Dayton "Dirt" Green Blog - June, 2010

With the news filled every day about the ruptured well spilling into the Gulf of Mexico, the thoughts that run through many of our minds is what is the true cost of oil.

In a laissez-faire economy, resources are allocated and used according to the economic principles of supply and demand which seems to be a very efficient system that Adam Smith described as an “invisible hand” in his book The Wealth of Nations.

It seems to me that the resulting cost of the oil to run our economy is skewed because of the subsidies provided by the US taxpayer and costs that cannot even be calculated.

For example, the US Six Fleet in the Persian Gulf is mainly there to secure the oil interests of the United States.

The cost of this naval flotilla is not cheap and there is the more important matter of the servicemen and women lost in the first Persian Gulf War under the first President Bush and other lives lost due to our presence in the region to protect oil interests

Another cost not calculated is the long term damage to wildlife and wildlife habitats such as in the Exon-Valdez spill some years ago in Prince William Sound in Alaska and now the even bigger disaster in the Gulf of Mexico.

Then, the economic damage from the livelihoods lost of those of us in the tourism and fishing industry is not calculated.

Finally, how much of the clean up costs for these disasters will be on the backs of the U.S. taxpayer?

In a recent broadcast on National Public Radio, the company that actually drilled the well in the Gulf will attempt to legally limit its liability to twenty seven million dollars.

What kind of people are the board and top executives that they are not willing to take responsibility for the disaster and step up to the plate to do the right thing?

In summary, the “invisible hand” described by Adam Smith does not allocate these calculable and incalculable cost to the price of oil and its extraction.

If the costs could be truly allocated by the “invisible hand” as described by Adam Smith, it might be that the costs of alternative energy sources might well compete with “cheap” oil.

This recent disaster has made it all even more imperative that the United States must get rid of oil as the main source of energy to power our economy and the sooner the better!