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November 8, 2008

Oil vs Air

-- by Dave Johnson

No one "owns" the air. No one gets to "profit" from air -- we don't have to "pay" anyone to be able to breath air.

Why is oil different?

Thinking through this question open up some very interesting ideas about our economy and who benefits and why.

In Alaska the oil companies pay the people of the state for the oil. No one pays state taxes AND everyone in the state gets a big check every year. AND the oil companies put aside money into a fund that guarantees the people of Alaska will continue to get those checks forever, even after the oil runs out. This is because the people of Alaska understood that the oil belonged to them.

So what about the rest of the oil in the country, and the world? Why don't the people of the US and the world benefit from their ownership of that oil? Why do a few people who own and manage oil companies get the profits for themselves and grow ever richer, while the rest of us lose our jobs and pensions and health care and houses?

Why do we get taxed to provide these companies that benefit a few people with military protection? Why do we get taxed to build the roads that enable them to move their products to make this money, and then have to pay them for our oil so we can drive cars on those roads? Why do we pay taxes to provide the legal infrastructure of courts and laws that enables them to grow richer, while we all grow poorer from it? Why do we get taxed to provide an education system that invents machines that take our jobs, and that only trains us to be employees that can just be tossed aside?

I'm using oil here as just one example of underlying economic assumptions. Inheritance is another underlying economic assumption. Why does someone "inherit" the right to be rich?

Who is our economy FOR, anyway?

There are a lot of questions here that will need to be re-thought if we are going to get out of the economic mess that the few who benefit from the current corporate and economic structure have gotten us into.

Posted by Dave Johnson at November 8, 2008 11:52 AM


Comments

Let me put it in a way you, the economically naive, would understand:

No one has to spend the enormous resources to go exploring for air. Once candidate sites are found, no one has to take the incredible financial risk in extracting said "air" (and remember only 10% of candidate oil drilling sites yield oil). No one has to spend even more enormous amounts of resources extracting, refining, transporting "air". No one has to pay for the equipment in ensuring that extracting, refining, and transporting the "air" does little to no environmental and health damage; no one is held responsible legally if they do.

Yes, oil companies make enormous profits, but that's only because they spend enormous capital and take an unbelievable risk. So, let me try to make you, a person with the economic understanding of a small child, understand: without profit to offset the risk there would be no oil extracted. No profit no gas, no plastics, no petroleum-based pharmaceuticals; in fact, no oil prepare to live in a pre-industrial society like your buddies in the Khmer Rouge wanted to.

Posted by: Scorpius [TypeKey Profile Page] at November 9, 2008 3:11 AM

Scorpius,

Too bad you put more thought into crafting an insulting response than a thoughtful one.

It is true that there are risks and expenses associated with the extraction of oil. But the mere fact that such risks and expenses exist tells us nothing about whether or not the most economically beneficial way to extract the oil is with the current rights schemes (and I would extend this point to all resource rights).

OF COURSE people need a profit incentive to both locate oil and extract it. That's a no brainer. But, in America, we aren't giving oil companies an incentive to extract the oil. We are simply giving them the oil.

Perhaps a better analogy isn't air rights, but water rights. At my house, I have a nice supply of water running under my property. I own the land. I own the rights to the water.

Now if I want to extract the water, do I have to pay someone to locate a good spot to drill a well? OF COURSE. Do I need to pay for the well to be drilled? OF COURSE. But do I give away the rights to my water for essentially nothing as an incentive for someone to drill a well and then sell the water back to me, in perpetuity? OF COURSE NOT. That would be stupid. And yet that is the economic scheme that we have had foisted upon us with respect to oil and other natural rights.

The idea that we must submit to this scheme or "live in a pre-industrial society like ... the Khmer Rouge" is ridiculous on its face. It is obviously disproven by the example given in the post, Alaska, which manages to extract oil despite sharing the profits with the residents of the state.

Hell, last time I checked, Venezuela manages to keep out of the dark ages without giving away its resources to parasitic corporations. Interestingly, most private oil companies have not responded with relief to Hugo Chavez' depriving them of the risks and expenses of extracting Venezuelan oil. Rather they have waged a massive p.r. campaign to demonize Chavez, isolate him politically, and even oust him militarily.

Posted by: space [TypeKey Profile Page] at November 10, 2008 2:41 PM

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