Regulation is the name, oligopoly is the game

Via Francois Tremblay's excellent blog I found this outrageous article. I had heard about stuff like this before, but the quote of the bureaucrat really captures the truth here:

"With the high cost of fuel right now, the department does recognize that a lot of people are looking for relief," said Reggie Little, assistant director of the motor fuel taxes division. "We're not here to hurt the small guy, we're just trying to make sure that the playing field is level."

Make sure the "playing field is level"? For whom? Is Mr. Little seriously suggesting that the oil companies need to be protected from one guy not buying their product? One man in North Carolina is impacting the wealth of the most profitable industry in the world?

But it's even more perverse than that: Mr. Little suggests through his comment that, except for this one veggie fuel guy, the current "playing field" is level - between us and Big Oil as well as between Big Oil and alternative energy sources. How can that possibly be, when the industry gets preferred access to politicians (Cheney's energy task force, for example), puts its own people in the regulatory agencies, makes huge contributions to politicians' campaigns, and gets the U.S. to fight wars on behalf of its supply chain?

Keeping the playing field "level" is always the commandment of the corporate regulatory State. The job is not to ensure fairness, but to ensure "stability". Real competition is far too messy and has far too many ups and downs to ensure that big, top-heavy, bureaucratic firms can deliver profits to shareholders consistently. By having the State arbitrarily step in and ensure everybody does business in the same way, they take competition out of areas that disadvantage big, centralized business - the very areas where individuals and small businesses are nimble and agile enough to win.

And, after all, it's not that they're making it outright illegal to compete with these entrenched, privileged oligopolies. That would be too obvious. Instead, they just make it so difficult, uncertain, and expensive - via the State - that nobody but the most dedicated and affluent can afford the alternatives. The State is a mechanism for making your own business model less uncertain while making others' more. Now that's "market power" (I just threw up a little in my mouth).

Such episodes should remind us that alternative energy sources need no subsidies or handouts to succeed. All that is necessary is to break the alliance between Big Oil and the police state. What's scary for the status quo isn't the costs of converting to new sources - it's how cheap it might be, once corporate welfare ceases to distort energy prices.

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Written on Tuesday, June 12, 2007