Intercept makes absurd argument to solve oil prices

March 11, 2022

By Tim Worstall

The Intercept tries to critique free-market capitalism without managing to grasp the free market part of it. Which isn’t, when you come to think of it, a good start to a critique. 

The background is the oil industry and whether asking it to go drill and produce more is the way out of high gas prices. The solution The Intercept determines is if the government owned all the oil, things would be better. For those who view how governments actually run things might be a surprise but leave that aside. It’s the reason this would be better which is the error.

The analysis is that even if the oil companies were free to drill more – say on Federal lands and so on – they wouldn’t. For they’re making good money right now and they know that if they produce more then oil prices will decline and they’ll make less. Well, yes, but this is to make the error of thinking that we have monopoly capitalism. That the only people who can do something are those who already do it.

What we actually have is free-market capitalism. Anyone who wants to try doing something may do so – subject to the usual safety laws, etc. So, if the current oil companies don’t increase production as a result of high prices then new companies will. As actually happens every time the oil market gets excited, Texas is full of ten-gallon hats talking of the riches from the next well to be drilled – some of them are even correct.

The Intercept was set up as a foundation based on a grant from Pierre Omidyar’s eBay fortune. The result is that it’s entirely independent and not reliant on any commercial indicators of success. This very liberty from commercial reality makes it more influential among those who value such things than its 3.5 million visits a month would usually indicate. 

Marx did say that capitalism will inevitably trend to monopoly capitalism but The Intercept seems to think we’ve already arrived there. A triumph of political theorizing over observation of reality perhaps. The important part of the phrase “free market capitalism” is the “free market.” This is exactly what stops the current producers of anything from being able to restrict production in order to keep up prices.


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