The Free Market Works Every Time

Yesterday The New York Times posted an article about the energy industry in Mexico. The article is about a recent move by the Mexican government to end state control of the energy industry in Mexico. The decision to deregulate has paid off.

The article reports:

The government began auctioning off rights two years ago to drill in parts of the Gulf of Mexico. On Tuesday, an international consortium of energy companies said they had discovered a large oil field, and another firm said it had discovered more oil than expected in a separate area.

The overhaul of the Mexican oil and gas sector in recent years eventually ended the state energy company’s seven-decade domestic monopoly on exploration and production. The aim was to arrest years of declining oil output, blamed on a slow-moving public sector that lacked the technology to exploit opportunities in deep-sea drilling, or shale oil and gas.

The two announcements on Tuesday appeared to suggest that Mexico’s strategy, which was met with criticism when it was first pushed through, was succeeding.

The consortium, made up of Premier Oil of Britain, as well as Talos Energy of Texas and the Mexican company Sierra Oil and Gas, said that it had discovered a field containing more than one billion barrels of oil in shallow water 40 miles off the Mexican coast. Riverstone Holdings, an American private equity firm that specializes in energy investments, owns 45 percent of Talos Energy and 43 percent of Sierra Oil and Gas.

It’s amazing what can be accomplished when there is an incentive to accomplish it!

There are two things to note here–like it or not, fossil fuel is the basis of the current world economy, and an improving Mexican economy may help slow down the pace of illegal immigrants coming to America from Mexico. This is a win-win situation for Mexico and for America. The free market works every time it is tried.

A Short Story With A Big Impact

Yesterday CNN posted a very short article that may have a big impact on the politics of the Middle East.

The article reports:

In what could be the largest natural gas discovery in history, Italian energy company Eni says it has unearthed a “supergiant” gas field in the Mediterranean Sea covering about 40 square miles.

The gas field could hold a potential of 30 trillion cubic feet of natural gas. Eni says that’s the energy equivalent of about 5.5 billion barrels of oil. The company won’t know the field’s true size until it begins to develop it.

Eni already has a presence in Egypt and expects to be able to develop the field quickly. It is possible that the field could satisfy the natural gas needs of Egypt for decades to come.

So why is this important? As the wealth from this discovery flows into Egypt, we can expect the Muslim Brotherhood to become more active in the country. Egypt has been one of the few countries in the Middle East to deal with the Muslim Brotherhood successfully. This is somewhat ironic since the Muslim Brotherhood began in Egypt. Egypt has been dealing with the Muslim Brotherhood since 1928. The Brotherhood was responsible for the assassination of Anwar Sadat and played a role in the ousting of Hosni Mubarak. At various times in its history, Egypt has jailed and executed members of the Muslim Brotherhood. Since the Muslim Brotherhood government that was set up after Hosni Mubarak was ousted, Egypt has been moving toward peace with Israel and alliances with western countries. This discovery should mean that Egypt will continue to move in that direction.

Would You Trust These People With Your Investment Portfolio ?

Yesterday the Daily Caller posted an article about the investments the Obama Administration has made in alternative energy companies.

The article reports:

The Romney campaign later clarified that he was talking about the DOE’s 1705 loan program which doled out $16.1 billion to green energy companies, accordingto the Washington Post. Of the 33 companies that received 1705 loan guarantees, only three have declared bankruptcy.

The article further reports:

The blog Green Corruption’s “Obama green-energy failure” list contains 23 bankrupt and 27 troubled green energy companies which were backed by the federal government. This list uses data compiled by the Heritage Foundation, but also includes some things the conservative think tank doesn’t.

According to the Heritage Foundation, $80 billion was set aside in the 2009 stimulus package for clean energy loans, grants, and tax credits, and 10 percent of these funds have gone to companies that have filed for bankruptcy or are in dire straits.

As I have said before, I believe there will come a day when green energy makes sense. I also believe that day will come after the free market has culled out the technologies that do not work and the technologies that do work have naturally risen to the top of the pile. Government subsidies interfere with that process and actually slow down the successful development of green energy–not to mention the amount of money the government has lost in picking winners and losers (mostly losers).

As taxpayers, we have the right to invest our money where we chose to invest it. There is nothing in the Constitution that gives the government the right to make investments in green energy for us.

 

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