Wednesday, March 7, 2012

A Single Fire - Part II

My last discourse concerned a question with the development of energy. Why, with the abundance of sources available to us, is the energy industry nonetheless restricted by onerous regulation?

Is it to prevent accidents? We addressed the basic reality of life that accidents can and will happen. Tying it with the analogy of a burnt down home, we note that such accidents do not result in the halted production of housing in general.

Yet somehow this reality of accidents is routinely utilized to block the generation of new energy capital. Save for those favored by government of course. Methods of generating energy that "actually works" however, routinely faces insurmountable regulatory impediments.

It is valid to theorize that, in the end, the justification for such burdens has little to do with preventing accidents. Private companies, who pour millions into the creation of their capital (be it a hydroelectric dam, coal mine, oil rig, genie magic self-perpetuating turbine, or otherwise), are naturally incensed to prevent their loss.

When major accidents occur, one naturally takes to the self to review what happened and to ensure that such events scarcely occur evermore. Not only does the victim reflect, but witnessing neighbors (or rival companies in the case of industries) also join in the interest of reviewing what happened, leading to the self-imposed refinement of internal safety protocols.

A concept known as "risk assessment" is borne of the invisible hand, with entire firms and corporate sub-departments dedicated to cause of loss prevention. Regardless of bureaucratic third-parties who may decide to take advantage of the spectacle in the name of "public safety."

If the true subconscionable purpose for regulations is not about accidents, what else could is be? There are those who postulate that its simply about protecting the "environment" as a general concept. To which you must ask, "Whose environment?"

Globally, the climate simply is beyond our hands and control. Planetary climates et al are destined to change and morph regardless of any life on their surface, and human history is rife with instances whereas the scare of environmental failure on a planetary scale is found to be empty.

Its true that environmental externalities can occur on scales small enough to affect human interests however. How a proposed method of extraction affects the living of fishermen or ranchers is perfectly valid. None wants to suffer smog directly imposed onto their own backyard. Being told that its "for the good of the market" is certainly no solace.

In such cases, the proper observance of property rights and contracts provide solutions where all are better off, both economically and environmentally. Justice for land holders at risk for being negatively impacted is preserved by simple title and deed. And given their necessary cooperation, brutishly sloppy methods of energy extraction are swift to go out of style.

Energy providers, in their own self-interest against liability claims from their landlords, are thus compelled to innovate towards a reduction of their externalized impact upon others. Such is market efficiency. Producers are better off for having expanding their product, at-risk land owners are better off from the provision of royalties, and the all-important consumer is better off from lowered prices.

Recently, such has been the case for energy companies in fact. Contrary to what policy makers in Washington may proclaim, new oil development over the pass four years resulted from this very notion of contracts between private entities, while development on federal lands has shrunk.

Truly, if the hundreds of impediments to energy development were justified by environmental concerns, why develop old technologies such as windmills? Windmills have been documented for harm brought to avian life, resulting in a far more visible impact compared to the fracking and horizontal drill techniques that permit conventional producers to locate far off-site.

If anything, proponents for alternative fuels would champion nuclear energy above all given its ultimate appraisal as a win-win source for energy. A win for the market as it provides on scales necessary to truly compete. A win for the environment as the summarized concept is to simply dig naturally radioactive material from out the ground, slowly deplete its ambient energy, and then return the material to the very ground from whence it came.

Yet even nuclear is denied with routine regulatory interference, same as the traditional resources of petroleum, natural gas, and coal. Hysteria over inevitable incidents (now matter how well their containment fail safes may have worked) is utilized as a politic scapegoat to deny the free-market expansion to human energy needs. Unworkable alternatives are instead ginned up, despite that they to (inherent to all things when one is trying to start a fire or create a spark) hold their own types of risks, even if they were to deliver.

So once more we must ask, "Why?" Subconsciously, why do the proponents of Big Government seek scapegoats to justify the squelching of true energy development? The rationale is simple:

More energy means more freedom, and more freedom always means less power for the state.

David Morris~

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