Economics in the Oil Industry

Consumers do individually have a somewhat finite amount of money to put toward spending in markets, so they tend to get the most they can for the money they have. Policymakers tend to look past the inefficiencies and waste (deadweight loss) created as unintentional consequences of their fiat actions. Consumers actually have less money value in the long-run, due to rising inflation rates and the devaluation of currency already in circulation as new money gets minted and created by fractional reserve banking.

While a portion of the population may gain from such measures as increased tax rates on some products, the social good is not maximized through this method, as the most efficient product in the market is not allowed to equalize itself naturally. Without interventionist policies, oil costs would normalize (saying goodbye to wild fluctuations in market costs) and slowly decline as the finite resource slides down the slope toward inefficiency in terms of EROI. Alternative energy sources to oil would become more appealing to both consumers and producers (and investors) in a free market as the costs of production of oil increase, as it's supply decreases (as it's done since about 1971).

I'm not all that surprised to see policymakers laughing off Hubbert's research from the mid-1950s, only that it is done so overtly. At least most of the tax on oil consumption is laid at the feet of those consuming it. If only the same could be said for the corn-for-fuel market...