so that they could also have profited from the higher prices. But government price controls prevented producers and consumers from making these rational economic decisions; as a result, everyone suffered.

Of course, other factors affect the price and supply of oil. Oil prices in the United States are to a significant extent affected by the actions of foreign governments. More than 75 percent of the proven oil reserves worldwide are under the control of nationalized or government-controlled oil companies in foreign countries (e.g., Russia, Venezuela, and countries in the Middle East), and the United States obtains about 60 percent of its oil through imports.9 Governments in foreign countries have even less respect for individual rights than does the U.S. government; thus they expropriate property, regulate production, and curb supply on an even greater scale.

Changes in the worldwide demand for oil and speculation in oil markets affect the price of oil as well. Oil prices reached record highs in 2008, due in part to rapidly increasing demand for oil overseas in developing countries (such as China and India). When demand for oil subsequently declined due to the spreading economic crisis, prices dropped in late 2008. Likewise, when speculators purchase large quantities of oil, prices temporarily increase; when they later sell that oil, prices decrease. The swings in price from speculation and foreign demand are now more volatile than they need be because of government restrictions on production capacity. When demand constantly pushes up against the capacity of the system, fluctuations in demand cause price to fluctuate wildly, especially for a good that is not very sensitive to changes in price (an inelastic good) such as oil.

However, foreign governments are not the main cause of our oil troubles; our own government is the main cause. Neither foreign demand nor speculation ultimately prevents us from getting the oil we need. Foreign demand for oil provides more incentive for oil companies to be as productive and efficient as possible. And far from thwarting the supply of oil, speculation helps to keep it in line with demand by accounting for likely future trends based on all the relevant economic data.

What prevents Americans from obtaining the oil and gasoline we need is environmental regulations and other government controls. In order to produce, oil companies must be free to drill for, transport, and refine oil and gasoline—and they must be free to trade their product by mutual consent to mutual advantage in the marketplace. Government violations of the rights of oil companies to do so curb oil production and raise the prices of oil and everything it affects.

How Government Thwarts Electricity Production and Raises Prices

As with government controls on oil and gasoline production, government controls on electricity production violate the rights of producers to act on their judgment, curb the supply of electricity, and make the available electricity—and everything that depends on electricity—more expensive.

If electricity producers were free to build and operate nuclear power plants as they see fit, they would significantly increase America’s supply of electricity. But the government—assuming it even permits a plant to be built—makes construction extremely expensive, hinders the operation of such plants after they have been constructed, and causes them to be taken out of service long before they have reached the end of their useful lives. For instance, whereas in France nuclear power plant construction takes five to six years, in San Luis Obispo County, California, regulatory delays caused the construction of the Diablo Canyon Power Plant to take seventeen years—while obstacles created by environmental regulations increased the cost of the plant twelvefold, from $500 million to $6 billion.10

The government justifies such delays and obstacles on the grounds that nuclear power is inherently dangerous and thus requires special oversight. However, nuclear power is used safely around the world; ten nations get more than 40 percent of their electricity from nuclear power, led by France with 78.5 percent.11 And the two examples that are typically cited as proof of the danger of nuclear power do not serve as such proof. The Three Mile Island accident in 1979 proved the efficacy of the plant’s safety system. Contrary to hysterical media reports, Three Mile Island’s safety features worked as planned, and the radiation that was emitted into the surrounding area as a result of the incident was far less than that emitted naturally from the ground each year.12 The Chernobyl disaster in 1986 demonstrated only that communist countries—which violate producers’ and consumers’ rights as a matter of course, and eliminate the free-market motivation to maintain one’s reputation, to avoid lawsuits, and to make money—tend to produce unsafe products. The plant’s safety features were utterly inadequate by the construction standards of the relatively free West, and those safety features that were present were often purposely circumvented.13 The Chernobyl incident is a monument to the disastrous consequences of government control of the economy.

The U.S. government also violates the right of power companies to build hydroelectric plants. As with nuclear power, greater use of hydroelectric power could significantly increase America’s supply of electricity. But whereas power companies are eager to take greater advantage of the renewable power of running water, the government not only prohibits them from building dams; it forces them to dismantle dams—and not for imagined public safety reasons, as is the case with nuclear power.

A 2002 study shows that the leading cause of dams being dismantled in recent decades is environmental regulations. The grossly misnamed Electric Consumers Protection Act of 1986, for instance, mandates that, when the government considers whether to allow hydroelectric projects to move forward, the “need” to protect wildlife be granted equal status with the human need for electricity.14 When the government pretends that fish have rights, it violates the actual rights of power companies to build dams and of consumers to trade with those companies to mutual benefit.

Environmental regulations also hinder the generation of electricity with coal. In 1999, the Environmental Protection Agency attempted to impose more stringent rules for ozone and soot emissions on coal-powered electric utilities. When an appeals court ruled that the EPA was overstepping its legal bounds, the EPA, environmental organizations such as the Natural Resources Defense Council and the Sierra Club, and the states of New York and Connecticut filed suits against coal-burning facilities in the Midwest and South, claiming that these energy producers were violating existing provisions of the Clean Air Act by making major modifications to their facilities without obtaining the necessary permits and without making upgrades to their pollution-control devices as required by the Act. One of the fifty-one facilities involved in the suits has paid the largest settlement ever in an environmental case—and a number of suits are still pending.15

Such regulations and lawsuits, motivated by environmentalism, preclude or discourage electric utilities from using coal power, which is ultimately reflected in the price consumers pay for electricity. And if president-elect Obama has his way, things will get much worse for the coal-powered electric utilities. Obama seeks, in his own words, to “put a cap and trade system in place that is as aggressive, if not more aggressive, than anybody else’s out there.”

[E]very unit of carbon or greenhouse gases emitted would be charged to the polluter. That will create a market in which whatever technologies are out there that are being presented, whatever power plants that are being built, that they would have to meet the rigors of that market and the ratcheted down caps that are being placed, imposed every year. So if somebody wants to build a coal-powered plant, they can; it’s just that it will bankrupt them because they’re going to be charged a huge sum for all that greenhouse gas that’s being emitted.16

In addition to “safety” and “environmental” controls, our federal and state governments thwart the electricity industry with economic controls. By granting legal monopolies to certain electricity producers within a given geographic region, the government forcibly prevents would-be competitors from competing with those anointed few. Not surprisingly, the result of these government-enforced franchises is less innovation, lower supplies, and higher prices than if energy producers were free to act on their own judgment and compete with each other. The government’s “fix” for this government-created problem is to regulate the rates of the government-granted electricity monopolies—which only exacerbates the problem. When the government eliminates competition and guarantees the anointed companies certain rates of return, it removes the incentive that electrical utilities would have in a free market to improve efficiency and quality. And when the government-dictated rates of return are below what the market would dictate, the kinds of electricity problems that have plagued America in recent decades ensue.

As is the case with the oil industry, price controls imposed on the electricity industry reduce the ability of and incentive for utilities to produce, and encourage overconsumption by customers. These and other controls result in brownouts, such as those that have occurred in the eastern United States, and rolling blackouts, such as those that have plagued California. Brownouts result when a utility cannot supply the voltage required for the system. Rolling blackouts result when the government, such as that of California, attempts to fix the government-created problem of low electricity supplies by periodically turning out the lights here and there to prevent the wider blackouts that would otherwise follow from its coercive rate controls. The government favors this “solution” of scheduled power outages over the alternative solution of freeing power companies to take the actions necessary to produce more electricity, to build new plants, to compete with each other, and to charge rates that correspond to market conditions.

California’s electricity problems in the past decade are often blamed on its alleged attempt in 1996 to deregulate its electricity market, but the state’s electricity market is and has been one of the most regulated in the country. Although California temporarily lifted price caps in certain portions of the market in 1996, it regulated the production and distribution of electricity through the California Power Exchange (Cal PX), a state-controlled trading floor through which most buying and selling of wholesale electricity took place. It forced utilities to sell much of the electricity they generated to competitors and then buy it back through the Cal PX. It outlawed most long-term purchase contracts of electricity (and therefore the long-term business planning and price stability that such contracts make possible) and instead forced purchasers of wholesale electricity to buy energy for delivery within a day.17 The law California passed in 1996 burdened its electricity market with such a mass of new regulations that to call this “deregulation” is like saying that a metastasizing cancer is in remission.

The result of California’s “deregulation” was to further force energy producers to act against their judgment, which in turn further reduced the supply of electricity relative to the rapidly growing demand in California. From 1996 until the 2000 electricity crisis in California, demand for electricity rose by 50 percent while supplies increased by only 6 percent.18 And from the late 1980s until the time of the crisis, generating capacity in California actually declined while demand soared.19 After California lifted price caps in 2000, the rising prices revealed the obvious: the regulations California had imposed on its electricity producers (along with lawsuits by environmentalists) prevented producers from profitably meeting rising consumer demand. If the California government had permanently abolished the price caps in all electricity markets across the state, along with abolishing environmental and other regulations that restricted the production of energy, the resulting freedom to produce along with the temporarily higher prices dictated by the market would have given power companies the incentive and ability to expand their production. The retraction of California’s interference in the energy market would have led, in time, to a thriving market with lower prices. Unfortunately, rather than eliminating its control over utilities, California reinstituted the price caps and perpetuated its electricity problems.20

Environmental regulations and other government controls—not the free market—are causing our nation’s electricity problems. Federal and state governments violate the rights of electricity producers to act on their own judgment with respect to the relevant facts, to run their businesses as they see fit, to construct power plants as they deem necessary, to compete with each other for customers, and thus to profitably supply electricity in accordance with the increasing demand.

Common Objections to Freedom in the Energy Market

If government regulations have such harmful effects on energy production, why do most Americans either advocate or tolerate them?

Some advocates of government intervention in the energy market claim that natural resources, such as the fossil fuels used for oil and electricity production, are “limited” and thus that the government is justified in imposing controls on energy producers and in subsidizing “alternative energy” pursuits. Such claims not only fail to justify the use of government force against energy producers and taxpayers (who ultimately do the subsidizing); they are also factually incorrect.

The earth is a solid ball of chemical compounds and elements, from its molten core to the perimeter of its gaseous atmosphere. We literally have just begun to scratch the surface toward gaining access to the resources contained within the earth. The deepest oil wells today descend only about seven miles into the earth and the deepest mines only about one or two miles; yet it is almost four thousand miles from the surface of the earth to its core. The sheer physical volume of potential resources contained within the earth is about 260 billion cubic miles. As long as scientists and businessmen are free to profit by tapping and using the earth’s resources, there is no end in sight to sources of energy.21

Even if we could manage largely to deplete currently known supplies of a particular fossil fuel, say petroleum, we would be in no danger of running out of natural resources—or even that resource. Since the early days of the oil industry, people have been predicting the imminent end of oil reserves.22 But we have, in fact, continually discovered more oil reserves. And today, even with dramatically increased oil consumption around the globe, the years of reserves of known oil deposits are higher than ever. Likewise, the years of reserves of other fossil fuels—coal and natural gas—as well as the uranium used by nuclear plants have continued to grow.23 And even if the years of reserves of any particular resource began to diminish, barring market distortions caused by price controls and other regulations, the price of the diminishing resource would begin to rise long before the resource was depleted. This would (a) signal to consumers well in advance to reduce their consumption of this resource and to turn to different sources for the relevant need, and (b) signal to businessmen that their profits lie in developing different sources to supply the relevant need.

A lack of natural resources is not preventing American businessmen from producing the energy we need; the proliferation of rights-violating laws and regulations is. Businessmen in a free market seeking to profit can and will discover methods and resources with which to produce the energy (and the many other products) we need to live. Businessmen prohibited from acting on their judgment will not. Production requires freedom.

Advocates of regulation also cite pollution as a reason to control the energy industry. But pollution is a necessary by-product of industrialization and of human life. To demand the elimination of pollution is to demand not only the elimination of industry but the elimination of human beings. A person cannot get through a day without polluting. Practically everything we do—from making hamburgers to making shoes to building homes to producing medicine to driving to work to visiting the restroom—creates waste. Pollution is not inherently bad; it is inherent in human life—which is the very standard of the good. Some degree of pollution is inherent in industry, and anyone who wants to live and enjoy the fruits of industry must embrace that fact.

Of course it is morally wrong and properly illegal for someone to knowingly dump toxic chemicals into a river, thereby endangering the health and property of those living downstream. In a rights-respecting society, individuals and companies are forbidden from physically harming others or damaging their property. But this does not mean that government should seek to regulate out of existence pollutants emitted by industry. As Ayn Rand stated the political principle involving pollution:

[I]f a man creates a physical danger or harm to others, which extends beyond the line of his own property, such as unsanitary conditions or even loud noise, and if this is proved, the law can and does hold him responsible. If the condition is collective, such as in an overcrowded city, appropriate and objective laws can be defined, protecting the rights of all those involved—as was done in the case of oil rights, air-space rights, etc. But such laws cannot demand the impossible, must not be aimed at a single scapegoat, i.e., the industrialists, and must take into consideration the whole context of the problem, i.e., the absolute necessity of the continued existence of industry—if the preservation of human life is the standard.24

Pollution cannot be eliminated. And to the extent that it can be minimized without thwarting industry or other requirements of human life, it is properly the concern of interested scientists and businessmen—not bureaucrats or politicians. If people want vehicles that produce less pollution, then businessmen who think they can profit by producing and marketing such vehicles will finance the research and development necessary to pursue those profits. If people are unhappy with the air quality in a given city, they can either move to a cleaner location or start doing business only with companies that try to minimize their contribution to the air problem. If enough people are concerned with the air quality and act accordingly by patronizing companies that respect their concerns, then businessmen will quickly find it in their self-interest to develop or modify products in order to profit from this new fact in the marketplace. And those businesses that best meet this challenge will tout their superiority over their competitors.

History shows that the more industrialized, freer, wealthier, more technologically advanced countries, such as the United States and Great Britain, enjoy better air quality than do less industrialized countries.25 Large cities in less industrialized countries, such as Mexico and India, are generally more polluted—because when people are struggling merely to produce the food necessary for survival, they can hardly afford to concern themselves with catalytic converters and smokestack scrubber systems.

Of course, environmentalists are desperately trying to create a state of fear and hysteria regarding “global warming” in order to convince us to enact government controls that will bring man’s activities to a virtual standstill. If we do not reduce the pollution caused by our consumption of fossil fuels, the environmentalists assure us, the resulting increase in atmospheric temperature will have catastrophic effects. In addition to systematically ignoring or evading the life-serving value of industrialization (or, worse, explicitly denouncing it by chanting “back to the Pleistocene”), environmentalists base their doomsday claims on shoddy science. It is far from conclusive that man’s activities have anything to do with the long-term warming trend, or that such a trend would be harmful to human life. To the extent that earth has experienced periods of cooling and warming, the available evidence indicates that these fluctuations are most likely a function of natural variations in solar activity.26 But even if the long-term warming trend were life-threatening and even if man’s activities had something to do with it, these facts would not justify government interference in the energy industry (or in any industry). The only way to solve such a problem—if it ever arises—is by leaving profit-seeking scientists and businessmen free to do the necessary research and development and produce the products we need to overcome the problem, such as more and better housing, air conditioning systems, flood control systems, and so on.

Before industrialization, people could not expect to live past the age of 25. Anyone who cares about human life and prosperity must recognize and respect the rights of those who make human life and prosperity possible—the industrialists, the businessmen, the producers. Energy producers are key among these benefactors of human life, because they fuel and make possible all the other industries. Government regulations on the energy industry violate the rights of these businessmen to act on their judgment; this, in turn, reduces the supply of energy, increases the price of energy, and lowers our standard of living. It is high time we put an end to the malicious practice of government interference in the energy industry.

The False Moral Idea Underlying the Assault on Energy Producers

Despite the disastrous consequences of government intervention in the energy industry, Americans by and large regard such regulations as morally necessary. This is because most Americans accept the notion that being moral consists in self-sacrifice, whether for the sake of “others”—altruism—or for the sake of “nature”—environmentalism. Altruism and environmentalism are what lead Americans to support regulations that thwart their lives.

Altruism is the motivation behind such government controls on energy production as maximum price controls and legalized monopolies. If it is moral to sacrifice oneself for the sake of others, it follows that energy producers should sacrifice their businesses and their profits for the sake of “the common good,” and that government force should be used to see to it that they do. If low energy prices are good for society, it follows that the government should impose price controls on energy producers. If politicians in a given region decide that a community would be better off if there were only one supplier of electricity, it follows that the government should grant an exclusive franchise to one utility and forcibly prevent others from establishing businesses in that region. The fact that price controls and legalized monopolies make no economic sense is treated, at best, as a side issue. The main concern on the altruist premise is that we do the “right” thing and force the greedy corporations to sacrifice for the common good. If the principle of altruism is true—if being moral consists in sacrificing for others—then government regulation of the energy industry forces energy producers to be moral. Who can argue with that?

Likewise, environmentalism is the moral motivation behind an increasing number of government controls. In its inconsistent and thus less-malicious form, environmentalism holds that we should altruistically preserve nature in its current state for the sake of future generations. In its consistent form, environmentalism holds that man should sacrifice not for the sake of other men, but for the sake of “nature”—snail darters, spotted owls, trees, everything that is non-man.27 As one environmentalist, a research biologist at the National Park Service, puts it: “We are not interested in the utility of a particular species, or free-flowing river, or ecosystem, to mankind. They have intrinsic va29lue, more value—to me—than another human body, or a billion of them. Human happiness, and certainly human fecundity, are not as important as a wild and healthy planet.”28 If a “wild and healthy planet” has “intrinsic value”—value apart from and irrespective of the needs of human beings—then it is immoral for man to use nature to suit his needs—and it is moral for government to stop energy producers and consumers from doing so. If hydroelectric dams harm fish, then the government must restrict or prevent power companies from building dams and even force utilities to dismantle them. If, as the Alaska Wilderness League insists, “[d]rilling the wildest place in America is objectionable no matter how it’s packaged,” then the government should restrict oil companies from exploring such regions as ANWR.29 If nature has “intrinsic value,” then government regulation of the energy industry is morally necessary to ensure the preservation of that “intrinsic value.”

Because Americans, by and large, accept the idea that self-sacrifice is morally good, America is willing to impose government controls that enslave energy producers to the “common good” or “future generations” or “mother nature.” And until people recognize the fact that human sacrifice is not moral but evil, they will continue to advocate such controls and suffer the consequences.

Our lives and prosperity require that we free the producers who seek to harness earth’s resources and convert them into the energy we need. It is time that we recognize the profound virtue of the energy producers and their activities, that we stop complaining about their profits, and that we stop sacrificing them—and consequently ourselves—for the alleged sake of “others” and “nature.”

Toward Ending the Assault on Energy Producers

If we want access to the energy on which our lives depend, we must recognize and embrace the moral principle that enables the energy producers to produce and deliver energy: the principle of individual rights—the fact that each individual has a moral prerogative to act on his own judgment for his own sake.

Energy producers are not free to drill for oil, not free to construct new power plants, to compete and innovate, to contract with customers by mutual consent to mutual benefit, to promote human life and prosperity—all because they are not free to act on their own judgment. At almost every step, government regulations violate the rights of energy producers by dictating what they can and cannot do. At almost every step, government force—wielded in the name of the morality of sacrifice—thwarts these life-serving producers and their profoundly vital pursuits. The assault on energy producers is obscenely immoral and—as detailed in this article—this immorality has serious consequences for all of us.

Those who want to enjoy the fruits of industrial civilization have a selfish, moral obligation to demand that energy producers be set free to produce and profit as they see fit. The moral and practical solution to our energy problems is to abolish controls on the energy industry. The sooner and faster we move in that direction, the better.

Endnotes

Acknowledgments: I thank Craig Biddle and Alan Germani for their extensive work on this article. I also thank Alex Epstein, Annaliese Cassarino, and Jim Brown for helpful comments on earlier versions of the essay.

1 Mike Dorning and Rick Pearson, “Candidates Rev Up Rhetoric Over Gas Tax, Obama Rapped for Opposing ‘Quick Fix,’” Chicago Tribune, April 29, 2008, http://archives.chicagotribune.com/2008/apr/29/news/chi-campaign_tuesapr29.

2 Democrats.Senate.Gov, “Democratic Senators Unveil Consumer-First Energy Act Of 2008,” May 7, 2008, http://democrats.senate.gov/newsroom/record.cfm?id=297375.

3 Bernadette Tansey, “Power Grab—Some Democrats Favor Seizing Plants,” San Francisco Chronicle, Monday, April 9, 2001, http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/04/09/MN122655.DTL.

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4 Energy Information Administration, “Analysis of Crude Oil Production in the Arctic National Wildlife Refuge,” May 2008, http://www.eia.doe.gov/oiaf/servicerpt/anwr/pdf/sroiaf(2008)03.pdf. The values given are peak estimates.

5 On U.S. refinery capacity and for examples of regulations, see the following articles from Oil & Gas Journal: David N. Nakamura, “U.S. Refining: A History,” vol. 101, no. 31, August 11, 2003, p. 15; Nick Snow, “NPRA’s Timely Capacity Tally,” vol. 103, no. 27, July 18, 2005, p. 29; “Attention to Refining,” vol. 103, no. 36, September 26, 2005, p. 21; Nick Snow, “Industry Groups Reply to Anger Over Gasoline Prices,” vol. 104, no. 18, May 8, 2006, p. 27; and Nick Snow, “U.S. Refining on Tightrope,” vol. 104, no. 29, August 7, 2006, p. 26. For more examples of regulations, see Stephen J. Glain and Peter J. Howe, “Clean-Air Rules Fuel Gas Run-Up,” Boston Globe, May 20, 2004. For examples of lawsuits by the EPA, see James Temple, “Refineries Upgrade Local Facilities,” Contra Costa Times, June 17, 2005.

6 “Attention to Refining” and Nakamura, “U.S. Refining.”

7 Elizabeth Allen, “San Antonio-Based Refiners Defend Clean-Air Additive that Pollutes Water,” San Antonio Express-News, December 3, 2003, p. 1E.

8 On taxes, see American Petroleum Institute, “Motor Fuel Taxes, Summary Report,” January 2008, http://www.api.org/statistics/fueltaxes/index.cfm. For the current price of gasoline, see American Automobile Association, “Daily Fuel Gauge Report,” http://www.fuelgaugereport.com/. The price I used was from November 23, 2008.

9 On imports, see the Energy Information Administration, http://tonto.eia.doe.gov/country/index.cfm. On proven reserves, see David R. Mares and Nelson Altamirano, Venezuela’s PDVSA and World Energy Markets: Corporate Strategies and Political Factors Determining Its Behavior and Influence, March 2007, http://www.rice.edu/energy/publications/docs/NOCs/Papers/NOC_PDVSA_Mares-Altamirano.pdf.

10 David Isaac, “California’s Recipe For Energy Crisis: When Demand Booms, Forget Supply,” Investor’s Business Daily, January 22, 2001, p. A28.

11 Mike Stuckey, “Nuclear Power ‘Wave’—or Just a Ripple?” January 22, 2007, http://www.msnbc.msn.com/id/16272910/from/ET/.

12 Dixy Lee Ray, “Radiation Around Us,” in Rational Readings on Environmental Concerns, edited by Jay H. Lehr (New York: Van Nostrand Reinhold, 1992), pp. 589–603.

13 On Chernobyl, see NucNet, “Chernobyl Fact File,” February 2006, http://www.neimagazine.com/journals/Power/NEI/April_2006/attachments/NucNetChernobylFactFile.pdf and Scott Peterson, “Chernobyl Closes, Legacy Endures,” Christian Science Monitor, vol. 93, no. 11, December 8, 2000.

14 Molly M. Pohl, “Bringing Down Our Dams: Trends in American Dam Removal Rationales,” Journal of the American Water Resources Association, vol. 38, no. 6, December 2002, pp. 1511–1519.

15 Ken Silverstein, “Clean Air Clarity May Come,” EnergyBiz Insider, August 30, 2006, http://www.energycentral.com/centers/energybiz/ebi_detail.cfm?id=200; “Supreme Court Reverses Fourth Circuit in Duke Energy Corp.,” April 4, 2007, http://www.bdlaw.com/news-152.html; and Lara Jakes Jordan, “Settlement Reached in Acid Rain Case,” San Francisco Chronicle, October 9, 2007, http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2007/10/09/national/w000743D95.DTL.

16 Interview with the San Francisco Chronicle, January 2008, http://www.youtube.com/watch?v=Hdi4onAQBWQ.

17 Nancy Vogel, “How State’s Consumers Lost with Electricity Deregulation,” Los Angeles Times, December 9, 2000, p. A1; and Jack Wakeland, “California’s Green Brownout, Part 1,” Intellectual Activist, vol. 15, no. 3, March 2001, pp. 24–29.

18 Charles Oliver, “California’s Home-Bred Energy Crisis: Blame Government, Not Deregulation,” Investor’s Business Daily, January 8, 2001, http://www.investors.com/editorial/editorialcontent.asp?secid=1501&status=article&id=160127&secure=5670.

19 California electricity production capacity data were obtained from the State Electricity Profiles of the U.S. Department of Energy’s Energy Information Administration at http://www.eia.doe.gov/cneaf/electricity/st_profiles/backissues.html. Electricity consumption data were obtained from the California Energy Commission at http://www.energy.ca.gov/electricity/consumption_by_sector.html.

20 Of course, power producers and distributors were alleged to have dishonestly manipulated supplies and prices in California. Although some companies, such as Enron, engaged in dishonesty, many of the trading tactics criticized by government officials, the media, and the public were legal methods used by companies to circumvent government controls. In fact, most—if not all—of the tactics of power companies that have been criticized were made possible only by the regulations created during California’s “deregulation” of its electricity market. For a detailed discussion of some of the trading tactics made possible by California’s “deregulation” of its electricity market, see Jack Wakeland, “The Electricity Papers,” Intellectual Activist, vol. 16, no. 6, June 2002, pp. 23–28.

21 The discussion on natural resources is based in part on George Reisman, Capitalism: A Treatise on Economics (Ottawa, IL: Jameson Books, 1996), pp. 63–67.

22 Cambridge Energy Research Associates, “Peak Oil Theory—‘World Running Out of Oil Soon’—Is Faulty; Could Distort Policy & Energy Debate,” November 14, 2006, http://www.cera.com/aspx/cda/public1/news/pressReleases/pressReleaseDetails.aspx?CID=8444.

23 Bjorn Lomborg, The Skeptical Environmentalist: Measuring the Real State of the World (Cambridge: Cambridge University Press, 2001), pp. 122–129.

24 Ayn Rand, Return of the Primitive (New York: Penguin, 1998), p. 167.

25 For an example from Great Britain’s history of how air quality has improved due to industrialization, see Lomborg, Skeptical Environmentalist, pp. 164–165 and 170.

26 John Emsley, ed., The Global Warming Debate (London: The European Science and Environment Forum, 1996), pp. 215–232; Arthur B. Robinson et al., “Environmental Effects of Increased Atmospheric Carbon Dioxide,” January 1998, http://www.oism.org/pproject/s33p36.htm; and S. Fred Singer and Dennis T. Avery, Unstoppable Global Warming: Every 1,500 Years (Lanham, MD: Rowman & Littlefield Publishers, Inc., 2007), pp. 7–9. For my own assessment of global warming, see Brian P. Simpson, Markets Don’t Fail! (Lanham, MD: Lexington Books, 2005), pp. 148–151.

27 My discussion of the nature of environmentalism is based on Simpson, Markets Don’t Fail!, pp. 143–146.

28 David M. Graber, “Mother Nature as a Hothouse Flower,” Los Angeles Times Book Review, October 22, 1989, p. 1.

29 Alaska Wilderness League, “Despite Congressional Opposition, Bush Budget Features $1.2 Billion From Arctic Refuge Oil Leasing,” The Arctic Truth, vol. 1, no. 43, April 9, 2001.

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