Somali pirates in the news again

Yet again, Somali pirates deliver a valuable lesson in political economy. The price of oil spiked this morning after the news broke that Somali pirates off the coast of Kenya had taken an oil supertanker ferrying 2 million barrels of oil through the treacherous waters. This is an excellent illustration of what a free market in oil (and, more importantly, sea transport) would look like: securing ships traveling across the globe is expensive. As it stands now, the US government (and governments around the world) effectively subsidizes the industry with their navies, ensuring safety for ships on the high seas. But this protection isn't free, and should be rightly counted as a subsidy for goods shipping internationally (such as crude oil).

For more on Somali piracy and what it can teach us about the world, see here. And for all my posts on Somalia (there's more than you'd think), click here.