Oil, Gas, and Government: The U.S. Experience, 2 vols.

The increasing professionalization of economics has largely concentrated first-rate research in the hands of professional academics, and in a few cases, government researchers and think tank employees. Gone are the days, continuing up through Keynes, when most top economists were either amateurs or part-time workers at the craft. Rob Bradley's Oil, Gas & Government: The U.S. Experience, however, resurrects the vitality of this tradition. While working outside academic circles, Bradley offers a treatise on economic regulation that is likely to remain the definitive work in numerous areas.

Bradley has a Masters degree in economics from the University of Houston and a Ph.D. from International College, but he has spent most of his life working in the energy industry in and about Houston, Texas. Through many years of diligent labor, Bradley has compiled the materials for a thorough treatment of the United States regulatory experience with oil and natural gas. The result is a 2000 page encyclopedic treatment of these topics, dense with history, analysis, and nuggets of insight. The reader will simultaneously find a work of history backed by original and primary source research, sound economic analyses of virtually every government intervention in the field, original case studies of public choice economics, and one of the best applied treatments of Austrian economics to date. The reader in search of the ambitious should pick up this book, and he or she is unlikely to be disappointed.

The author brings a definite point of view to the topic - Austrian economics with a free market slant. The book supplies microeconomic analysis and common sense rather than quantitative models, and is catholic in applying a judicious mix of Chicago School, UCLA, Public Choice, and Austrian-style arguments. Bradley states at the outset that the energy market, insofar as it has been allowed to operate, has served consumers well, and that government interventions have had the contrary effect. Such avowed advocacy is unpopular among today's academic specialists, but by the end of Bradley's two volumes it is difficult to imagine how anyone could fail to accept his arguments. Both the depth and breadth of his research put the nineteenth century German doctoral dissertation to shame.

The author pays special heed to what Ludwig yon Mises labeled the dynamic of interventionism. An initial intervention begets economic problems, which gives rise to pressures for further interventions, to remedy those problems. Interventions then follow one after the other, each rationalized or justified by previous institutional malfunctions. A society either collapses under the weight of the accumulated interventions, or sweeps them away. The United States has swayed back and forth between these two alternatives over the period Bradley considers. The market continues to supply us with energy, but government regulations often have directed the attention of entrepreneurs towards unproductive rather than productive activities.

Summarizing the topics covered by Bradley could itself take up several pages of review. He deals systematically with the most widely studied areas, such as price regulations, price controls, natural gas regulation, antitrust law, environmental policy, oil import regulations, and intervention in petroleum marketing. As "bonuses," the reader also receives thorough treatments of how the transportation market has influenced energy production and regulation, the history of regulations against self-service gas stations, the relationship between antitrust law and common pool problems, energy policy in wartime, the regulation of gasoline marketing, and restrictions on futures and forward trading, among many other topics that fall outside of the usual purview of energy economists and historians.

Despite the massive length and scope of Bradley's book, it is difficult to find faults in the economic logic. This reader would take issue with several points with regard to emphasis, but it would be unfair to characterize them as errors. Bradley often praises the market for its general ability to support innovation and serve consumer demands, but he does not offer a clear standard for judging when a market might misfire in the absence of government intervention. This problem becomes especially apparent when dealing with the more complex issues, such as evaluating alternative systems for awarding property rights in oil pools. Bradley advocates a "Lockean," market-based approach, but it remains an open question whether the entire pool should serve as the unit across which property rights are defined, and what standard we might use to judge whether a pattern of extraction is too slow or too rapid. The author also is fond of invoking the Austrian doctrine of "subjective cost" to criticize marginal cost pricing regulations, but if costs are purely subjective it is unclear how markets can engage in rational economic calculation. Truly subjective costs could never be represented or reflected by objectively measurable prices, which implies that even the Austrians rely surreptitiously on an objective cost argument to some extent. In these regards, even many readers with Austrian sympathies, such as myself, might find the book too Austrian and too willing to accept the relative efficacy of the market without stronger proof.

These are nonetheless nits about a book that serves as a major contribution. Energy economists, energy lawyers, regulators, and industry participants will find this work a necessity. The length will scare off many readers, but the style is clear and agreeable. Even individuals who will not read every page will find that this book offers a nearly inexhaustible supply of browsing material. Bradley's work reads as a labor of love, a paean to the virtues of the market, and a testament to the tragedies of foolish intervention.

Tyler Cowen George Mason University