"Greed"?

I made the mistake tonight of watching the evening "news". It seems that the price of light sweet crude oil closed today at just under $134.00/bbl. Whoopti doo! The usual suspects in the US senate took the opportunity to AGAIN summon the oil company executives before the judiciary committee to berate them for "obscene" profits and the price of motor fuel. Is it possible that these politicians do not understand the difference between "profit" and "profit margin"? Or alternatively do they in fact understand the difference and assume that Joe government "school" graduate does not?

The oil companies are forced to BUY crude oil from OPEC and other GOVERNMENTS who own 90% of the planets oil reserves in order to refine it to sell to motorists. When they must pay $134.00/bbl for crude and at the same time maintain a profit margin of 10-12% the profit in absolute terms is going to go through the roof. DUH!

And yet the same politicians who have been the most obstructive in limiting the supply of our energy sources by placing proven domestic reserves of oil off limits while world demand is skyrocketing are the most vocal at decrying the run up in the cost of gasoline. .

Take just over nine minutes to view this video in order to better understand the real greed is that of politicians.

A Modest Proposal

It appears that the ongoing drought being experienced in the southeastern section of the U.S. has begun to generate more widespread notice along with the proposals put forth to address the calamity. The facts of the situation are these:
1. The southeast over the past several decades has experienced exponential growth.
2. The infrastructure to support this growth has seriously lagged.
3. The control of the bulk of the infrastructure in the area is assigned to various governmental jurisdictions.
4. Seasonal rainfall which has historically been relied upon to supply adequate water has failed to do so.
As is the case in most all calamities, our society has fallen into the habit of seeking a scape goat to blame for the situation. The evil de jour of anthropogenic climate change is vigorously touted as the culprit by the warmistas who demand that more regulatory authority be ceded to the government in order to control changing climate patterns. Others would assign the responsibility for the crisis on the failure of the various governments to rationally control the recent surge in economic and consequently population growth.

These two schools of thought both favor augmenting the powers of the very entity who is responsible for the situation which is, in the opinion of ΛΕΟΝΙΔΑΣ, the government. As governments are want to do, they generally either ignore the laws of economics or attempt to repeal them. A case in point is the simple fact that water is a commodity and as such is subject to the economic law of supply and demand: the value of a commodity increases to the extent that the demand for it exceeds the supply. The diminishing supply of water accompanied by the increase of demand created by a growing population has not resulted in an increase in the cost of the commodity delivered to the consumers as would be the situation if it were not under the artificial and irrational control of the government. The government's only tool for its purposes is force as exercised by its police powers such as imposing penalties for what it arbitrarily designates as "excessive consumption". The additional enforcement of such ukases generates increases in costs and in no way contributes to the incentive to access more of the commodity.

If the commodity were privately provided widgets and the identical situation existed, the increased value of widgets would generate a private incentive to increase widget deliveries to cover the demand. This basic and simple method of addressing these problems appears to escape the learned discussions of many economically illiterate products of government indoctrination learning centers.

Unfortunately, the above is not satire as was the essay by Mr. Swift.

cross posted at: Eternity Road

Econ 101

The following is lesson one in elementary economics from Dr. Walter Williams for ΛΕΟΝΙΔΑΣ's readers:

The first lesson in economic theory is that we live in a world of scarcity. Scarcity is a situation whereby human wants exceed the means to satisfy those wants. Human wants are assumed to be limitless, or at least they don't frequently reveal their bounds. People always want more of something, be it: more cars, more food, more love, more happiness, more peace, more health care, more clean air or more charity. Our ability and resources to satisfy all those wants are indeed limited. There's only a finite amount of: land, iron, workers and years in a lifetime.

Scarcity produces several economic problems: What's to be produced, who's going to get it, how's it to be produced, and when is it to be produced? For example, many Americans, and foreigners, too, would love to have a home or vacation home along the thousand miles of California, Oregon and Washington coastline. Shipping companies would like to use some of it as ports. The U.S. Defense Department would like to use it for military installations. There's simply not enough coastline to meet all the competing wants and uses. That means there's conflict over coastline ownership and its uses.

There are several methods of conflict resolution. First, there's the market mechanism -- let the highest bidder be the one who owns and decides how the land will be used. Then, there's government fiat, where the government dictates who gets to use the land for what purpose. Gifts might be the way where an owner arbitrarily chooses a recipient. Finally, violence is a way to resolve the question of who has the use rights to the coastline -- let people get weapons and physically fight it out.

At this juncture, some might piously say, "Violence is no way to resolve conflict!" The heck it isn't. The decision of who had the right to use most of the Earth's surface was settled through violence (wars). Who has the right to the income I earn is partially settled through the threats of violence. In fact, violence is such an effective means of resolving conflict that most governments want a monopoly on its use.