Throughout the latest discourse on energy policy and government-related endeavors in natural resources, I have come to a conclusion on the matter: We aren’t running out of resources as fast as some would have you believe.
So often we hear that our crude oil supply is decreasing at a rather alarming rate. Historically, however, scientists have underestimated our ability to extract natural resources. Steven Horwitz of St. Lawrence University recalls the expansion of the telephone grid. In a video on LearnLiberty.org, he shows that as phone companies strung more wire, copper grew in high demand, thus creating an economic incentive to invest in more advanced extraction techniques. As a result, copper mining companies were able to uncover far more of the natural resource than so-called experts had declared were available.
The free market comes through like the clutch batter for a slumping baseball team. Above all else, the free market reassures people that they ultimately decide their own fate. The incentive to find cheaper ways of production, the entrepreneurial spirit that arises to adjust supply, and the consumer-driven market that inspires beneficial products – these are the just a few of the hallmarks of a free-market society.
Discussions about natural resources often succumb to the lies and misjudgments of the opponents of a free-market system. We rely on the free market’s energy products to keep society functioning at optimum capacity. They fuel our cars, heat our homes, and sustain our physiological needs. These products and resources are conserved by some, used liberally by others, and not even consumed by a smaller percentage of the population.
But the speed at which we consume goods should not be limited for the purpose of what could be false notions of sustainability. In this lies the beauty of the free market system: The demand for goods fuels the engine of creativity and entrepreneurship. Resources such as oil have seen drastic increases in supply due to the exploration that occurred when demand rose in the marketplace. The supposed scarcity of a resource should not abolish the use of that good.
This is partially what the “green revolution” seeks to accomplish. It replaces the ability of entrepreneurs to solve the problems of supply by responding to price signals sent by consumers with the government’s highly-politicized decisions. For example, oil is considered a non-renewable resource, and portrayed as a rapidly decreasing resource in today’s marketplace. Rather than keeping with the tradition of finding more effective ways to extract this resource, developing more techniques to use it more efficiently, or allowing the entrepreneurs in the system to replace this resource as consumers see fit, the green movement forces consumers to operate under the false assumption that they should not have the ability to choose what goods and services they desire. Instead, taxpayers are forced to subsidize inefficient and far more expensive means of energy, while consumers are denied more affordable options.
If oil is actually being permanently depleted without any hope of increasing supply or improving on current extraction techniques, than let those entrepreneurs in the energy industry seek solutions to this problem. Basic laws of supply and demand tell us that if a resource is actually becoming more scarce its price will rise. The natural response to higher prices will be more companies entering the oil industry, and for entrepreneurs to invest in more advanced methods of extraction to find more of that resource. The result will be the discovery of more oil not accessible at previous levels of extraction effort and techniques. Furthermore, the high price of oil will allow for opportunities for alternative forms of energy to become competitive in the marketplace.
The one similarity we need to recognize in all these examples is that in a free, competitive market consumers, along with actual resource availability, will dictate which direction entrepreneurs should pursue. In this current discussion over sustainability and the use of controversial techniques such as hydraulic fracturing, let’s put aside the politics and let the free market work out the costs and benefits of each solution.
It is a noble gesture to be mindful of what you consume so that you allow others to partake in that resource. However, it is foolish and immoral for government to operate under what could be a false assumption.
Mark Coggins is an intern at the Civitas Institute in Raleigh.