We Can Free Ourselves of the Oil Monopoly

Friday, February 1, 2013

I'm reading the book, Salt: A World History. It's more interesting than you might think. Because the primary method of preserving food for most of human history was using salt, it was the most important commodity on earth. Milk was preserved with it as cheese. Vegetables were preserved by pickling, which required salt. Meat and fish were preserved with salt. It was vitally important and became more so as time went on, right up until the Civil War, when other ways of preserving food became widespread (like canning and eventually refrigeration).

One of the things that surprised me was how many times and places in history someone tried (and sometimes succeeded) gaining a monopoly on salt production or distribution. It was such a vital commodity that tremendous wealth and power could be gained from a monopoly of salt.

As other ways of preserving food became available, salt lost its exalted status. Nobody really cares who (if anyone) controls the salt market.

The new vitally important commodity is transportation fuel. Everybody needs it. And one fuel dominates. Almost all forms of transportation in the world — 95% of the trains, planes, ships, cars, trucks — run on petroleum. Other viable fuels are available, but the vehicles themselves are made to only burn one. It is a virtual monopoly.

On top of that, OPEC formed a cartel to illegally control the price of oil.

When a commodity is important enough, someone will always try to control it, monopolize it or corner the market in one way or another. The English did it with salt, the French did it, different cities did it back to ancient times, China did it, the Mayans did it, the Aztecs did it. Anyone in power wanted to do it or tried to do it. Mark Kurlansky, author of Salt: A World History, wrote:

The earliest evidence that has been found of Mayan salt production is dated at about 1000 B.C., but remains of earlier saltworks have been found in non-Mayan Mexico such as Oaxaca. It may be an exaggeration to claim that the great Mayan civilization rose and fell over salt. However, it rose by controlling salt production and prospered on the ability to trade salt, flourishing in spite of constant warfare over control of salt sources. By the time Europeans arrived, the civilization was in a state of decline, and one of the prime indicators of this was a breakdown in its salt trade.

The same kind of thing can be found throughout history all over the world. It looks like a fact of life: Someone will try to gain and hold a monopoly on any important commodity. And if we (the people using the commodity) don't want to be the victims of a monopoly, it is up to us to stop it. But how?

Kurlansky wrote, "The Aztecs controlled the salt routes by military power and were able to deny their enemies, such as Tlxalacaltecas, access to salt." Before Europeans discovered America, a tribe in central America — the Tlatoque — refused to participate in the Aztecs salt monopoly. They deliberately avoided using salt.

Kurlansky wrote, "The Spanish took power by taking over the saltworks of the indigenous people they conquered. Cortes, who came from southern Spain, not far from both Spanish and Portuguese saltworks, understood the power and politics of salt. He observed with admiration how the Tlatoque had maintained their independence and avoided the oppression of the Aztecs by abstaining from salt."

We may not be able to abstain from oil, but as Korin and Luft argue in their book, Turning Oil Into Salt, we can certainly add enough competition to break the monopoly and strip oil of its strategic status and thus make the OPEC cartel no longer capable of controlling the price of transportation fuel.

We can become free of oil's monopoly by expanding fuel competition until oil is only one of many viable fuels used by combustion engines, just as salt is now only one of many ways to keep food from spoiling. Fuel competition can free us from the monopoly and its economy-smothering, national security-weakening, pocket-emptying effects. Do you want to see this happen? Start here.

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