Free Markets

Free MarketsThe key to breaking our oil addiction is to open fuel markets to true competition.

The elements are already in place to create replacement fuels at a pace and volume that rival gasoline production.  All that’s needed are several decisive actions:

  • Encourage automakers to manufacture far more flex-fuel vehicles.
  • Remove barriers to companies that want to enter the fuel distribution business.
  • Change regulations to allow consumers to convert vehicles to flex-fuels.

Then, stand back and let the markets work their magic. New businesses will compete, prices will fall, innovations will drive efficiency and quality, and a virtuous circle will be underway.

How do we know such a transformation is possible? Because it has happened time and again as our free market system has evolved and thrived over hundreds of years.

Here are just three recent examples:

  • There was a time, before 1984, when only AT&T could sell long-distance telephone service because other operators couldn’t get fair access to local carriage. That ended when a federal judge ruled that AT&T had to grant access to the local loop to anyone who wanted to sell long-distance services. Within three years, the price of a long-distance call went from $3.00 a minute to $.30 a minute and now it’s $.03 a minute because the market was opened. What followed was a telecommunications revolution that has resulted in the proliferation of wireless broadband, powerful mobile devices, games, and social media. The revolution has created phenomenal opportunities for entrepreneurs and shareholders. And it has given consumers a plethora of high-quality, low-priced products and services.
  • Cable television channels initially sprang up in the late 1940s to deliver programming to isolated rural communities via large community antennas (CATV) and coaxial cable. But over time, competition from cable channels, led by CNN, grew increasingly intense and eventually ended the dominance of the three major (and later four) broadcast networks with a flood of new programming and a new (subscription-based) business model. Competition from cable changed the entire entertainment industry and led to unprecedented consumer choice and value.
  • Before the deregulation of the airline industry in 1978, prices and routes were strictly controlled and carriers competed in such areas as meals and the skill and experience of the crew. After deregulation, low-cost carriers entered the market, forcing down airfares, filling seats, and pushing inefficient airlines into bankruptcy. Competition transformed air travel from a service mainly available to the affluent, to one that has become widely accessible to the American public and essential to U.S. business. Competition not only saves consumers billions of dollars a year in air fares, but has given them the freedom to choose when and where they want to travel to nearly every place in the world.

There is no disputing the power of competition and markets to create wealth, efficiency and long-term prosperity. And there is no reason why these powerful forces should not be unleashed to create true fuel freedom for Americans.