We Don't Have a Free Market in Transportation Fuel

Sunday, March 25, 2012

When thinking about the "mandate issue" (wanting to preserve a free market and not encumber it with government regulation), it is important to realize that right now petroleum does not exist in a free market.

Some oil production operations produce oil for much cheaper than others, so they could sell theirs on the market at a price lower than anyone else, and thus gain a larger market share.

But they don't. They all sell barrels of oil for the same exorbitant price. Why?

Because they can sell every drop they have at top dollar.

Why? Because OPEC keeps oil artificially scarce. They are large enough and keep it scarce enough that all the oil that becomes available on the world market is snatched up. There is no competition. It's an unprecedented (and illegally-created) seller's market.

But OPEC's price-fixing, economy-devastating scheme (and its destructive effects) can be bypassed with the simple introduction of the Open Fuel Standard. With the passing of the bill, cars would become a platform upon which different fuels would compete against petroleum in a free market.

Prices for fuel would quickly drop, and the economy — no longer dragged down by the crushing, encumbering, onerous fuel prices — would boom. Let's make it happen now: What You Can Do.

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