Some confused persons still think we invaded Iraq to get its oil, which would have been like spending a dollar to get a penny. Saddam would have sold us all the oil we wanted (and Kuwait’s too) if we had just left him alone.
Now whole careers in the public eye are being built on the idea of peak oil—a geological conceit that produces scenarios of global catastrophe only because it omits the price mechanism, which has worked well for a century to adapt the world economy to whatever amount of oil is geologically available at a given time.
This isn’t to say that oil isn’t a political problem maker. Villains like Saddam want to steal it. As a fount of domestic patronage, it spoils, corrupts and degrades societies where control is handed to politicians. But for the rest of us, that corruption is mainly visited via policies peddled domestically with a heavy dose of energy panic.
…in retrospect, the obvious question raised by the Macondo blowout is why anyone would bet their company by drilling in ultra-deep water where the consequences of a blowout can’t quickly and economically be contained.
It turns out that one reason is the now-famous Oil Pollution Act of 1990, which capped oil-spill liability partly out of fears of jeopardizing the nation’s energy. Even so, when the bill was debated, shipowners warned that any substantial liability at all might kill the global oil trade.
Well, if not in law then in practice, the cap has been repealed. We’ll soon see on what terms shareholders and insurance markets are willing to back the search for oil in deep waters. Guess what? By properly pricing the risks of a deep-water blowout, we’re likely to get much safer drilling.
Would that all our energy choices were allowed to work the same way, undistorted by rampant intervention premised on the false notion that the global oil market has proved to be anything other than what it is: robust, reliable, unfailing, if frequently volatile.