THE GLOBAL PROBLEM
Witness President Obama's extension of a moratorium on offshore drilling in the wake of the Gulf oil spill. ... India, Brazil and Chile also are contemplating various forms of windfall profits taxes ... It all adds up to a global problem. One common thread running through these cases is that all the countries involved are democracies. The danger is that if these countries won't supply minerals to the world on market principles, others--like China--will step into the gap with other ideas.
THE ALTERNATIVE TO AMERICA DRILLING
If capitalism can't provide, Chinese companies will make their own deals in places like Africa, Mongolia and Russia. ... Without giving too much credence to China alarmists, it is still possible to say the world is better off if resources are in the hands of transparent companies that will trade on market principles free of the risk of excessive government interference.
HOW LIBERAL DEMOCRACIES' RETICENCE HELPS LESS LIBERAL GOVERNMENTS
America's policies to keep its own oil reserves untapped mainly benefit Russia, the Middle East and Venezuela, which are left to fill the unmet demand--and profit handsomely as a result.
The choice for Western policy makers now is simple: They can clamp down on their resource industries for domestic political reasons and hand pricing and supply power to nonmarket and nondemocratic governments. Or they can allow their own companies to run a truly global resource market capable of meeting the world's need for things.