Thursday, March 15, 2012

I actually strongly agree with this Don Boudreaux column


I don't think it's a reason to be apathetic about the costs of petroleum. And unfortunately a bird struggling through an oil spill (the case he mentions) is probably not even the biggest cost of petroleum. But Don makes an important point of having a balanced view of the costs and benefits of things.

I would add one other point, though. The market is really good at allocating petroleum according to its benefits. Will you benefit from plastic? Buy it. Will you benefit from transportation in a gasoline powered vehicle? My gas station is three blocks away - it's easy for me to buy more gasoline. The benefits of this particular product are easy to satisfy through the market.

But unlike a lot of other goods, the costs of petroleum are uniquely hard to get compensation for through the market. It's easy for me to get compensation for the disutility of work - it's called a paycheck. How do you compensate for the disutility of pollution or climate change? That's much harder.

That has consequences that we should all think about.

But Don is certainly right - a gut instinct reaction against petroleum is not wise.


  1. You get plastic, transportation, etc. for the disutility of oil.

  2. "How do you compensate for the disutility of pollution or climate change? "

    Assign property rights. Done.


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