Property & Gasoline

First Published: 2005-09-04

In a letter to The Tribune, J. Moore warns of impending crises due to high oil prices. He calls for government action because the oil shortage is "haunting the world with possible world recession." A "shortage of refineries" adds to the crisis because "no one wants them in their back yard", and the oil importers (Esso, Texaco & Shell) take a "holier than thou" attitude.

The writer suggests an "urgent" need to reroute traffic, bypassing downtown Bay Street and "offer incentives" to "large businesses" to relocate to the suburbs. Government incentives are either a form of tax relief, or a cash subsidy. However defined it is taxpayer money.

The writer fails to note that rerouting traffic "cutting just under the arch south of the hill" would require the expropriation of private property for the new roadway. The tax dollars for the "incentives" to business are also private property until they are "taken" by the state.

It is a grand scheme that would require radical changes to established norms, a classic example of "the end justifying the means" and is particularly repugnant as it involves the arbitrary confiscation of private property.

Private property and the associated rights form the bedrock for civil society. In the libertarian tradition political and economic freedoms are inseparable from the principle of the right to private property.

The price of gasoline may be straining our pocket books, but as the following chart illustrates oil prices change over time. In real dollars they are lower now than they were in the seventies and eighties. Current or even higher prices for gasoline do not justify increasing taxation or expropriating private property.

Real crude prices* January 1970 to July 2005.

*West Texas Intermediate in constant (July, 2005) U.S. Dollars. Sources: Federal Reerve Bank of St. Louis, and Burea of Labour Statistics.

Julian Simon in his remarkable book "The Ultimate Resource II" challenges the conventional beliefs about scarcity of energy and natural resources. Careful quantitative research, and economic logic rebut widely held Malthusian judgments related to declining resources and population size. His work shows that resource prices have steadily decreased over time, and he predicted their continuing decline.

Thomas Sowell a Hoover Institute scholar, in his book "The Vision of the Anointed" describes the key elements of visionaries:

The oil price framed as a "crisis" is the pretext for the "anointed" to impose their "visions" on everybody else. Hype it up to convince the innocent and gullible of impending disaster and the need for action. Follow this with a government solution to "curtail the dangerous behaviour of the many". Then "dismiss any arguments to the contrary as either misinformed or motivated by unworthy purposes".

As tough as it may be to pay for gas these days, it will be much tougher for the persons who lose their property and for everyone else having to pay higher taxes.

The preservation of liberty and property requires us to identify and refute bad ideas that invoke government action to correct prices that are artifacts of the free market.

Reference: The Oil Price Mirage by Pierre Lemieux at www.mises.org.

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