September 1, 2010

Unintended Consequences

Professor Mankiw links to an Economist article that suggests solid state lighting will not reduce energy use -- it will simply increase the demand for light.

The light perceived by the human eye is measured in units called lumen-hours. This is about the amount produced by burning a candle for an hour. In 1700 a typical Briton consumed 580 lumen-hours in the course of a year, from candles, wood and oil. Today, burning electric lights, he uses about 46 megalumen-hours—almost 100,000 times as much. Better technology has stimulated demand, resulting in more energy being purchased for conversion into light.

That, at least, is the conclusion of a study published in the Journal of Physics D: Applied Physics by Jeff Tsao of Sandia National Laboratories in New Mexico and his colleagues. They predict that the introduction of solid-state lighting could increase the consumption of light by a factor of ten within two decades.


Just as the efficient vehicle owner finds himself driving more miles, so these will increase consumption. This would be good news to me, but blog brother jg is more concerned about light pollution than I.

Either way we can agree that the ridiculous nannying toward adopting these devices will -- mirabile non freakin dictu -- not achieve the nannies' goals.

Posted by John Kranz at 2:11 PM | Comments (8)
But johngalt thinks:

Whoa, an Anthem reference. Nice!

Posted by: johngalt at September 1, 2010 10:39 PM
But Keith Arnold thinks:

The quote from Economist begged for it; that, or a reference to a petition from candlemakers and allied industries regarding sunlight, to protect advances in our lighting technology. Fidelity to Rand and Bastiat are both valued among the lot of us...

Seriously, though - if we humans are clever enough to create advances in any science, then why should we not enjoy the fruits of our labors? We don't invent more efficient lighting to stick to the antiquated consumption budget; we invent more efficient lighting to create more light. Were we to suddenly discover a new, plentiful fuel source for cars (be it massive oil reserves or an engine that ran on ambient static electricity), then why should we continue driving gutless, underpowered four-cylinder cars when we could savor the wind in our hair and the thrill of triple-digit speed?

Posted by: Keith Arnold at September 1, 2010 11:54 PM
But jk thinks:

To the pantheon of Rand and Bastiat, let me add my hero, Dr. Karl Popper (the only man by whom John Maynard Keynes ever admitted to be bested in debate).

Germane here because a footnote to a footnote in The Open Society and its Enemies talks about "those who would send us back to the caves." Working in Boulder County, that represents almost everybody I know. As we celebrate light, a beloved cousin pushes the whole family to establish a weekly candlelight dinner: not for romance mind you, for "the environment."

Humans, pace the late Discovery Channel Gunman, do not deserve heat and light -- and certainly not fun in transportation.

But, brother, please rethink your aversion to tetracylendrical automobiles.

Posted by: jk at September 2, 2010 10:15 AM
But Keith Arnold thinks:

Adjectives, my good jk, adjectives - my aversion is to *underpowered* four-bangers. Remember, the 1986 Mustang SVO also ran on just four... plus an intercooled turbo package. 'Twas a NICE four.

Having said all that, I'd almost be willing to wager serious money you didn't buy that MR2 solely for its mileage per gallon, and the reasoning in the original post still reigns supreme. Quod erat demonstrandum.

Posted by: Keith Arnold at September 2, 2010 2:12 PM
But johngalt thinks:

@JK- To your cousin, doesn't he/she realize how much CO2 is emitted by candle flame? I think you should propose dinner in the dark. (If you REALLLLY want to be environmentally friendly...)

Posted by: johngalt at September 2, 2010 7:24 PM
But jk thinks:

What? You mean replacing all electric light with candles would not help the environment? Man, if only she had a cousin who cared enough to tell her these things...

Posted by: jk at September 2, 2010 7:42 PM

August 24, 2010

Another Boulder Power Boondoggle

Perhaps you've heard about the "green" power initiative called "smart grid." According to Wikipedia, "A smart grid, is, in essence, an attempt to require consumers to change their behavior around variable electric rates or to pay vastly increased rates for the privilege of reliable electrical service during high-demand conditions." Well, who in their right mind wouldn't want THAT in their home?!

As it is often eager to do, the city of Boulder, Colorado wanted to be a pioneer in transforming the smart grid into reality so they colluded with utility company Xcel Energy to wire up 23,000 homes at a projected cost in the neighborhood of $20 million. Now that the experiment is over and the final price was $45 million Xcel says, "We would not do that again over the whole service area," But in bailing out on the added cost Boulder says, "There is not a clear consensus among the members of the Boulder City Council with regard to the value of SmartGridCity in its present state or the prudence of this investment."

What? Boulder City Council considering the "prudence" of "investing" residents' money based upon "value?" Pinch me!

Posted by JohnGalt at 3:20 PM | Comments (3)
But Keith Arnold thinks:

I've spotted the fallacy in your text. You have the phrase "... who in their right mind..." in a discussion of Boulder politics. That's like saying "... what thinking voter..." in a discussion of California politics. Sort of a sociological division by zero; logic fails, the fabric of the universe is rent asunder, Cthulhu awakens, and in the end, chaos.

Posted by: Keith Arnold at August 24, 2010 4:07 PM
But johngalt thinks:

Not exactly a fallacy, merely sarcasm. For anyone who jumps up and says, "OOOh, pick me, pick me" to have his behavior dictated by the capricious pricing schemes of do-gooder utility bureaucrats (who couldn't explain a BTU with both hands) is most certainly not in his right mind.

Posted by: johngalt at August 25, 2010 3:02 PM
But jk thinks:

I'm just glad I saw "couldn't explain a BTU with both hands" before I drank my coffee, Five stars for that'n.

Posted by: jk at August 25, 2010 3:13 PM

August 19, 2010

"Public" Utilities Malfeasance

Colorado's HB 1365, which I railed against last March, directed electric utility company Xcel Energy to "study" the economic benefits of converting existing coal-fired plants to use natural gas. But don't confuse them with any facts.

Xcel now says building brand new gas fired plants and tearing down the coal units would be cheaper still. How? Well, there are some tax benefits, but there's also a new 10-year contract with natural gas provider Andarko Petroleum.

It almost sounds as though it were a fixed-price contract, but one that long would be most unusual. Historically gas contracts run only a year, said Stutz.

Wouldn’t it be easier to make his case if the gas contract were made public? Perhaps, but he said the gas contract is proprietary information.

Hmmm. Proprietary information? Public utility?

But don't expect the Public Utilities Commission to look out for the public. Ron Binz, the chairman of the Colorado PUC, is an environmental activist.

Historically commissioners have not been involved in negotiating controversial legislation that they may end up implementing. A hands-off approach makes sense if you’re supposed to be a neutral arbiter. You rarely hear of judges at any level participating in legislation.

But Binz was quite active in the negotiations involving HB 1365 before it was introduced, as e-mails uncovered in a court proceeding revealed.

He’s also an advocate for climate-change legislation at the national level, and heads the climate task force of the National Association of Regulatory Utility Commissioners.

To quote Mythbusters' Jamie Hyneman, "Well THERE'S your PROBLEM!"

Posted by JohnGalt at 2:52 PM | Comments (0)

August 3, 2010

The Chevy Volt Dance

Brother AlexC posted this on Facebook, but I wanted to make sure everybody saw it.

Now who can say that the bailout didn't work, huh?

Posted by John Kranz at 4:43 PM | Comments (3)
But johngalt thinks:

Yikes. First the kiddies took over government and now the kiddies have taken over marketing at a major multinational corporation. What's next? Oh, I forgot: medicine.

Posted by: johngalt at August 4, 2010 3:22 PM
But T. Greer thinks:

Hey, if the Volt at my local Chevy dealer came with one of these dancers, I would buy it too. ^_~

Posted by: T. Greer at August 4, 2010 5:38 PM
But jk thinks:

They're all government workers, tg, you'll be paying for their healtcare the rest of your life.

Posted by: jk at August 4, 2010 6:13 PM

July 30, 2010

Tweet of the Day

The Volt is the Emperor's new car. --@terraM

Posted by John Kranz at 7:35 PM | Comments (0)

Proud to be a Republican

We're the party of thought and ideas and ideals. And the ONLY thing that can mess it up is when we win majorities and have to govern.

Rep. Paul Ryan has superb plans for entitlements, Rep Tom Price has an excellent plan for budget and Federal discretionary spending.

Now Kim Strassel shares California Rep. Devin Nunes's Energy Roadmap. And it strikes me as a thing of beauty.

Mr. Nunes's interest is how to answer these concerns in a more free-market way. The Californian's road map is the product of years of work, most recently with Mr. Ryan and a handful of Republicans with energy expertise—Illinois's John Shimkus, Utah's Rob Bishop, and Idaho's Mike Simpson. It's a bill designed to produce energy, not restrict it. It returns government to the role of energy facilitator, not energy boss. It costs nothing and contains no freebies. It instead offers a competitive twist to government support of renewable energy.

Both Strassel and I would prefer that renewals "sink or swim" ("...and swim just left town...") but Nunes funds them with royalties from extraction and introduces a pricing mechanism, and -- gasp! -- competition and scoring.
It would divert all the federal resource royalties into a fund. Companies or individuals with proven renewable technology would take part in a reverse auction. They'd bid for government bucks; those that can produce the most megawatts for the least money win. Auction winners forego other federal handouts. And consider this: The more fossil fuel extraction, the more royalties (potentially hundreds of billions of dollars) available to boost alternative energy.

Noocyulur power would not be subsidized, but regulatory hurdles would be dealt with. Like the Green Lobby, it would be put up or shut up time for the denizens of deuterium:
Rather than throw federal loan guarantees at uncertain nuclear plants, the legislation attacks the true problem: bureaucratic roadblocks. It streamlines a creaky regulatory process, requires the timely up-or-down approval of 200 plants over 30 years, and offers new flexibility for dealing with nuclear waste. Mr. Nunes likes to point out that his nuclear provision alone would do more to reduce carbon emissions than any Democratic proposal in existence. And it would in fact create, ahem, green jobs. Imagine that.

Now if we can just do something to keep the GOP out of power for a few more years so that these great ideas keep coming.

UPDATE: And then there's Senator John Thune:

He is best known for being the man who retired Democratic Minority Leader Tom Daschle in 2004, but GOP Senator John Thune of South Dakota is now striving for some policy and political visibility. He's just made a sweeping proposal to reform the clearly broken Congressional budget process.

Last year, Mr. Thune became head of the Republican Policy Committee, a leadership post that puts him in charge of generating the party's position on key issues. He's also being talked about as a dark horse presidential candidate by Republican strategists who aren't enamored by any of the likely 2012 contenders.


Minus ten points for "line item veto." Conservatives have got to jump off that train if they want to keep any Constitutional cred. Love the idea of President Christie stripping pork but I'm less keen on President Obama stripping out the tax cuts and pocketing the spending increases.

Posted by John Kranz at 2:26 PM | Comments (0)

Yet Some Still Doubt Government's Investing Prowess

Below, the Wall Street Journal suggests that that the Feds might not make $1.1 Billion the CBO projected with their scheme to invest in banks and funnel loans to small businesses. Well that's the WSJ Ed Page -- whaddya expect?

Now their right-wing buddies at the New York Times Opinion page carry a guest editorial by Edward Neidermeyer which calls the Government Motors Chevy Volt "a vehicle that costs $41,000 but offers the performance and interior space of a $15,000 economy car."

Quantifying just how much taxpayer money will have been wasted on the hastily developed Volt is no easy feat. Start with the $50 billion bailout (without which none of this would have been necessary), add $240 million in Energy Department grants doled out to G.M. last summer, $150 million in federal money to the Volt’s Korean battery supplier, up to $1.5 billion in tax breaks for purchasers and other consumer incentives, and some significant portion of the $14 billion loan G.M. got in 2008 for “retooling” its plants, and you’ve got some idea of how much taxpayer cash is built into every Volt.

In the end, making the bailout work — whatever the cost — is the only good reason for buying a Volt. The car is not just an environmental hair shirt (a charge leveled at the Prius early in its existence), it is an act of political self-denial as well.

If G.M. were honest, it would market the car as a personal donation for, and vote of confidence in, the auto bailout. Unfortunately, that’s not the kind of cross-branding that will make the Volt a runaway success.


Effing Nascar Retards...

Hat-tip: Jonathan Last

Posted by John Kranz at 12:05 PM | Comments (2)
But Boulder Refugee thinks:

How's this for great minds thinking alike? JK just got the category wrong.

Posted by: Boulder Refugee at July 30, 2010 12:28 PM
But jk thinks:

And six minutes late! It's nice of you guys to let me play with you.

Posted by: jk at July 30, 2010 12:37 PM

July 16, 2010

BP Spill - Tale of the Tape

Over the previous 87 days of the oil spill "disaster" every attempt to plug the leak had the dominant liberal establishment mass media looking over BP's shoulder and then rushing out with breathless reports of "another failure." It's curious that now, with flow stopped for the moment, they all find it within themselves to counsel caution. Better late than never I suppose.

But what is the total damage done by the leak? The linked story cites a leaked volume of four million barrels of raw crude oil. Alright, let's put that in perspective. 4 million barrels is 22458333 cubic feet. From a well head located roughly 5,000 feet below the water's surface this amounts to a column of oil extending from the well to the surface that is about 23 meters (about 75 feet) in diameter. For a geological feature measured in nautical miles this really does amount to a "drop."

Dilution is the pollution solution.

Posted by JohnGalt at 3:02 PM | Comments (0)

June 29, 2010

It's not Easy Being Green

If you've never cared for the song (or if you have) I recommend Sophie Milman's version. But I digress.

Two Insty posts deserve a reciprocal segue:

GOOD NEWS AND BAD NEWS ABOUT THE PLUG-IN PRIUS: “So far, the Inside Line team has racked up more than 500 miles in the plug-in Prius and the experience has to be considered somewhat of a let down. The team has averaged 62 miles per gallon, a good number for sure, but one that many drivers of the more conventional Prius have easily achieved on a regular basis. . . . Given the plug-in’s slightly improved efficiency, one would have to drive 215,100 miles to make up for the additional cash laid out to start

And
ECO BOOST: Ford Mustang V6 Gets 48.5 MPG Around Bristol Race Track.

Okay, Tangerines and Tangelos. But Look at Gallons per 100 mile:
  • Super cool, fun, babe-magnet* Mustang: 2.06186

  • Doofy, expensive, pretentious Prius that has to be plugged in at night and which will require multi-thousand dollar battery replacements at regular intervals: 1.6129

So, every 100 miles, the Plug-in Prius owner saves almost a half a gallon of gas. Seventy five gallons in a 15,000 mile year.

*Granted, the women in Brother Ka's life require the V8, but let’s race the V6 against the Prius...

Posted by John Kranz at 3:19 PM | Comments (9)
But Keith Arnold thinks:

Harrrrumph!

The woman (singular, take special note) in Brother Ka's life is happy driving the 232 V-6, so long as it's the ragtop. Mrs. Ka felt at the time that the V-8 was a trifle peppy. And inasmuch as she drives just like I do, I'll put serious money on her behind the wheel of her Mustang - and she'd probably spot the sissy Prius a hundred yards in a quarter-mile dash to prove her point.

As for the Mustang's environmental impact:

http://www.nationalreview.com/planet-gore/13334/environmental-progress-parked-mustang-test/henry-payne

Posted by: Keith Arnold at June 29, 2010 5:31 PM
But johngalt thinks:

And the Prius' impact, on the other hand...

"To compare, the Toyota Prius involves $3.25 per mile in energy costs over its lifetime, according to CNW, while several full-size SUVs scored lower. A Dodge Viper involves only $2.18 in energy per mile over its lifetime. The Range Rover Sport costs $2.42, and the Cadillac Escalade costs $2.75."

Posted by: johngalt at June 29, 2010 5:47 PM
But Keith Arnold thinks:

Not so loud, jg - or someone will cite you as proof positive that the Prius deserves a taxpayer-funded subsidy to put it on an equal footing. The'll demand eighty cents a mile in subsidy to make it competitive with the Range Rover.

Posted by: Keith Arnold at June 29, 2010 6:28 PM
But johngalt thinks:

DUDE! Where've you been?

Federal Tax Incentives

(Thanks for the hanging curve ball.)

But seriously, yes they can always ask for another subsidy... because this one is clearly not big enough.

Posted by: johngalt at June 29, 2010 7:46 PM
But jk thinks:

You guys makin' me laugh!

At the same time: Tesla Raises $226 Million in IPO, Stock Gains 40% on First Day

Posted by: jk at June 30, 2010 1:00 PM
But Perry Eidelbus thinks:

JG, I am definitely not, NOT NOT NOT NOT NOT NOT clicking on that link.

Coulda been worse, I suppose. It could have been a Helen Thomas as an example of a liberal "babe"!

Posted by: Perry Eidelbus at July 1, 2010 2:00 PM

June 25, 2010

Quote of the Day

I stay out of the global warming dispute, and I mean completely. I don't argue that we need to do things because the world is coming to an end or going to shift because we have endangered ourselves. I mention global warming in the movie but don't focus on it, and the reason is because I think it's a red herring. If we focus on money, and the bottom line, and we look at what kind of cost savings and profits can be gained through energy efficiency, it makes the global warming argument look like people who just don't understand where the value is. We need to focus on value, because the major change for the green revolution has to happen at a business level.

If you don't provide businesses with value, they won't ever change. They don't care what's happening to the world. Corporations aren't run with a set of moral directives. They are run with one thing in mind, and that's profit. For me, for my work, even for the Fuel film, the question was always: How do we get away from these didactic arguments that just go around in circles and leave people with less understanding, less information, less ability to make informed decisions than they had when they began? How do we give them really clear, insightful information that they can use to actually better their lives? It's great that it betters the planet as a result. And it's great that it improves the air. Of course it's going to reduce carbon emissions. Because at the end of the day, it's an efficiency equation. -- Josh Tickell, the director and star of the award-winning documentary, Fuel


Posted by John Kranz at 1:38 PM | Comments (4)
But johngalt thinks:

I call BS:

"Corporations aren't run with a set of moral directives. They are run with one thing in mind, and that's profit."

To the contrary - the profit motive IS a proper moral directive.

Do you see how even men who are favorably inclined to capitalism are defeated by the ideas of altruism without even knowing it? (Not that Mr. Tickell is necessarily or even slightly one of those men.)

Posted by: johngalt at June 25, 2010 2:50 PM
But jk thinks:

MISTER TICKELL! I missed that. It sounds like a product VP Gore orders on the internet late at night from one of his lonely mansions...

Each can decide the credit he or she wants to extend Tick, but I was pretty impressed that a documentary filmmaker (I think about Spurlock and Michael Moore) would push profit motive and market value as the goal for alternative energy sources. You read it as anti-Rand, I read it as pro-Milton Friedman (a Corporation’s only goal is to provide value for its shareholders).

Posted by: jk at June 25, 2010 3:01 PM
But johngalt thinks:

Half-empty... half-full.

Posted by: johngalt at June 26, 2010 12:42 AM
But Giggle T thinks:

I agree. You have to give businesses and corporatios financial incentives to go green. It has to be practical for them to really they their ways of doing things.

Posted by: Giggle T at June 27, 2010 6:55 PM

June 23, 2010

Smackdown Indeed

The WSJ Ed Page is impressed by the pointedness of Judge Feldman's (loved him in Young Frankenstein!) "legal rebuke" of the Obama moratorium on deep water oil drilling.

Oil-services companies brought the case, which is supported by the state of Louisiana, arguing that the White House ban was "arbitrary and capricious" in exceeding federal authority, and Judge Feldman agreed. He noted that even after reading Interior Secretary Ken Salazar's report on safety recommendations (which included the ban), and Mr. Salazar's memo ordering the ban, "the Court is unable to divine or fathom a relationship between the findings and the immense scope of the moratorium."

Quite the opposite, said the judge, "the Report makes no effort to explicitly justify the moratorium." It does "not discuss any irreparable harm that would warrant a suspension of operations" and doesn't provide a timeline for implementing proposed safety regulations. There is "no evidence" that Mr. Salazar "balanced the concern for environmental safety" with existing policy, and "no suggestion" that he "considered any alternatives." The feds couldn't even coherently define "deep water." Ouch.


Ouch indeed! Whole read the thing.

Posted by John Kranz at 11:45 AM | Comments (0)

June 22, 2010

Judicial Slap-Down

Not so fast, Barack: Judge Rules Against Obama Drilling Ban

Judge Feldman noted in his decision that the Supreme Court has explained an agency rule as being arbitrary and capricious "if the agency has relied on factors which Congress has not intended it to consider, entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise."

"That rationale resonates in this dispute," Judge Feldman wrote in his decision.

Translation: You did ALL of these things you jackasses!

The Republic strikes back.

Posted by JohnGalt at 3:57 PM | Comments (5)
But jk thinks:

Huzzah for Judge Feldman and huzzah for tripartite government!

Larry Kudlow mentioned the injunction last night but I was not at all optimistic.

Makes one proud.

Posted by: jk at June 22, 2010 5:02 PM
But Boulder Refugee thinks:

Aw, you guys are missing the point on this one. The judge saved the Obama Administration from itself. Hizzoner took an ecological disaster and expanded it to an economic disaster as well. Had the judge not made this ruling, Obama & Co. would have held the bag for the whole catastrophe. Now, Obama has the political cover with his Leftist base, but won't suffer the consequences of the decision. Somewhere Barry and Michele are fist-bumping.

Posted by: Boulder Refugee at June 22, 2010 7:11 PM
But johngalt thinks:

No. I think not. This Reagan-appointed judge made an objective reading of the law and concluded that the administrative branch can not "arbitrarily and capriciously" deem a legal business to be illegal, even temporarily.

Without rulings like this Barack Obama and Hugo Chavez would be fist-bumping.

Posted by: johngalt at June 22, 2010 7:32 PM
But Boulder Refugee thinks:

Don't get me wrong, I think it was the right decision as a matter of law. But, I don't think that you can deny that the judge saved Obama from himself, politically.

Posted by: Boulder Refugee at June 22, 2010 8:05 PM
But jk thinks:

President Obama has a plan: he's going to put fifteen judges on teh Fifth Ciruit in time for the appeal.

Posted by: jk at June 23, 2010 11:03 AM

June 17, 2010

How Cap and Tax will be Passed ... THIS YEAR

For several months now I've taken scant comfort in the belief that "after the healthcare disaster there's no way that congress or the American people will allow the energy tax bill to pass." Then I read this analysis by RCP's Jay Cost:

The only reason to pass such a major piece of legislation during a lame duck session is because the proposal is unpopular. If Democrats could sell the bill to their constituents, they would pass it before the November elections then campaign on it. Party leaders must also expect that the political will for this bill will not exist in the 112th Congress after the voters have spoken in November. In other words, the new representatives coming in are not going to vote for it - so Nancy Pelosi, Harry Reid, and Barack Obama had better get the representatives who were just fired to support it before they're forced into early retirement.

But Jay says the president would be wise to use caution, lest he hurt his own chances for re-election in '12:

Passing health care reform over howls of popular protest then jamming energy reform through a lame duck Congress might solidify the impression that this President is a bully who doesn't care what the people think. That would hand the Republicans a great valence issue for 2012. Nobody likes a bully, after all.

But if the president has already acquiesced to a belief that his re-election is doomed anyway...

Posted by JohnGalt at 3:29 PM | Comments (1)
But Perry Eidelbus thinks:

Obama's energy tyranny was legislatively stalled. The oil rig exploded when Obama needed such a thing the most, and the timing couldn't have been better if Obama's goons had planned it. As Rahm Emanuel said, never allow a crisis to go to waste.

Meanwhile, the American people are stupid enough to swallow the guff about "offshore drilling," when it's federal regulations that prevent them from safe, plentiful drilling on land and in shallow waters.

Posted by: Perry Eidelbus at June 17, 2010 3:52 PM

June 12, 2010

"Unfettered" Capitalism

JK recently invoked a long-standing theme put forth by Blog Brother Silence: That without government guidance a capitalist economy necessarily results in an extreme gentrification of society, or a "Dickensian" world if you will. I noted in the comments that "it is not only the wealthy who can create wealth. At every level of the economic ladder, when value is traded for value wealth is created." A more thorough explanation of this fact is offered in a Wendy Milling essay: 'No Thomas Friedman, Capitalism is Perfect.'

Some degree of economic malady exists and will continue to exist under any system, including capitalism. It is not the responsibility of capitalism to eliminate, and it is not a feature of capitalism, but of a special facet of reality: Man's free will.

Individuals must perform mental and physical work in order to attain material values, but this requires an act of free will. The existence of free will means that some people will choose to have a different value system, and some will choose not to have values at all. In a pure capitalist system, the opportunity to achieve whatever prosperity level desired is available to everyone.

(...)

It is not the proper purpose or function of a politico-economic system to override the free will of man, and any attempt to do so is immoral. It would be an attempt to violate the rights of the virtuous for the sake of those who reject virtue, because in reality, the only way to start equalizing results for people who have chosen to reject effort is to rob from those who have not. To insist that people who demonstrate no commitment to achieving material values, value the materials anyway-and then blame capitalism for their not having them-is to border on the psychotic.

Now, what Wendy has described is only valid in a special place we like to call "reality." Opponents of capitalism can't prevail in the face of these facts using reason. In fact, many deny that reason exists. Instead, as Wendy writes, "they rely on obfuscations, equivocations, and an attitude of militant evasion. One trick is to make inappropriate demands of capitalism, then stomp and pout and denounce capitalism when those demands are not met." She calls this approach "crybaby metaphysics." That is apt teminology, and the reacton to the BP oil leak by President Obama casts him as Crybaby in Chief. ("Just plug the damn hole!")

Milling concludes by answering Friedman's sneering taunt, "But what say the tea partiers today? Who will step forward now and demand that the ‘energy market' be rescued from regulatory bondage?"

Observe that the government, beholden to an insane environmentalist ideology that views nature as an intrinsic value and superior to human beings, forbade oil companies to drill nearer to the coast line where there were shallow waters. In the shallow areas, an oil leak could be directly accessed. Instead, companies were only allowed to drill in areas too deep for current technology to address.

The liability risk in deep waters was too great for the oil companies to accept. This is an example of the inherent safety features in a free market. However, because we need the oil for our economy, politicians had to entice companies to drill there by capping liability limits on accidents, legally shielding them from the consequences of failure they would bear under a capitalist system. It is government that removes the safety controls and engenders unacceptably risky situations.

There is no regulation that can override the reality of a fundamentally flawed set-up like this, which is why the statists do not offer to explain why such regulations were not already in place in one of the most heavily regulated sectors of the economy.

It is also an open question what the actual economic damage will be, what it would be were the federal government not interfering with local authorities' attempts to mitigate the spill, and what adaptations the private sector will make to counter the new adversities.

Thus, if it were not for government interference, there might still have been an accident at some point, but there would have been no "disaster." Statism was the problem, and laissez-faire would have prevented this situation.

Capitalism is not to blame for the flaws of our mixed economy, the do-gooders' "fettering" is.

Posted by JohnGalt at 11:28 AM | Comments (0)

June 7, 2010

One Two, Futility, Three, Four!

ThreeSourcers who wish to extract an I-told-you-so can search for posts in which I argued against the European ('nuff said?) method of measuring fuel economy by the reciprocal: liters per 100 kilometers. Just a different scale said I.

And a logarithm is just a number and an exponent is just like a factor and -- what did you say your major was in school? Mea Maxima Culpa, I was "wrong as pants on a trout" to quote Mister Quint.

If you really want to see the effect on fuel economy, the reciprocal form conveys more important information. Y'all may be way ahead, but I had to play with some numbers. Imagine vehicles that get 10, 20, 25, 33, 50 and 100 mpg. The jump from 33 to 50 looks pretty substantive, as when I trade my MR2 for my sanctimonious in-laws' Honda Hybrid. But trading your 20 mpg truck for a 25 mpg hybrid or minivan. why bother?

We don't have to use metric, but let's look at those in terms of gallons per 100 miles. This is a measure of how much gas you'll buy and burn. 10,20,25,33, 50, and 100 equal 10, 5, 4, 3, 2, and 1 gal/100mi.

Little different, n'est ce pas? Moving from 20 to 25 has the same fuel savings as from 33 to 100 or 50 to 100. Or even 100 to zero!

And that's the significance of this story, claiming that "over half of the 130,000 hand-raisers for the Nissan Leaf, currently own a Toyota Prius."

That's a pretty significant signal to us. It tells us that there is a segment of eco-friendly consumers who are interested in going to the next level. They own a hybrid vehicle. But if the next step is available, they want to take it.

Well <southparkvoice>Good for You!</southparkvoice> But you're saving a marginally small amount of fuel.

Hat-tip: Instapundit

UPDATE: On the other hand:
lance_leaf.gif

UPDATE II: And, for those interested, 100 / 7 = 14.28, as in Ashton Kutcher's New Ride:

ashton.JPG

If Ashton were to upgrade to a Hummer...

Posted by John Kranz at 2:58 PM | Comments (6)
But johngalt thinks:

Whoa, a few too many typos there to keep up with, but the point is a good one. So I'd like to offer an attempt at clarification.

Gallons per mile -> miles per gallon

5 -> 20
4 -> 25
3 -> 33 (and a third, but who's countin'?)
2 -> 50
1 -> 100
0 -> infinity

So, for a troglodyte like my brother to trade in his 20 mpg SUV for a 25 mpg one saves as much fuel as when Ed Begley gives up his plug-in hybrid for sandals.

More importantly, moving from a 10 mpg vehicle to one that gets 100 mpg cuts fuel consumption by 90%, and any further reduction from there is, by comparison, negligible. You can be the government will still be mandating it though.

Posted by: johngalt at June 7, 2010 8:10 PM
But jk thinks:

Fixed (one) typo. And by the way. I think you mean "Gallons per 100 miles."

Posted by: jk at June 8, 2010 9:54 AM
But jk thinks:

But I'm not gonna make a big deal of it...

Posted by: jk at June 8, 2010 9:56 AM
But jk thinks:

Oh, and was that "you can bet the government...?"

Posted by: jk at June 8, 2010 12:46 PM
But johngalt thinks:

Yes, per 100 miles, and yes, "bet" the government. Gee, this blogging thing is complicated!

Posted by: johngalt at June 8, 2010 3:11 PM
But johngalt thinks:

Oh, and I hear that Ashton drives his new ride when he goes to visit Al Gore's house.

Posted by: johngalt at June 8, 2010 3:15 PM

June 3, 2010

"Fossil" Fuels: A Renewable Resource?

From a news article in Laser Focus World magazine:

Scientific evidence supports the origination of petroleum reserves from the decay of carbon matter such as ancient dinosaur and vegetation remains. However, researchers (...) have used laser heating in a diamond anvil cell (DAC) to demonstrate that high-temperature compression of natural elements in the upper mantle of the earth do indeed create hydrocarbons that could be transported through deep faults to shallower regions of the crust and contribute to petroleum reserves in an abiotic (having nothing to do with biology) process.

In other words, not coming from decayed dinosaurs or vegetation, hence the scare quotes in the title. (A more apt term would be geological, or geo-fuels.)

Naturally occuring subterranian gases, under extreme heat and pressure, appear to "partially reacts to form saturated hydrocarbons (ethane, propane, and butane), molecular hydrogen, and graphite. These hydrocarbons are a primary component of petroleum and were detected in the experiments using Raman spectroscopy."

I asked my PhD physicist friend, who sent me this article and told me that crude oil may well be a renewable resource, Would this mean that Peak Oil is a myth?

"Yes."

Update - June 09: A caller to Mike Rosen's show this morning asked Robert Bryce, author of 'Power Hungry - The Myths of "Green" Energy and the Real Fuels of the Future' about the abiotic oil theory. He claimed that most of the oil company experts discount it, at least with regard to crude oil. Natural gas is apparently a better fit for the theory.

Posted by JohnGalt at 3:30 PM | Comments (3)
But jk thinks:

A Dogma de Fide tenet of ThreeSources truth:

April 19, 2008

July 27, 2009

Posted by: jk at June 3, 2010 4:05 PM
But johngalt thinks:

And here JK proves that johngalt's memory isn't worth 4 bits, but allow me to summarize. The 2008 post discussed a theory. The 2009 post hailed experimental evidence (the same evidence I linked). Today's post linking a May, 2010 magazine article about it shows that Laser Focus World is slower than Eureka Alert.

Posted by: johngalt at June 3, 2010 7:20 PM
But jk thinks:

I don't expect anyone to remember much of the general nonsense I post, but this is a long time belief of mine (my conversion dinner would have been 1978 or 79).

It is just oddball enough that I am pretty sensitive. Watching a news clip on dispersion of the oil spill, the announcer said "Oil is biodegradable -- it is after all made from dinosaurs." My eyes rolled.

Posted by: jk at June 4, 2010 10:07 AM

June 2, 2010

Gulf Oil Spill - The Real Threat

"Could we really take over BP?" Robert Reich is apparently serious.

Q: But why should we expect government to do any better job than BP?

A: BP would still be at the job -- and its expertise, equipment, and other assets would continue to be utilized. But the federal government would be in overall control of the operation -- weighing public risks and benefits, deciding what resources are necessary, getting accurate information and disseminating it to the public.

Yeah. That'd work.

Posted by JohnGalt at 3:53 PM | Comments (2)
But jk thinks:

"weighing public risks and benefits, deciding what resources are necessary, getting accurate information and disseminating it to the public"

Yeah, the absolute sweet spot of government competence! You're re-reading Atlas, what page is this again?

Posted by: jk at June 2, 2010 4:05 PM
But johngalt thinks:

I'm in Chapter 6, 'The Non-commercial' which relates more to the MoDo column below. My guess is I'll get into more of this in chapter 7, 'The Exploiters and the Exploited.' Then of course there's chapter 12, 'The Aristocracy of Pull.'

Posted by: johngalt at June 2, 2010 4:22 PM

'lectricars! Green Jobs!

Our story (a story on loan from Holman Jenkins, Jr.) opens in Sunny California. And it has cool cars, high livin' entrepreneurs, dreams-a-plenty, and I'll work in some bikini-clad blonde women if you give me some time.

Everybody's favorite $100,000 'lectricar is coming into production! Huzzah!

Tesla is the dreamchild of Silicon Valley entrepreneur Elon Musk, but not even Mr. Musk's ample bank account is capable of providing financing on the scale required to bring a car to market. Especially not when it's already being drained to finance his unprofitable space-rocket company and now a divorce. In February, Mr. Musk told a judge he's "out of cash" and living off loans from "friends."

Among the friends he didn't enumerate is the federal government, which under a law Mr. Obama keeps bragging about has become Tesla's biggest supplier of working capital, in the form of $465 million in federal loan guarantees. But there's a wrinkle: This money can't be used directly to put Tesla's new "Model S" into production, but will be available only after Tesla raises the necessary funds from private investors.

Bottom line: Tesla needs an IPO, even in today's inhospitable market and despite its unpromising business plan. Mr. Musk himself especially needs an IPO to refloat his lifestyle by converting some of his Tesla stake to cash.


Huh, that didn't sound too good did it? Well, no doubt it is going to get better because 'lectricars are THE thing now, and everybody agrees that the $100,000 Tesla 'lectricar is the coolest!
What we have here is a political kludge of the murkiest order. Tesla reportedly was within hours of closing a deal for a plant site in Downey, Calif., when the Toyota offer materialized, thanks in part to undisclosed state incentives orchestrated by Mr. Lockyer. ("Downey is awesome," Mr. Musk wrote to city fathers apologizing for the last-minute jilting.)

Hardly was the deal announced before White House aide Jared Bernstein was on a conference call urging Tesla to rehire laid-off UAW workers. And already scheduled was Mr. Obama's campaign, er, presidential visit to Northern California, in which he was pleased to take credit for the deal.

Within days too, a bipartisan cabal of legislators introduced identical bills in the House and Senate to ladle out fresh subsidies for electric cars, including $5 billion to reward "deployment communities" or "corridors" (in California, say) that sponsor local schemes to spur sales of electric cars.


Kudlow fans will know Jared Bernstein as the sweet, loveable but highly misguided lefty foil who can be counted on to oppose anyone with reason. He entered the Administration early as VP Biden's Economic Advisor (Big Bird was unavailable?) I guess he's running GM now.

Jenkins suggests that California and the US could use some business that might, um, if I can broach the topic, generate revenue instead of mop up subsidies. But no, this calls for a victory lap. 'lectricars! Green Jobs! Bankruptcy!

Posted by John Kranz at 11:13 AM | Comments (1)
But johngalt thinks:

For an unvarnished review of the Tesla watch Jeremy Clarkson explain the obvious in his original style here. [Caution: advertising boondogle required for viewing.]

"...undisclosed state incentives organized by Orren Boyle, err, Mr Lockyer."

Question: Is "bikinied" a legitimate adjective?

Posted by: johngalt at June 2, 2010 3:08 PM

May 28, 2010

King Barack the Verbose

On the heels of Charles Krauthammer's King Canute reference, [third comment] Mark Steyn fills us in on the background.

In the age of kings, we were taught that kings were human, with human failings. Now, in the age of citizen-presidents, we are taught that government has unlimited powers over "heaven, earth and sea." Unlike Canute and Alfred, the vanity of Big Government knows no bounds.

You won't be sorry if you read it all. He even takes a whack at the Euro.

Posted by JohnGalt at 3:24 PM | Comments (0)

May 24, 2010

Looks Like We'll Need Bigger Subsidies

Is The Electric Emperor Naked? asks American.com

Honda’s R&D chief thinks he may at least be in his underwear.

What Honda knows about electric cars is considerable. But what Honda, as one of the world’s leading manufacturers, knows about the car business is even more considerable. And as to the electric part of that business, Kawanabe says “We lack confidence” in it.

“We are definitely conducting research on electric cars,” he recently told Bloomberg News, “but I can’t say I wholeheartedly recommend them.”

Why? As a leading engineer for the builder of some of the world’s most popular cars, Kawanabe’s answer is right to the point. “It is questionable whether consumers will accept the annoyances of limited driving range and having to spend time charging them.”

Kawanabe is not saying anything new, but he is saying something that is either ignored or has yet to sink in with electric enthusiasts. EVs—including the very best of them—don’t go very far. They go even less far if they go fast. They go even less far if they contain passengers or any significant cargo. Or if it is very cold. Or if it is very hot.


I think that Honda has a good gift for planning strategically and taking the long view. The electric car fanatics are developing a technology that is years away in popular availability and adoption. The article suggests that 10% of the market in ten years is optimistic.

I'd suggest that predicting as faddish a trend as 'letriccars five or ten years into the future is pretty difficult. A little caution looks wise. Tesla is sui generis, the Chevy Volt is appealing to the firm's political owners, Nissan is free to bet on the Leaf. But all of these will come out of other R&D, and the 2013 Honda line might show a company that made the right pick..

Posted by John Kranz at 7:06 PM | Comments (2)
But johngalt thinks:

Yeah, but you know those engineers... always focusing on the possible. What a bunch of naysayers.

By the way, have I ever told you that all of us in Galt's Gulch drive electric SUVs with on-board electricity concentrators with as much horsepower capacity as you'd care to pay for at the time of order? Jus' sayin'.

Posted by: johngalt at May 24, 2010 8:14 PM
But nanobrewer thinks:

Silly people; using your brains and thinking the vox populai is anything but a quaint myth.

The California cognoscenti have spoken, and have told us how 2% of the cars on the road _shall be_ EV's as of.... oh, ten years ago?

Ooops. I think we're coming up on the anniversary of the mandate hitting 5%. Someone better speak up!!

Who remembers? I do....
http://www.acterra.org/ev/archive/CARB_STAT.html

Posted by: nanobrewer at May 25, 2010 1:39 AM

May 7, 2010

Quote of the Day

"[T]hink of what's happening in countries like Spain ... where they’re making real investments in renewable energy. They're surging ahead of us, poised to take the lead in these new industries," declared then-President-elect Barack Obama back in January 16, 2009. -- Ron Baily
A meta-QOTD today, the whole post is superb. (HT: Instapundit)
Posted by John Kranz at 11:41 AM | Comments (1)
But johngalt thinks:

"And when the subsidies go, so, too, go the much-vaunted "green jobs" that depend on them. Climatewire reports that some 30,000 green jobs have evaporated in Spain. Earlier studies found that it cost nearly $750,000 to create each new green job in Spain's renewable energy sector."

Maybe they can "create" some more new jobs removing the solar panel eyesores.[first comment]

Then there's this: "Prices charged for solar power were 12 times higher than those for fossil fuel electricity." Strange that "free" energy costs so much, eh? I guess it's because of all those subsidies to oil and gas companies. Oh, wait...

Posted by: johngalt at May 9, 2010 9:58 AM

May 1, 2010

"Clean and Safe" alternative energy

Unless you're a bird. (Warning: Content may be disturbing to some viewers.) [No, I'm not kidding.]

Hat tip: M4GW

Posted by JohnGalt at 3:34 PM | Comments (4)
But jk thinks:

I have been meaning to take and post a picture of the new Lafayette Solar Farm on Hwy 7 not too far from the "Condo of Love" that I call home.

I don't think I'll march or blow it up (though there's a big fertilizer store a mile away... Fifty Pounds of Ammonium Nitrate to a gallon of fuel oil if I recall from college...)

Nah, but I did have a Senator Kennedy moment. The flatland prairie around here is very attractive. Everybody loves the mountains, but the high plains are pretty to me. We have houses and farms and some commercial development that all seems to fit.

And now all of sudden there a few acres of black photovoltaic panels that are an absolute eyesore; nit huge but definitely ugly. I know all the denizens in Lafayette society are tickled pink that .0319% of their electricity is "renewable" but I gotta drive by this thing every time I go into town.

Posted by: jk at May 2, 2010 11:13 AM
But johngalt thinks:

Speaking of "Senator Kennedy moments"... Interior secretary approves nation's first offshore wind farm at Cape Cod

I'm all for bucking the NIMBY interests of the Kennedy family or specious "undersea indian burial grounds" claims but the federal subsidies being devoted to build these delicate engineeringing curiosities in the middle of the ocean really get me wee wee'd up.

Posted by: johngalt at May 2, 2010 1:53 PM
But johngalt thinks:

WSJ has some numbers that put the (not likely to be built soon) offshore wind project in perspective.

Posted by: johngalt at May 2, 2010 1:56 PM
But johngalt thinks:

And finally, the Kansas City Star (my dad's old hometown paper) has a brief pro-con piece between Brian Merchant, Treehugger-dot-com, and the Boston Herald editorial staff. The latter says

Of course, there are those — and we count ourselves among them — who are huge fans of wind power but in the appropriate place and at a sustainable cost. Cape Wind fails on both of those scores.

(...)

While people may argue about the aesthetics of turbines on an ocean horizon, there can be no argument that this will be among the most expensive sources of energy ever devised by mankind. And that's not counting any possible public subsidy. [my emphasis]

Don't forget to vote in their online poll!

Posted by: johngalt at May 2, 2010 2:08 PM

April 1, 2010

I Could Not Have Decided for Myself

Don't worry, the AP suggests you're coming out okay:

WASHINGTON – Drivers will have to pay more for cars and trucks, but they'll save at the pump under tough new federal rules aimed at boosting mileage, cutting emissions and hastening the next generation of fuel-stingy hybrids and electric cars.

The new standards, announced Thursday, call for a 35.5 miles-per-gallon average within six years, up nearly 10 mpg from now.

By setting national standards for fuel efficiency and greenhouse gas emissions from tailpipes, the government hopes to squeeze out more miles per gallon whether you buy a tiny Smart fortwo micro car, a rugged Dodge Ram pickup truck or something in between.


Where do you start with the awfulness of this policy? First principles. Government does not create more fuel efficient cars -- like the minimum wage, it just makes some purchases illegal.

It seems that citizens could choose whether they wanted to pay more for a more fuel efficient car. But as subjects, we are told.

Posted by John Kranz at 7:41 PM | Comments (1)
But johngalt thinks:

Read this post to my dad. He pointed out that those new government-approved cars aren't more fuel efficient they're merely more fuel economical as a result of being smaller and lighter. [And I add, less comfortable and more dangerous.]

Today Jason Lewis said, "Just when you thought the world hasn't gone completely insane..." as the lead in to a story.

I couldn't help wondering, "Who thinks that?"

Posted by: johngalt at April 1, 2010 9:20 PM

March 23, 2010

No Nukes!

Haw about a little energy scarecrow? I'm sick of health care.

I saw this on a Stossel clip on Hulu and meant to ask the ThreeSources' cognoscente about it. Stossel has a blog post about it today. Key 'graph:

I thought that nuclear power is a wonderful underutilized energy source, hampered only by idiots who believe the scaremongering pushed by the likes of Jane Fonda and The China Syndrome. After all, France gets 80% of its electricity from the atom, and they handle the nuclear waste without a problem.

But Cato Institute energy analyst Jerry Taylor set me straight. Yes, the waste is manageable, he says, but affordable nuclear power is a Republican energy myth: “Take a Republican speech on energy and cross out nuclear, replace with wind and solar…and you’ve got a Nancy Pelosi speech on energy. Exact same thing.


I won't say Cato is never wrong, but I am disinclined to say that he's nuts on this.

Cognoscente?

Posted by John Kranz at 4:54 PM | Comments (12)
But Lisa M thinks:

No jg, I meant efficient--the quote form the Cato guy seems to imply that nukes are as inefficient as wind and solar, which I don;t think is a fair comparision. Additionally, since I was distracted and in class, Perry makes a point I was going to make, which is that government regs artificially drive up the price of nukes, thereby making it less economical.

That all being said, I admit to being pretty ignorant to actually knowing how nukes compare to other forms of energy in the realmsof economics and efficiency. It would not surprise me at all that the French were using an inefficient power source for 80% of their supply.

Posted by: Lisa M at March 23, 2010 11:53 PM
But jk thinks:

<animalhousevoice>I'll not sit still while Perry runs down Cato!</animalhousevoice>

I think, to be fair, Cato's on your side, Perry. The comparison to wind and solar is that none competes well on a level playing field. Doofy Right Wingnuts like me have been assured that nuclear power would be competitive if gub'mint "got out of the way" but I fear he (and jg) may be right.

Posted by: jk at March 24, 2010 11:13 AM
But johngalt thinks:

Lots of thoughts in as few words as possible:

Coal is less popular in the east because those sources are intrinsically higher in sulphur (read: "acid rain") than western coal.

I never found a reference by Cato guy to efficiency of generation, which is what I assumed Lisa meant. He touches on efficiency of greenhouse gas reduction but not really compared to wind and solar, that I could see.

The efficency of wind and solar is not their fatal flaw - availability is. Wind energy peaks at night and in the winter - solar is effectively limited to a 4-6 hour period mid-day. Peak electric usage is summer afternoons and evenings year-round.

The efficiency of nuclear isn't really an issue since the fuel source is so magnificently concentrated. Perry's government regs. and concommitant costs/risks are the problem. (So now, finally, I'm prepared to agree with Cato guy that NUKES ARE NOT THE ANSWER! though not for the flower children's reason.) If gub'mint got ALL the way out of the way then nookyuler would have a chance to compete - but that ain't gonna happen.

The major battle line in this country today is coal vs. natural gas. Production advancements in natural gas have massively increased supply, therefore lowering cost vs. coal. But it still costs more than coal, notwithstanding gas guy's claims on the Mike Rosen show yesterday.

Hey gas guy, if gas really is "as inexpensive as coal" then why do you need Colorado law to keep utilities from buying coal?

Posted by: johngalt at March 24, 2010 3:50 PM
But johngalt thinks:

OK, I wasn't quite done.

My last point refered to Colorado outlawing coal. I just updated last week's blog on that issue here.

And in this link to the coal industry website you can see, state by state, average electric rates along with the breakdown of fuel sources. Compare CO to CA or TX on the high side and WA on the low side.

Posted by: johngalt at March 24, 2010 4:05 PM
But Perry Eidelbus thinks:

I'm not "running down" Cato, but I'm pointing out something that their analyst doesn't appear to have considered. There's no such thing as a truly private nuclear power plant in the United States: there are so many requirements and regulations that they're state-run, even if ownership is ostensibly in private hands. When I first started researching nuclear energy, ahem, 19 years ago, I was shocked to find that you can't build a new plant based on an existing working design. You still can't, as far as I know. Nuclear energy can never be viable while regulations prevent operators from "Xeroxing" a practical design. This adds millions before the site can be considered for approval.

Take Indian Point, in my home county. Its electricity is expensive not because nuclear energy itself is that expensive, but because the envirowackos have completely hamstrung the operations. There's always a lawsuit or near-lawsuit to shut down the place, and applying for a license renewal is an extremely long and costly process.

But remember that I'm a staunch believer in markets, so I'm only saying about the Cato analyst, "Maybe correct, but here's something to think about." It's one thing to say that an apple costing 50 cents should be cheaper than a pear costing 40 cents after a 20-cent subsidy. But you can't say that the pear is cheaper or more expensive in a free market when the government has made it more expensive for the pear grower.

If someone can make something work, let him. If he can't, failure will be a lesson to the next guy (whether it's not to try it, or to try a different way). Some people once thought dirigibles were the future, and that airplanes would be limited to mail routes and sma.

Posted by: Perry Eidelbus at March 24, 2010 4:06 PM
But Perry Eidelbus thinks:

Oops, trailed off at the end. Meant to say, "smaller passenger routes."

Posted by: Perry Eidelbus at March 25, 2010 10:05 AM

March 17, 2010

Colorado following California into Anti-Coal Stupidity

Watch out Pennysylvania, you're probably next. Yesterday Colorado's lame-duck governor announced a "Clean Air - Clean Jobs Act" that looks like it's on the fast track through the state legislature, having "bipartisan" sponsorship in both the house and the senate. The sponsoring GOP senator, in particular, draws my ire. It's been a while since I've felt the need to publish outside of the friendly confines of ThreeSources, but I wrote the editor of the Denver Post about it.

Re-thinking Josh Penry

Dear Editor,

Senate Minority Leader Josh Penry has been making a name for himself in conservative circles but it may be time to reconsider. The Post reported Tuesday that he co-sponsored Governor Ritter's new "Clean Air - Clean Jobs Act" that outlaws coal power in Colorado. Have we not learned from California's mistake? Electricity costs 40% more there, largely due to their coal ban. Why do it?

Penry isn’t quoted but reasons given include anticipation of federal regulations that could “lead to a 4 to 6 percent increase in rates.” That’s still 34% less than California. Xcel Energy and natural gas companies support the plan. The latter because coal always wins in a free-market; the former because they’ll get money for new plants and cover for raising rates. It’s like light bulb manufacturers encouraging the ban on cheap light bulbs.

And then there are coal’s higher carbon emissions. As Curtis Hubbard alluded last month on his Post blog, if the events of the past year haven’t convinced us that the whole ‘Climate Change’ issue was a fraud we have reason now to at least ask the question.

UPDATE - March 24, 2010:

Not long after my post I heard radio ads SUPPORTING this bill. They were paid for, if I'm not mistaken, by the Independent Petroleum Association of America, a natural gas lobbying group. [No, I just heard it again. It's America's Natural Gas Association.] Jackasses.

Fortunately, the coal guys are fighting back. Today I heard the first ad against the bill deriding the mad rush to pass the bill "and raise electricity costs for Colorado residents for decades to come." The ad was paid for by American Coalition for Clean Coal Electricity, a coal lobbying group.

Which to side with? The one that doesn't want to restrict the market - Coal.

Posted by JohnGalt at 2:32 PM | Comments (0)

March 5, 2010

I'm from 'Big Oil' And I'm Here to Help

I'm not quite ready to address the question of why the secular French and Russian revolutions "made such a hash of things, when the relatively devout American [revolution] succeeded." As a warm-up exercise I'll attempt to explain why America's elected leaders insist on cutting the nose off of America's energy policy. Hint: It is to spite America's face.

I remember wondering 20-odd years ago in my college days if environmentalists who lobbied government for ever greater restrictions on oil and gas development (and every other productive activity, it seemed) seriously believed that elected leaders would do something so obviously harmful to the American standard of living. Looking back now it clearly wasn't as obvious to our elected leaders as I had assumed. More importantly, however, it's also no longer obvious to a huge portion of the electorate. For decades the environmentalists and their minions, through vehicles such as global warming and Avatar movies, have lectured Americans that we are evil earth killers. For most of that time there was little in the way of self-defense on the part of "big oil." I'm pleased to say that has changed. "The US oil and natural gas industry is moving ahead with a long-term educational advocacy program to build understanding and appreciation of the role the industry and its products play in fueling the nation’s economy."

But just why has the industry felt the need to undertake such a program? Red Cavaney, President and CEO of the American Petroleum Institute (API), provides some context. “Like many industries, especially those with roots dating back a century or more, we have traditionally focused on just getting our job done, if you will,” he says. “To the extent we communicated externally, our companies have tended to focus on their brand.”

Cavaney explains that on issues related to public policy, the industry has tried to be responsive to a policy-maker audience. “The industry has not, however, engaged stakeholders and others more broadly about its irreplaceable role in fueling our nation’s overall economic growth or its contribution to an improved quality of life for the American consumer,” he says.

As my high-school history professor Doc Ton used to say, "The pendulum always swings back."


Posted by JohnGalt at 2:46 PM | Comments (3)
But jk thinks:

Add to that Karl Popper's famous "those who would take us back to the caves." Boulder is full of folks who would like us all to be poor dirt farmers even if we could get clean abundant energy from kissing rocks.

Posted by: jk at March 5, 2010 4:45 PM
But Boulder Refugee thinks:

As a Boulder native, The Refugee will attempt to shed light on the average Boulder psyche. Most of them don't, in fact, want everyone to be dirt poor farmers. They want all of the 60" flat panel TVs, 6000 sq ft homes, three cars, iPods, etc. They want everyone else to be dirt poor farmers so that they can by organic produce and feel good about.

An interesting article appears in the WSJ on Feb 13: http://online.wsj.com/article/SB10001424052748704320104575015920992845334.html?KEYWORDS=boulder+green+energy. The point of the article was that even in an uber-environment outpost like Boulder, individuals valued convenience more than energy savings:

"Since 2006, Boulder has subsidized about 750 home energy audits. Even after the subsidy, the audits cost each homeowner up to $200, so only the most committed signed up. Still, follow-up surveys found half didn't implement even the simplest recommendations, despite incentives such as discounts on energy-efficient bulbs and rebates for attic insulation.


The City of Boulder prides itself on being an eco-conscious town. So how come it's been so hard to get residents to reduce their dependence of fossil fuels? WSJ's Stephanie Simon reports.
About 75 businesses got free audits; they made so few changes that they collectively saved just one-fifth of the energy auditors estimated they were wasting."

Once again, the Liberal Left shows it's true colors.

Posted by: Boulder Refugee at March 5, 2010 10:55 PM
But johngalt thinks:

Awesome link br. Thanks!

Posted by: johngalt at March 8, 2010 11:37 AM

Got Jobs?

The House of Representatives recently passed its own version of the largely symbolic, but very expensive, 15 ba-billion dollar jobs bill. What frustrates me most of all about this is how they ignore a simple and inexpensive way to create real, private-sector jobs, increase tax revenue, and reduce our dependence on foreign oil. EnergyTomorrow.org sez:

Increasing access to oil and natural gas resources could generate nearly 160,000 new, well-paying jobs, $1.7 trillion in revenues to federal, state and local governments and greater energy security. And according to a PricewaterhouseCoopers (PwC) study, the U.S. oil and natural gas industry already supports 9.2 million American jobs and contributes more than $1 trillion to the national economy, or 7.5 percent GDP.

Our nation has vast on-and-offshore oil and natural gas resources that could be produced safely to put this country's economy back on its feet.

But it's not just domestic oil and gas that will provide the jobs and energy our nation needs. Canada, our friendly neighbor to the north and top supplier of oil, will continue to play a vital role as we seek greater energy and economic security.

According to a recent CERI study, the economic impact of Canadian oil sands development is expected to lead to 342,000 U.S. jobs between 2011 and 2015, and an estimated $34 billion to the U.S. Gross Domestic Product (GDP) in 2015 and $42.2 billion in 2025.

I've said it before and I'll say it again - Many answers to our economic woes are easy to find; if government hacks really intended to fix the economy they would do it.

Posted by JohnGalt at 2:29 PM | Comments (0)

February 15, 2010

America's Next Superfund Sites

It isn't enough that billions of dollars (and euros) have been wasted in the construction of wind energy "farms." Get ready to spend billions more tearing them down.

Posted by JohnGalt at 3:38 PM | Comments (5)
But jk thinks:

Jobs, jobs, jobs! Is there no end to the prosperity of the Green Revolution?

Posted by: jk at February 15, 2010 4:17 PM
But Perry Eidelbus thinks:

Y'all are just too racist to recognize what Obama is doing. He's simply following FDR's programs of people digging holes and filling them up again, which averted economic disaster by creating aggregate demand.

Pardon me while I throw rocks through my windows to create jobs for the local glassmaker. And the feds can enact lots of new compliance regulations, requiring a separate report for each, to ensure employment for my boss and me.

Posted by: Perry Eidelbus at February 15, 2010 10:19 PM
But johngalt thinks:

Better yet - let's throw 'em through White House windows. I'm sure they'll be replaced with only the best.

Posted by: johngalt at February 15, 2010 11:32 PM
But nanobrewer thinks:

OK, I'll take this one up, as the resident Libertarian-Wind-Phile.

I find the AT article slightly disingenuous, as I often do for the O/L pubs from the reaching Right (worst example was loosely linking Enron to EPact). Still, I don't disagree with it's main point: wind and solar have gotten a lot of subsidies. What is mainly lacking is a comparison with the subsidies wind gets (for production), to those gained by oil, coal & gas for land use and their own depreciation shell games. Even the greenie-weanies rarely draw this comparison. He also doesn't properly explore the shameless shell game that wind proponents play with need a new wind subsidy _title_ every 5-10 years (tax credit: discredited), they get the PTC, then they get a RPS, then they get the ITC, now... it's something else... I forgot which.

As such, I'm not such a firm believer as I once was that wind could complete on a truly level playing field, but I'd like to see a detailed subsidy comparison.

Prof. Calzada's presentation on Spain's Green-going-into-the-Red was very powerful.
http://www.heartland.org/bin/media/newyork09/PowerPoint/Gabriel_Calzada.ppt

Posted by: nanobrewer at February 18, 2010 12:31 PM
But johngalt thinks:

A picture is worth 32,850 words (every year for fifty years.)

Those who rail against coal, oil and gas subsidies generally forget to consider the immense taxes those industries pay in return. But fine, eliminate ALL of the subsidies. Oil wins in a cakewalk.

Posted by: johngalt at February 19, 2010 3:48 PM

December 23, 2009

Getting tired of asking for permission

LetMyPeopleDRILL.jpg

Get yours here.

Posted by JohnGalt at 2:35 PM | Comments (0)

December 17, 2009

Evolution to Extinction

Sanctimonious progressives ridicule social conservatives for refusing to acknowledge the validity of the theory of evolution. Too bad they are too dense to see the obvious parallel with their refusal to acknowledge the lessons of history. But IBD's Michael Ramirez sees it.

ramirez%2015DEC09.jpg

Posted by JohnGalt at 3:50 PM | Comments (1)
But Keith thinks:

I thought they all died in the Ice Age. These dinosaurs oughta stay away from the Gore Effect:

http://directorblue.blogspot.com/2009/03/gore-effect-strikes-again-giant-dc.html

Posted by: Keith at December 17, 2009 6:11 PM

October 12, 2009

A Trike for Silence

This post Insty linked to made me think of ThreeSources's token left-of-center Silence Dogood. We may not vote alike but we frequently think alike.

One smart comment of his is that government regulation in fuel economy and transportation safety have stifled the development of hybrid vehicles -- not gas-electric hybrids, but scooter-motorcycle, cycle-car skateboard-bus vehicles which might find a market yet cannot be brought to market because of governments need to stratify and classify.

bmw-simple-concept-1.jpg

BMW's 120MPG hybrid motorcycle-car-stealth-bomber-thingy might make some sense but one finds it hard to see its coming to market.

Posted by John Kranz at 1:21 PM | Comments (8)
But jk thinks:

This MR2 owner could not agree more,

Posted by: jk at October 13, 2009 11:43 AM
But johngalt thinks:

Too complex and too many variables to predict every time, but the empirical evidence is conclusive.

I considered posting this link yesterday. It came in an email from my dear ol' dad last month. I refrained. But now I have to say you've asked for it.

http://images.google.com/images?hl=en&um=1&q=smart+car+wreck&sa=N&start=20&ndsp=20

Posted by: johngalt at October 13, 2009 1:49 PM
But Silence Dogood thinks:

Johngalt you must have been confused by the name "Smart". Did they learn nothing from the vans of the early 70's? Namely, you need some crumple space between you and the front of your car. Has nothing to do with your size or weight. Speaking of weight, 1800 lbs for this thing? They saved a whole 500 lbs from a Honda Fit? And gas mileage of 33/41? Seriously, this thing doesn't get 80 mpg? The Smart Car is pure marketing.

Posted by: Silence Dogood at October 14, 2009 12:11 AM
But jk thinks:

Boulder lefties get mad when they see a Hummer; I get mad when I see a smart car. They are so completely lame -- just a hair better gas mileage than my Mister2. It's all about showing how much you care, I suppose.

BTW engineering section: another mea culpa. I've completely changed my tune on reciprocal gas mileage -- the Europeans do have a better idea there. Looking at gallons per 100 miles, the difference between the MR2 and StupidCar® look as negligible as they are.

Posted by: jk at October 14, 2009 10:07 AM
But johngalt thinks:

You're absolutely right Silence, the so-called Smart Car delivers all of the hazards and inconveniences with little of the intended advantages of a smaller, lighter car. Like hybrids, I consider them the automotive equivalent of a hair shirt. But don't crumple zones necessarily make any given car larger and heavier than it would otherwise have been?

On the stealth tryke, zero to sixty in ten seconds? That's one way to get high mpg - tall gears and/or a throttle limiter. I think concept vehicles like this are a very worthwhile endeavor, if only to demonstrate what has to be sacrificed for a few more miles per gallon (or fewer litres per meter.)

Posted by: johngalt at October 14, 2009 12:15 PM
But johngalt thinks:

On a related note, I just saw a commercial for the new 2010 Subaru Outback. They billed it as "the original SUV alternative" immediately followed with "now bigger and better."

Posted by: johngalt at October 16, 2009 11:45 AM

September 28, 2009

'Bout That Peak Oil...

BP announces `giant' oil find in Gulf of Mexico

LONDON (AP) -- BP PLC said Wednesday that it had made a "giant" oil discovery in the Gulf of Mexico but had not yet determined the size and commercial potential of the find.

The well, in Keathley Canyon block 102 about 250 miles (400 kms) southeast of Houston, is in 4,132 feet (1,259 meters) of water, the company said.

The Tiber well was drilled to a total depth of 35,055 feet (10,685 meters), making it one of the deepest wells ever drilled by the oil and gas industry, BP said.

BP has a 62 percent interest in Tiber, while Petrobras holds 20 percent and ConocoPhillips has 18 percent


Hat-tip: Scrivener.net

UPDATE: A ThreeSources friend tells me that the wife of another ThreeSources reader played a large part in the find -- well done!

Posted by John Kranz at 7:02 PM | Comments (0)

September 24, 2009

Realistic technologies

The German automakers' laudable "go diesel" media blitz continues with a review of Audi's Q7 TDI and Mercedes' GL320 Bluetec. Reviewer James Schembari must be some sort of genius:

The diesel has become so seamless and the mileage so good that you can’t help but wonder if the technology could become the most realistic high-mileage solution for large passenger vehicles until other technologies are perfected.

This observation isn't notable so much for it's brilliance as its obviousness, and its similarity to other such observations. For example:

- The automobile has become so comfortable and convenient that you can't help but wonder if the technology could replace the horse and buggy until other technologies are perfected.

- The electric lamp has become so safe and economical that you can't help but wonder if the technology could replace the kerosene lamp until other technologies are perfected.

- Centralized generation of electric power from fission fuels has become so clean and ubiquitous that you can't help but wonder if the technology could replace fossil fuel generation UNTIL OTHER TECHNOLOGIES ARE PERFECTED.

I wonder if the Germans will ever show us the way on that too.

Posted by JohnGalt at 12:41 PM | Comments (1)
But jk thinks:

But realism implies reason, which the "green" community lacks. Don Surber has more on Save the planet, kill an eagle.

Diesel just doesn't "feel" as good as an electric vehicle full of heavy metals and toxic acids, powered by electricity from an old coal plant - now that's environmentalism!

Posted by: jk at September 24, 2009 1:42 PM

September 22, 2009

Citizens or Subjects?

Or, a better title might be "Gimme That Old Time Paternalism..."

Energy Secretary Stephen Chu "sees Americans as unruly teenagers and the Administration as the parent that will have to teach them a few lessons." WSJ:

“The American public…just like your teenage kids, aren’t acting in a way that they should act,” Dr. Chu said. “The American public has to really understand in their core how important this issue is.” (In that case, the Energy Department has a few renegade teens of its own.)

The administration aims to teach them—literally. The Environmental Protection Agency is focusing on real children. Partnering with the Parent Teacher Organization, the agency earlier this month launched a cross-country tour of 6,000 schools to teach students about climate change and energy efficiency.

“We’re showing people across the country how energy efficiency can be part of what they do every day,” said EPA Administrator Lisa Jackson. “Confronting climate change, saving money on our utility bills, and reducing our use of heavily-polluting energy can be as easy as making a few small changes.”


Don't. Know. What. To. Say. Anymore.

Posted by John Kranz at 3:33 PM | Comments (1)
But johngalt thinks:

"... a few small changes."

Few?

Small?

Pfffth.

Posted by: johngalt at September 23, 2009 11:50 AM

September 17, 2009

Audi Preaches JG's Gospel of Petroleum

You may have seen the new Audi commercial with barrels of oil rolling through the streets and back onto the tankers that brought them here from overseas producers. "If 1/3 of us drove a TDI clean diesel vehicle, we could send back 1.5 million barrels of foreign oil every day."

Well, since I love oil, I went to Audi's website looking for a copy of the commercial and found their "Diesel - it's no longer a dirty word" flash presentation.

Some highlights:

A TDI engine is revved several times while a white hanky is held near the exhaust pipe. Spotless.

"One drop of diesel fuel has 12% more power than one drop of gasoline."

I'm ready to do my part to reduce global warming-
"If 1/3 of Americans switched from gasoline to diesel, it would be the equivalent of planting 2.2 billion trees."

"so if you take the combination of phenomenal performance with reduced emissions and the positive impact that has on the environment there can truly be no compelling argument against the adoption of clean diesel technology for use on the roads in the United States."

Well, except for the fact that it would obliterate all of the "crises" that environmentalists have concocted to take us back to the caves.

Hey Obama, stimulate THIS!

[UPDATED to add video of the commercial from YouTube.]

Also of interest, a history of diesel cars in America since 1979. Via AudiofAmerica on YouTube. They call it Audi TDI: TRUTH IN DIESEL

By the way, did I mention that I love oil?

Posted by JohnGalt at 12:33 PM | Comments (3)
But jk thinks:

Our German bruderin who expected that? I would add the VW Commercial: How does your hybrid sound? Makes me laugh every time.

Posted by: jk at September 17, 2009 12:58 PM
But Keith thinks:

What time is it? It's time to unpimp your Prius...

Posted by: Keith at September 17, 2009 2:23 PM
But johngalt thinks:

Okay, now I'm really, really, ROFLMAO.

Posted by: johngalt at September 17, 2009 3:44 PM

September 8, 2009

The Condor Cuisinart

You'd think the Audubon Society might be celebrating the Petrosesquicentennial. You would, of course, be wrong.

But as Brother JG and I seek to crowd more people into the petroleum evangelists' revival tent, some bird lovers might want to consider baptizin':

A July 2008 study of the wind farm at Altamont Pass, Calif., estimated that its turbines kill an average of 80 golden eagles per year. The study, funded by the Alameda County Community Development Agency, also estimated that about 10,000 birds—nearly all protected by the migratory bird act—are being whacked every year at Altamont.

Altamont's turbines, located about 30 miles east of Oakland, Calif., kill more than 100 times as many birds as Exxon's tanks, and they do so every year. But the Altamont Pass wind farm does not face the same threat of prosecution, even though the bird kills at Altamont have been repeatedly documented by biologists since the mid-1990s.

The number of birds killed by wind turbines is highly variable. And biologists believe Altamont, which uses older turbine technology, may be the worst example. But that said, the carnage there likely represents only a fraction of the number of birds killed by windmills. Michael Fry of the American Bird Conservancy estimates that U.S. wind turbines kill between 75,000 and 275,000 birds per year. Yet the Justice Department is not bringing cases against wind companies.

"Somebody has given the wind industry a get-out-of-jail-free card," Mr. Fry told me. "If there were even one prosecution," he added, the wind industry would be forced to take the issue seriously.

According to the American Wind Energy Association, the industry's trade association, each megawatt of installed wind-power results in the killing of between one and six birds per year. At the end of 2008, the U.S. had about 25,000 megawatts of wind turbines.


This from a WSJ editorial decrying the double standard in enforcement, as oil and power companies have been levied with huge fines based on the Migratory Bird Treaty Act.

Gotta love oil.

Posted by John Kranz at 11:55 AM | Comments (7)
But jk thinks:

Understood Keith, but the Condor salad generated by your basic 400KW turbine takes away the subtleties of the endangered species's distinctive flavor.

Posted by: jk at September 8, 2009 2:25 PM
But Keith thinks:

Frankly, I prefer my terrine with the beak and feathers removed, thank you...

Posted by: Keith at September 8, 2009 2:59 PM
But Boulder Refugee thinks:

The larger point is that none of these industries should be subject to enviro-harassment through the courts that the present system permits. Limits on environmental lawsuits and endless impact studies should be an essential part of tort reform. Unfortunately, that has less of a chance than a condor in a windmill blade collision.

Posted by: Boulder Refugee at September 8, 2009 6:24 PM
But Silence Dogood thinks:

I always wondered about that. I have seen the Altamont farm and it is huge, at one point there are windmills as far as the eye can see, up and down each hill. Double standard indeed. Don't forget that Hydro doesn't get a pass either, a couple of dams along the Sacramento river had to put in fish ladders for the spawning salmon.

Posted by: Silence Dogood at September 9, 2009 12:41 AM
But johngalt thinks:

And more than one dam has actually been demolished in the name of fish habitat. It's almost as if environmentalists don't want ANY energy sources. Hmmm.

This was long before the internet so any references are only on microfiche somewhere but I recall during my college days - it made an impression on me as an idealistic young electrical engineering student - the early days of wind turbine R&D led to howls of protest from environmental groups because of bird strikes. They were dubbed "bird blenders" at the time. If wind turbines should ever become a predominant source of electricity those same old voices, the very ones that now give wind power a pass, will rise in opposition once again. The good news is, there's virtually no chance of wind power becoming a major player in the energy market.

Posted by: johngalt at September 9, 2009 12:56 PM
But Keith thinks:

Well, in that case, I highly recommend we appoint Capt. Chesley B. "Sully" Sullenberger III to the position of Wind Farm Czar. Seems to me he has some experience with bird blenders, has the ability to keep his wits about him during a crisis, and may have a personal stake in seeing to it that no tern is left unstoned to protect the infrastructure. In fact, I might go so far as to presume he has a personal axe to grind...

Posted by: Keith at September 9, 2009 3:54 PM

September 7, 2009

I Love Oil

(And why everyone else should too.)

JK recently heralded America's Petrosesquicentennial, the 150th anniversary of the first American oil well. We are quite enamored of the "black gold" on these pages. And why not? 3.8 gallons of oil derived gasoline (you may have heard of it - it's been used as a primary motor fuel for nearly a hundred years) which can be purchased on any street corner for about ten bucks, produce as much energy as an average lightning bolt (about 500 megajoules.)

And the safety of this miracle fuel is such that anti-industrial zealots like those on Dateline NBC have had to use remotely detonated explosives to recreate accidental fuel tank explosions.

But there's more to oil than gasoline. Much more. Modern necessities made from oil include jet fuel, propane gas, plastics, asphalt, and dozens of petrochemicals essential to hundreds of industries we could hardly imagine living without. (Paints, fertilizers and textiles to name just a few.)

I went searching for the historical significance of the Petrosesquicentennial and found the following graph of world population and income since 1500. It shows a precipitous rise in population around the time of the Industrial Revolution. But the per capita world GDP rose only 31 percent in the early decades of the Industrial Revolution (1820 to about 1870). In the next 30 years however, inflation-adjusted individual incomes went up another 45%, and 20 years later nearly doubled from there. Finally, by the end of the 20th century, individuals earned a whopping SEVEN TIMES what their ancestors did at the time commercial oil production began.

(Click on graph to enlarge)

While the Industrial Revolution began in the early 1800's without oil it "centered on improvement in coal, iron and steam technologies." The truly modern developments "steel, electricity and chemicals" were hallmarks of the Second Industrial Revolution which, though not clearly delineated from the first, roughly coincided with the commercialization of oil in America.

So if you love iPods, cell phones, jet planes, mass transit, modern medicines, supermarkets, artificial light, white collar jobs ... and the income to pay for all of these and more ... you'd best come to grips with your closet love affair with oil.

UPDATE [10:43a EDT]: As often happens, I omitted a key argument in the thread. The point of all this was to set up the assertion that the advent of cheap and abundant oil was not only coincident with the Second Industrial Revolution, but catalyzed it. Try to imagine the course of the industrial age without it. Certainly a gallon of gas could have been replaced, say with 121 cubic feet of natural gas or 9 pounds of coal, but extracting and using a liquid fuel proved far more practical and economical than those gaseous or solid ones, at least for some uses. And I contend those uses were - and remain - important. Add to this the less obvious fact that many chemical uses of oil may be irreplaceable.

Oil has clearly fueled prosperity. Not only that, it did so for everyone.

Posted by JohnGalt at 12:00 AM | Comments (1) | TrackBack
But jk thinks:

And let's not fail to celebrate John Rockefeller, who gave non-wealthy Americans the gifts of affordable heat and light. His nickel-a-gallon kerosene provided productive hours of reading and working to those who could not afford dollar-a-gallon whale oil.

For this generous gift to our nation's poor and his unprecedented philanthropy, we call him a "robber baron."

Posted by: jk at September 7, 2009 11:23 AM

August 28, 2009

Petrosesquicentennial

Blog Brother Cyrano sent a link that I wish I had posted yesterday. I am claiming coinage for the title word, though I am not sure when it will be used again.

But August 27th was the 150th anniversary of the first American Oil well -- and if that's not a better cause for celebration than Labor Day, I'll drink a quart of 10W30. IBD Ed Page:

On that day in 1859, Edwin Drake struck black gold with the first commercial oil well — creating an industry that would provide the lifeblood for modern civilization.

And yet no one seems to care.

In previous generations, the birth of the oil industry was celebrated, and deservedly so. Oil has sustained and enhanced billions of lives for more than 150 years by providing superior, affordable, ultraconvenient energy — and is as vital today as ever.


I celebrate modernity today and link to an extended, director's cut of my favorite TV commercial (embedding disabled, sorry!): Putting the 'No' in Innovation!

Happy Petrosesquicentennial!

Posted by John Kranz at 10:18 AM | Comments (1)
But AlexC thinks:

Pennsylvania, ahem..... to be sure....
they were drilling near Oil Creek, so it was a sure thing. ;)

Posted by: AlexC at August 28, 2009 1:36 PM

July 27, 2009

My "Truther" Theory

I always wonder why my conspiracy theory accepting friends are never dissuaded by the number of opposing views if not by Occam's Razor. To be sure, truth is not a democracy, and I have been proud to stand for many minority positions. But when I see "9-11 Truthers" and a few friends who believe that five billionaire families meet in Germany once a year and plan everything that happens everytwhere, I wonder that the tidal forces don't affect them.

And yet, my favorite wacko belief got linked by Instapundit today: Hydrocarbons in the deep Earth? I heard it called "outgassing" and had the pleasure of a personal presentation by Dr. Sterling Colgate, who was a former President of New Mexico Institute of Mining and Technology and a good friend of a(nother) guitar player in my band.

His pitch was that almost every hunk of rock we see floating around kicks out low level hydrocarbons, when these comets and asteroids clearly did not have millions of decaying dinosaurs to create oil. Maybe, just maybe, Earth was no different and these small molecules were compressed into more complex organic structures as they came through the intense heat and pressure of the Earth's mantle.

This was in an apolitical part of my life and I had no dog in the fight. I admittedly got a pitch from a charismatic and obliviously brilliant physicist, but it has always made more sense to me.

Posted by John Kranz at 9:45 AM | Comments (1)
But johngalt thinks:

So experimental efforts to "sequester" carbon by burying it underground could actually promote the natural creation of more hydrocarbon fuel deposits? The irony is delectable!

Posted by: johngalt at July 27, 2009 3:14 PM

July 13, 2009

With Success Like This...

[Austin] Statesman.com:

Austin Energy officials say that times have changed and that the nation's most successful (by volume of sales) green-energy program, which offers the renewable energy only to those who select it, might no longer be the best way to carry out the city's goals. It now costs almost three times more than the standard electricity rate.

"I think it's time to sit back and look at the philosophy behind GreenChoice," said Roger Duncan, the head of Austin Energy and the chief architect of GreenChoice.

"It was our intent to use it to stimulate the market for renewables, which it did, and then eventually phase it out," Duncan said. "It was never intended to go on forever."

Duncan said part of the solution might just be adding new wind, solar and other renewable-energy projects into the bills of all Austin Energy customers, which could increase rates for everyone


A perfect blueprint for the nation! Create a bunch of green energy that is too expensive to find a buyer --- and then make everybody buy it.

Hat-tip: Instapundit

Posted by John Kranz at 2:31 PM | Comments (0)

June 27, 2009

Don't Tell Blake Carrington!

Colorado ranked worst place for energy industry to do business

Surveys and magazine rankings routinely list parts of Colorado as the best places to live. But one survey says for oil and gas companies Colorado is the worst place in the country to do business.

The survey covered 143 locations worldwide. Colorado ranked last among the states and 81st in the world.

In 2007 Colorado was among the best places for oil and gas.

Some executives say Colorado has fallen out of favor because of new regulations.


Hat-tip: @RockyMtnRight

Posted by John Kranz at 1:21 PM | Comments (2)
But Perry Eidelbus thinks:

Don't you see what a good idea Obama's cap-and-trade is? The One will make Colorado equal with everywhere else...by bringing down everywhere else to Colorado's level.

Posted by: Perry Eidelbus at June 27, 2009 2:23 PM
But Boulder Refugee thinks:

On the plus side, the Rockies have won 19 out of their last 22 and are just 7 1/2 games out. Who cares about economics when you have baseball?

Posted by: Boulder Refugee at June 29, 2009 10:55 AM

June 26, 2009

"Balanced" and "sensible" climate change bill passes House

That's the spin thrown on the bill by President Obama yesterday. Surely it was far from either of those qualities at the time, but prior to passage another 300 pages were shoe-horned in ... at 3 am this morning! [What in the hell is the fixation that Washington politicians have with that time of day?] Minority Leader Boehner said the obvious:



And here are a few floor quotes:

Rep. Geoff Davis, a Republican from Kentucky, said the cap-and-trade bill represented the "economic colonization of the heartland" by New York and California.

Rep. Devin Nunes (R-Calif.) called the bill a “scam” that would do nothing but satisfy “the twisted desires of radical environmentalists.”
Rep. James Sensenbrenner (R-Wisc.) called it a “massive transfer of wealth” from the United States to foreign countries.

Democratic Rep. Tim Ryan of Ohio countered that, without the bill, the United States would remain energy-dependent on people who want to “fly planes into our buildings.”

I'd hoped to insert a bulleted list of ways that this bill is a colonoscopy for America but then I realized, Who the hell knows what it does... it jumped from 1200 pages to 1500 overnight!

But it's far from law yet. Next stop: the Senate.

(Note that as the lions share of H.R. 2454 was written by the environmental lobby this post qualifies for the coveted "dirty hippies" category.)

And kudos to JK for naming the 8 RINOs who voted for this treasonous piece of crap. Just four of them switching sides would have spiked it.

Posted by JohnGalt at 7:55 PM | Comments (6)
But AlexC thinks:

That jagoff Kirk wants to run for Obama's former Senate seat.

Good luck with that.

Posted by: AlexC at June 26, 2009 11:33 PM
But johngalt thinks:

Of the 44 Democrats voting no, one is from Colorado and four are from PA. I'll tell you what - my respect for John Salazar (CO-3) just grew three sizes larger.

Posted by: johngalt at June 27, 2009 10:06 AM
But jk thinks:

Well done, Mister Leader!

I tend to give up before trying on my representation, but Colorado's two freshman Democrat Senators could well feel a little heat on this issue.

To take up an Instapundit riff, having the next Tea Party outside of Senator Udall's or Bennett's office might be a better blow for freedom than a photo-op outside the Capitol.

Posted by: jk at June 27, 2009 11:50 AM
But johngalt thinks:

If Mark Udall might face heat on this issue in 2010 he doesn't seem to feel it at the moment. One of the stories I read yesterday said a few senators were working the halls of congress twisting arms for a yes vote. Mark Udall (D-CO) was the one mentioned by name.

I'm in for a TEA (Taking Energy Away) party at one of Markey's offices. Instead of pitchforks we'll carry empty gas cans. (Shall we try to organize something for next week?)

Posted by: johngalt at June 27, 2009 3:27 PM
But jk thinks:

I'm thinking we'd have better luck with Bennett, but that it would be a good exercise to scare Senator Udall. He is used to catering to CO-2 collectivists and a reminder that Boulder is not the whole state, dude, might be a good lesson.

They're pushing on Twitter for GOP defectors (great Twitter tag #capandtr8tors) to change their vote as you suggest with Markey. Is that realistic? I cannot imagine that the same effort would not be better directed at the Senate, but I am open to discussion.

Posted by: jk at June 27, 2009 6:29 PM
But HB thinks:

Best quote:

“I look forward to spending the next 100 years trying to fix this legislation,” said California Republican Brian Bilbray.

Posted by: HB at June 27, 2009 10:15 PM

May 15, 2009

For Sale: The Golden State

I really wanted to include a little graphic showing the state of California with a FOR SALE sign planted in it right about at Sacramento. Well, just use your imagination.

California's Governor Schwarzenegger has proposed selling a number of state landmarks (state ownership of which is in some doubt) to raise cash and balance the state budget. One-time proceeds are estimated at $1 billion. The budget shortfall is $15.4 billion, just for the next fiscal year. Obviously state officials need more stuff to put in their garage sale. Hmm, I wonder what California has that someone might be willing to pay cash for (other than federal bailout dollars, that is.) Gee, that's a tough one!

According to this handy interactive graphic the total government lease royalty revenue that would result from lifting current oil and gas production moratoria is $1695 billion and of that amount, $1386 billion of it comes from the outer continental shelf (Atlantic, Pacific and Gulf regions combined.) A summary report here provides numerous tables showing the breakdown by area but none were clear enough for me to cite specifically. Let it suffice to say the California budget shortfall, at $15.4 billion, is a bit over 1 percent of the possible OCS government windfall. If the Governator would simply work toward responsible development of his state's natural resources he could balance its budget overnight, and for decades to come.

As an added bonus, the productive half of America might even throw in legalization of pot!

Posted by JohnGalt at 10:46 AM | Comments (5)
But jk thinks:

I'm just happy the Governator is listening to Reason TV as they point out some of the goodies that are available.

Great point on the revenues from energy production. If we could duct tape Senators Boxer and Feinstein in a box* for a couple of days and override the bans, would the Golden State's production be viable at current prices?

*ThreeSources does not recommend or condone violent behavior directed at legitimately elected officials. This was merely a dramatic device to suggest possible passage of legislation that the current Senatorial representation of California has long opposed.

Posted by: jk at May 15, 2009 11:42 AM
But Keith thinks:

California going bankrupt while refusing to pump all that nice, shiny, revenue-producing oil isn't far removed from half a billion people starving in India while porterhouses and top sirloins on four legs walk around unmolested and uneaten on their city streets.

THERE'S a worthy run-on sentence to make a well-deserved point. The picturesque tone of voice is just a fringe benefit.

All that being said, I must once again apologize to the whole nation for my state. Let's just face it: we're heap plenty stupid. We gave you Feinstein, Boxer, Schwarzenegger, Waters, and come next Tuesday, we'll see whether we're still stupid.

I'm sorry. I'm really, really sorry.

Posted by: Keith at May 15, 2009 4:32 PM
But jk thinks:

A feller in the 2nd Congressional Colorado district is not going to cast any stones (not without a permit, Kieth).

The Reason video reminded me the hope I had for Ahnold. All humor of the video aside, it underscores just how bankrupt (philosophically) the system is. Watch those union folk -- those teachers "Ain't got none attention of giving nothing up!"

Schwarzenegger was a rare chance: he had the star power to get elected as an individualist in a collectivist-leaning state and he had toughness to stand up to the opposition. The California Public Union Sector trained him like a puppy. Is there another one left, Yoda?

Posted by: jk at May 15, 2009 5:02 PM
But johngalt thinks:

I see today evidence that the "sell Cahl-ee-fohrn-ya's state landmarks" proposal was little more than a campaign stunt. It was aimed at bolstering support for tomorrow's tax increase ballot measures (which Keith alluded to in his comment.) The half-dozen or so initiatives would raise taxes to collect, as I understand it, an additional $6 billion per year for 3 years from CA taxpayers (read: those "white people" who gathered on Capitol steps nationwide last month). If they fail, as the polls suggest most will, the supposed result will be "deep spending cuts."

Good NED, can we get some of those ballot measures in OUR state too??

Posted by: johngalt at May 18, 2009 1:36 PM
But Keith thinks:

johngalt: for more on tomorrow's wacky ballot measures in California, see here:

http://tinyurl.com/ooehz7

I did an update yesterday pointing my readers back here, and we have a lively conversation going among my readers in which you're always welcome to participate. Heaven knows a good lesson in free-market economics and the proper role of government is sorely needed by Californians, especially our elected overlords...

Posted by: Keith at May 18, 2009 1:55 PM

May 13, 2009

We'll Pick Winners, We're Just Not Good at It!

Scrivener.net has a little fun with the Obama Administrations abandoning funding for Hydrogen cars. He links to a WSJ blog with the sorry scoreboard:

“We’re very good at starting programs. We’re not so good at delivering” on the promises made by those programs, Mr.[Robert] Fri said. For example, President Nixon called for a low-emissions car in 1970. Jimmy Carter urged the reinvention of the car in 1977. The Clinton administration started the “Partnership for a New Generation of Vehicles” in 1993. President Bush launched the FreedomCar project in 2003. Meanwhile, General Motors only put Hummer up for sale this summer, when gasoline hit $4 a gallon.

Posted by John Kranz at 5:03 PM | Comments (0)

May 11, 2009

Fuel Economy Buffoonery

It was bound to happen: The 2010 Ford Fusion Hybrid - "The most fuel efficient mid-sized sedan in America." EPA rated 41 mpg city/36 mpg highway.

You read that right, brother. It is supposedly MORE fuel efficient in town than on the open road. ("Smart" drivers will doubtless pull over and stop every mile or so to improve their highway mileage.)

Posted by JohnGalt at 1:39 PM | Comments (2)
But Keith thinks:

I'm assuming - more efficient in town than on the four-lane because in town, the carbon-based engine shares duty with the electric motor, while freeway speeds on the four-lane require full-time use of the gasoline burner, because battery power can't push you along at a speed needed for freeway driving?

Alternative cynical theory: getting out and pushing can be done on city streets only.

Posted by: Keith at May 11, 2009 4:36 PM
But johngalt thinks:

Yes, more or less. And the salient point is this: What is the battery's state of charge at the beginning and end of the test?

Posted by: johngalt at May 11, 2009 5:17 PM

April 30, 2009

Shreveport is Forgiven

I got beat up very badly when my band was traveling outside Shreveport, LA. We were, as AlexC would point out, a bunch of dirty hippies, but still I have harbored some less than positive feelings about the place.

Now, however, Shreveport may deliver our country from shortages on Natural Gas -- and with any luck obviate some of the nonsensical subsidies for "Green" energy. Those who realize CO2 is not a pollutant must concede natural gas to be one of the cleanest fuel choices.

CADDO PARISH, La. -- A massive natural-gas discovery here in northern Louisiana heralds a big shift in the nation's energy landscape. After an era of declining production, the U.S. is now swimming in natural gas.

Even conservative estimates suggest the Louisiana discovery -- known as the Haynesville Shale, for the dense rock formation that contains the gas -- could hold some 200 trillion cubic feet of natural gas. That's the equivalent of 33 billion barrels of oil, or 18 years' worth of current U.S. oil production. Some industry executives think the field could be several times that size.

"There's no dry hole here," says Joan Dunlap, vice president of Petrohawk Energy Corp., standing beside a drilling rig near a former Shreveport amusement park.


It's a little too far North, but I'll still extend them a heartfelt Lasseiz rouler les bon temps!

Posted by John Kranz at 1:04 PM | Comments (0)

April 28, 2009

More bad news for the wind power industry

Can the green power bubble really be popping already?

From the Guardian UK via American blogger Anthony Watts: 'Britain's Only Wind Turbine Plant to Close' A small excerpt:

"The UK has large wind resources and it's a priority for the government but the orders didn't move. That's why we're telling employees that we're not reinvesting there.

"We are waiting to see in the coming period if the government initiative announced last week will get the market to move again. At least it gives some hope but it's too early to tell."

Those pesky government-induced markets are a real bugger. Be sure to follow the link though and watch the impressive video of a wind turbine exploding. It's not described but appears to me as an overspeed condition. Too windy?

Found this while searching for the Governmentium joke. That old blog has been replaced by this new one by Anthony Watts - Watts up with that? Looks like good stuff.

Posted by JohnGalt at 2:47 PM | Comments (0)

April 27, 2009

How Much CO2 is REALLY reduced by wind and solar? 30-40% at BEST

Here is more evidence for brother Nanobrewer that wind power doesn't work as well as advertised. This time, on environmental and not merely ("merely" - sheesh) economic terms.

Co-written by former Secretary of Energy James Schlesinger, under whose leadership the National Renewable Energy Laboratory was established in Golden, CO, this Washington Post article explains that "the sun doesn't always shine and that the wind doesn't always blow." (Stay with me here.)

The climate change benefits that accrue from solar and wind power with 100 percent fossil fuel backup are associated with the fossil fuels not used at the standby power plants. Because solar and wind have the capacity to deliver only 30 to 40 percent of their full power ratings in even the best locations, they provide a carbon dioxide reduction of less than 30 to 40 percent, considering the fossil fuels needed for the "spinning reserve." That's far less than the 100 percent that many people believe, and it all comes with a high cost premium.

The economic disadvantages are mentioned too, if you care to read the article, but I figured you're already tired of reading about those.

NB, I'd be happy to discuss if you care to. Either in the comments, in person or via email.

Posted by JohnGalt at 2:09 PM | Comments (0)

Drill Baby, Drill

So why doesn't 'big oil' diversify and use some of its wealth and expertise to find [fill in your favorite cuddly adjective - clean, renewable, alternative, sustainable, holy] energy technologies to replace their "reprehensible" products? Exxon Mobil CEO Rex Tillerson says it's because if his company were to go into that field then congress would immediately cancel the tax subsidy. Actually what they would do is they would just cancel it for us," he said. He added: “In reality, that is what I fear would happen. So we are not going to go into investments that are dependent on a government providing a tax system to make them viable.

By the way, Exxon said it was increasing its capital budget by 11% and will spend $29 billion next year on finding, drilling and refining fossil fuels and chemicals. So, they’re not planning on going anywhere, anytime soon.
Posted by JohnGalt at 1:48 PM | Comments (0)

April 26, 2009

"Dead as hell"

That's how wind champion T. Boone Pickens describes the market for wind energy projects in the wake of the mortgage banking crisis.

Wind power developers have long relied on complex tax-equity financing to bring most of their projects to market, but that system, once hailed as innovative, has collapsed over the last year, leaving the wind sector flailing for the cash it needs to make generation projects a reality.

This ought to give some insight into the economics of "alternative" energy in general and wind power in particular. Nanobrewer recently said he was convinced that wind power "works" economically and I suspect these complex tax-equity financing schemes are the biggest reason for that belief. But nothing about the scheme that made it "work" was the result of a free market. There are myriad ways for the house of cards to crumble. And now, in the wake of AIG and investment banking failures, even last year's most popular wind champion has to admit defeat.

So how badly is the sector hurting? Oil tycoon turned wind speculator T. Boone Pickens recently described the wind market as "dead as hell" to the Wall Street Journal. Richard Saunders, director of project development at GreenHunter Renewable Power, said Pickens was not far off.

Saunders estimates that in 2009, about 4,000 megawatts in new wind capacity will come online. That would be down significantly from the 8,400 MW built last year. And much of the new capacity is "really just things that are carrying over" from permits already issued in 2008.

"They've slowed down their activities tremendously," Saunders said. "They can't get the money."

If wind power "worked" economically then none of this would be happening. Consumer demand for the stuff would bring investment capital in torrents.

I also enjoyed the following point-counterpoint between wind industry analyst Tyler Tringas and ARI's Yaron Brook: "He [Tringas] added that he does not believe in government meddling, but he does think lawmakers need to account somehow for the cost of carbon." Brook's reply - "I don't believe there's an externality cost to CO2," he told Tringas.

UPDATE: This may (or may not) be the WSJ piece where Pickens first made the "dead as hell" assessment. I can't tell since it's subscription only and I only get the preview. Nonetheless, it bears mention for this:

Hit hard by the recession, the clean-energy industry is on the ropes. Governments are injecting stimulus money in hopes of keeping it alive, but what the industry ultimately needs is a far bigger dose of private investment.

In the space of a few months, the recession has slammed the brakes on what had seemed a full-tilt push for new ways to power the planet while emitting less pollution.

Umm, wasn't government "investment" supposed to create millions of "new energy jobs" that would pull America out of recession? If the recession itself has "slammed the brakes" then how can ANY amount of government "stimulus" make any difference?

Posted by JohnGalt at 3:20 PM | Comments (1)
But Perry Eidelbus thinks:

"If wind power "worked" economically then none of this would be happening. Consumer demand for the stuff would bring investment capital in torrents."

Exactamundo. I've meant to blog about this for a long time, ever since T. Boone started his hogwash.

He's looking at wind power because he sees a profit opportunity. If that were the end of it, I'd say "Power to him" and not blink an eye. However, he's seeking profit via government coercion: he's lobbying hard so government will skew markets in his favor, whether it's forcing energy producers to use more windmills or giving tax breaks to Pickens because he built more windmills early on.

He can go ____ himself up the tailpipe with one of those large windmills, and then go to hell.

Posted by: Perry Eidelbus at April 27, 2009 2:20 PM

April 21, 2009

Truth to Power

That whooshing sound you hear is the whole Upper West Side gasping for breath.

Science Editor John Tierney tells it like it is in the New York Times in Use Energy, Get Rich, and Save the Planet.

1. There will be no green revolution in energy or anything else. No leader or law or treaty will radically change the energy sources for people and industries in the United States or other countries. No recession or depression will make a lasting change in consumers’ passions to use energy, make money and buy new technology — and that, believe it or not, is good news, because...

2. The richer everyone gets, the greener the planet will be in the long run.


A little choir preaching -- but ThreeSourcers should cherish every word, and then store the link to rebut their acquaintances.

Posted by John Kranz at 5:39 PM | Comments (4)
But T. Greer thinks:

I have always liked Tierny. He is a pragmatist first and foremost, and has never been afraid to tell environmental activist crowd when they are scare mongering. In addition, he has always been fair to the adaptation advocates, whom I count myself among.

*sigh*

I wish more science editors had his backbone.

Posted by: T. Greer at April 21, 2009 6:53 PM
But jk thinks:

Amen to both. Tierney is great.

Posted by: jk at April 21, 2009 7:42 PM
But Perry Eidelbus thinks:

I just noticed. That's, uh, Upper West Side. :)

And if it's the NY Times building, that's still midtown.

Posted by: Perry Eidelbus at April 23, 2009 1:49 PM
But jk thinks:

Thanks to our NYC editor for keeping me honest. I have since corrected West Upper Side to Upper West Side (dang it, even I know that). And I was looking more for the true believing subscribers than the publisher.

Posted by: jk at April 23, 2009 2:03 PM

April 13, 2009

We Should All Go

At the Boulder Theatre, tomorrow night:

Boulder Weekly Films & Center for ReSource Conservation:
FUEL
Tuesday, April 14, 8:00 pm

FUEL is an insightful portrait of America?s addiction to oil and an uplifting testament to the immediacy of new energy solutions. From Rockefeller?s strategy to halt Ford?s first ethanol cars to Vice President Cheney's petrochemical company sponsored energy legislation to revealing available solutions to "repower America" ? from vertical farms that occupy skyscrapers to algae facilities that turn wastewater into fuel.

More Info


They forgot to say "No Moonbats Allowed!"

Posted by John Kranz at 6:36 PM | Comments (0)

April 7, 2009

Quote of the Day III

What kind of lazy-ass blogger posts three "QOTDs???"

Well, what could one possibly add to this?

No one at GM ever said that the first-gen Volts would make money, but Troy Clarke, president of GM's North American operations, recently told Automotive News that the second-generation vehicles might also be a red entry on the books. Of course, "as we get a chance to change the generations of technology, we'll lose less and less," he said, adding that, "It's not our intention to lose money forever." Well, that's something. -- autobloggreen.com
Posted by John Kranz at 1:50 PM | Comments (8)
But Keith thinks:

Crikey! It's like they brought Madman Muntz back from the dead to run GM. The Muntz Jet may actually resume production at last - complete with an in-dash four-track tape deck, for your listening pleasure...

Posted by: Keith at April 7, 2009 3:25 PM
But Boulder Refugee thinks:

What'm I gonna do with all my old 8-tracks? Granted, the "Jesus Christ Superstar" tape is broken, but I've still got "Tommy"...

Posted by: Boulder Refugee at April 8, 2009 11:24 AM
But johngalt thinks:

I haven't heard this discussed anywhere yet but this seems like a good time and place: After Obama Motors cancels the "gas guzzling" but profitable SUV car models I'd like to see some enterprising billionaire spin them off into a new auto company - he could call it "Specific Motors" - and put the profitable models back into production. It would be interesting to see if consumer demand could defeat layer upon layer of government coercion as Obama Motors uses its power of force to "compete" with the desirable cars.

Posted by: johngalt at April 8, 2009 11:28 AM
But Keith thinks:

jg: I like your idea, but it won't happen. Were GM/Obama Motors to do away with the popular models you describe, it would be done in the the name of the environment and in the name of fuel consumption. Being at the behest of government policy, your spin-off company won't be ALLOWED to manufacture the now-contraband autos, and if necessary, legislation will be enacted forbidding the popular gas-guzzlers.

It will probably be an amendment to Directive 10-289.

That being said, the gubmint can have my gas-guzzling V-8 Mustang GT when they pry the five-speed shifter out of my cold, dead right hand - if they can catch me first.

Second, "Specific Motors" is a name that needs improvement. It needs to be named after the founder, like "Taggart Transcontinental," "d'Anconia Copper," or "Wyatt Oil." A generic, faceless name like "Amalgamated Switch and Signal" or "Associated Steel" just won't do.

Wouldn't it just be sweetly ironic to see this happen under the banner of "Galt Motor Works"?

Posted by: Keith at April 8, 2009 1:39 PM
But jk thinks:

Lunching with ThreeSources friend Silence Dogood, I just suggested that the government could "fix" Chrysler and GM by saying the CAFE standards are forgotten, have a nice day. A little simplistic, but I'd love to see it tried.

Okay, Keith we need more data -- what year is the horse?

Posted by: jk at April 8, 2009 8:06 PM
But Keith thinks:

jk: 2004 (Fortieth Anniversary), dark gray - so I have no fear on highways where you see the sign "Patrolled By Aircraft." I'm the same color as the pavement. Low-tech stealth, and producing a CAFE-curdling 17-18 MPG - just a hair greener than the mileage I used to get on my 1986 Jeep CJ-7.

I like your idea of deep-sixing CAFE. I'll add one to counterbalance it, since we're also going to have to do something, throw a bone to the global warming crowd. I once proposed that here in California, they print the IQ of every licensed driver on their license, and allow them to drive at speeds up to their IQ rating. Here in California, that would keep the average down to Jimmeh Carter's gas-saving 55...

Posted by: Keith at April 8, 2009 9:20 PM

March 9, 2009

Why politicized economic development is dangerous

I recently wrote on the danger of politics driving scientific research. The obvious case of this now is all of the government "investments" being proposed in the name of "saving the planet from irreversible damage due to climate change."

But even if man-made climate change was real (sorry tg, is real) and even if "renewable" energy sources were beneficial to counter it, the least effective entity to make them a reality is - wait for it - government.

Consider the following essay on "One Reason Governments Spend So Much" from the 'Uncle Eric' book: Whatever Happened to Penny Candy?

Industries generally develop in three stages. First is scientific feasibility, second is engineering feasibility, and third is economic feasibility.

Using the airline industry as an example, the question in the 1800s was: "Is long-distance air travel possible?"

In the 1800s, balloons were already in use but were not practical. The problem to solve was the heavier-than-air machine.

The Wright Brothers in 1903 proved scientific feasibility. They risked their time, money and lives to show that a heavier-than-air machine could fly.

Lindbergh, in 1927, proved engineering feasibility. He risked time, money and his life to show that long-distance air travel was possible.

This gave investors enough confidence to risk their money in the aircraft industry. In 1935 the Douglas Company came out with the DC-3, which was the beginning of economic feasibility.

The modern airline industry resulted from all this risk-taking. Today, a middle-class American can go anywhere in the world much faster, and in much greater comfort, than a Roman emperor could. Travelers fly because the benefits are greater than the costs. This is economic feasibility.

This three-step model explains why governments are terrible at economic development. The "experts" who comprise the government gamble with other people's money, so they tend to confuse scientific and engineering feasibility with economic feasibility.

Once science and engineering prove something can be done, those who comprise the government will do it - even if the costs are greater than the benefits. [emphasis mine]

This economic development of the economically unfeasible is precisely the modern story of:

Wind power
Solar photovoltaic power
Ethanol (both glucosic AND celluosic)
Biodiesel
Hydrogen fuel cells
Dual-mode hybrid cars
The list goes on...

Posted by JohnGalt at 2:38 PM | Comments (6)
But Keith thinks:

Just to add to the entertainment value: "But even if man-made climate change were real..." is the grammatically accurate construction. Heh.

JohnGalt: great post, and the model of three-stage development makes plain, even to a poor, dumb country boy like me, why government-run economic development doesn't work. And to boot, it's much more elegant than me just saying "a government that can't even balance its own checkbook has no business fiddling with the economy."

I'd only propose one small change to the quote rfrom the essay. Where the author wrote "Once science and engineering prove something can be done, those who comprise the government will do it - even if the costs are greater than the benefits" in the last paragraph, it seems to me that the last phrase should omit the word "even" and the hyphen, thusly: "... those who comprise the government will do it if the costs are greater than the benefits." If the benefits are greater than the costs, entrepreneurs and private industry will do it, without the necessity of government meddling. Profit motive being what it is, and all that.

Ergo, government will ONLY do it if its benefits do not justify its costs, and that applies to every item in your list. QED, yes?

Posted by: Keith at March 9, 2009 3:18 PM
But jk thinks:

Ahh, the punchline from a great old gag can be trotted out:

I congratulate Keith on his use of the subjunctive.
Posted by: jk at March 9, 2009 4:32 PM
But Keith thinks:

Thanks, jk...

Say, on the subject of government and the economy, I've been reading in the news today that Warren Buffett has been quoted as saying the U.S. economy "fell off a cliff." I've read that three times today, and every time, all that comes to mind is...

"It was pushed."

Posted by: Keith at March 9, 2009 5:11 PM
But johngalt thinks:

Wellll, I was trying to have some fun with TG, saying "was" as in "past tense" ... before it was largely discredited, then replacing it with "is" as a sop to him since he's not yet comfortable with the "denier" badge of courage.

I admit - sometimes my jokes trip over their shoelaces.

Oh, and yes, I do fully agree with your improvement of the closing paragraph. Well done!

Posted by: johngalt at March 10, 2009 12:25 AM
But jk thinks:

Tough room, jg, you know that as well as anyone.

Posted by: jk at March 10, 2009 1:34 PM
But T. Greer thinks:

Eh, I though the post was funny. I also think you have highlighted one of the biggest problems with the Eco-stimulus crowd. What they call progress is in actuality a retardation (word?) of Western civilization.

Posted by: T. Greer at March 11, 2009 12:19 PM

March 6, 2009

Why Politicized Science is Dangerous

Yesterday I commented that there's "another important dragon to be slain before" the next elections for congress and for president. That dragon is the myth of man-made global warming caused by our use of economical, safe and abundant energy sources. Many of us have long contended that the idea is founded upon pseudo-science. The late Michael Crighton agreed and in an appendix to his wonderfully entertaining and thought provoking novel 'State of Fear' he wrote "Why politicized science is dangerous."

Imagine that there is a new scientific theory that warns of an impending crisis, and points to a way out.

This theory quickly draws support from leading scientists, politicians and celebrities around the world. Research is funded by distinguished philanthropies, and carried out at prestigious universities. The crisis is reported frequently in the media. The science is taught in college and high-school classrooms.

I don't mean global warming. I'm talking about another theory, which rose to prominence a century ago.

Read on below-

State%20of%20Fear%20Apdx%201-a.jpg

State%20of%20Fear%20Apdx%201-b.jpg

State%20of%20Fear%20Apdx%201-c.jpg

State%20of%20Fear%20Apdx%201-d.jpg

State%20of%20Fear%20Apdx%201-e.jpg

State%20of%20Fear%20Apdx%201-f.jpg

State%20of%20Fear%20Apdx%201-g.jpg

State%20of%20Fear%20Apdx%201-h.jpg

Posted by JohnGalt at 12:10 PM | Comments (6)
But jk thinks:

Careful, jg, TR has some strong followers around here. Sure he wanted to control capitalism from Washington, lock up his enemies and kill the enfeebled, but he displayed prodigious intellectual powers, looked good in casual clothes, and said "bully!" a lot.

Posted by: jk at March 6, 2009 2:36 PM
But johngalt thinks:

One of Crighton's points is how, after the horrors perpetrated in the name of the theory became widely known, "nobody was a eugenicist and nobody had ever been a eugenicist."

You'll recall I suggested not long ago that we start a permanent record of Global Warmists today, for the historical record.

My favorite thing about TR was "speak softly, and carry a big stick."

Posted by: johngalt at March 6, 2009 3:47 PM
But T. Greer thinks:

@Jg: I read that book and thought it sucked. (Tidal waves=result of climate change?) On the other hand, I thought the appendix you link to was quite insightful. It is rather sad to me that one's views on AGW are determined by your political affiliation. These days it seems that if you believe in "protecting the environment" then AGW is a self-evident fact not worth examining, while if you are of the free-market crowd, there is no way the climate could ever be linked to man's activities on the Earth.

This is a false dichotomy. It is perfectly acceptable to hold that warming may be influenced bu man and that free markets should not be interfered with for the environment's sake. Indeed, this is the exact position I hold.

Posted by: T. Greer at March 6, 2009 5:30 PM
But T. Greer thinks:

@Jk: Hahahha. Enough already! I think we have covered this before- Roosevelt's views on eugenics never led to anything more than a desire to make immigration laws stricter. Vilifying him for politicizing science makes no sense. Everything else you have listed is irrelevant to the subject of this post and has been discussed already.

Posted by: T. Greer at March 6, 2009 5:32 PM
But jk thinks:

Okay, I'll leave TR alone.

I enjoyed the Lomborg clip. He inspired the D in DAWG and I think his position is reasonable and defensible.

I hold that the debate was politicized by the left: those who Popper said would have us go back to the caves. Suddenly, the inefficacy of their ideas was meaningless: we had to take on the whole Nader-Kucinich platform or all of our children will die!

The DAWG advocates then claimed that "the science was settled" because a poll was taken. Popper, again, pointed out that science is not really done that way.

Yes, it is too bad that something important has devolved into childish bickering -- but, Mommy, they started it!!

Posted by: jk at March 6, 2009 7:04 PM
But johngalt thinks:

But it isn't called global warming anymore tg, it's "climate change." That way the charade can be continued whether the trend is warmer or cooler. Which is fortunate for them since now, it's cooling.

The market interference you allude to is the setting of arbitrary limits on emission of mammal breath. "First they came for the dioxins, then the beneficial pesticides, then the fluorocarbons, oxides of nitrogen and sulfur compounds, and when they came for carbon dioxide there were no pollutants left to say - you can't regulate non-pollutants!"

Posted by: johngalt at March 7, 2009 8:11 PM

December 19, 2008

Millions of Green Collar Jobs!

Candidate Obama promised his administration would create millions of "green collar jobs," and to most it was a successful platform. Myself, I heard "Wasted $Billions and stifled innovation from government intrusion" but I am a partisan hack.

I'd bore whoever would listen with "when the government picks winners in the energy sector we get Synfuels and Ethanol." Let the Senators decide what projects get funded and don't be surprised if we're all driving our cars on Iowa's major export. Had Senator Craig had not been busted, I suppose we'd be developing a potato-fuel infrastructure.

In addition to creating more greenhouse gases, costing more, and adding to volatility in world food markets -- how's that Ethanol decision panning out? Instapundit links to this story about the collapse of North Dakota's ethanol industry and the evaporation of subsidies promised to keep the economically unviable industry afloat:

North Dakota has an annual capacity of 333 million gallons of ethanol. Due to this year’s excessive commodity fluctuations, VeraSun, the state’s largest producer (which recently filed for bankruptcy), is itself eligible to claim a full $1.6 million from just one quarter’s worth of production. Over the past two months the price of corn has dropped sharply, leaving producers with very expensive inventories.

It remains to be seen if this fund is essential to North Dakota’s ethanol producers and if they can weather the storm without it.


Posted by John Kranz at 1:42 PM | Comments (1)
But Keith thinks:

Denier? Pshaw. Think of him as that kid with enough nerve to point out that the emperor was out parading in the buff.

Being the only person in the house to see the truth and act on it does not make one wrong.

Posted by: Keith at December 19, 2008 6:59 PM

December 1, 2008

Never Saying You're Sorry...

I don't have to remind ThreeSourcers of my high esteem for Instapundit. Professor Reynolds gets the lion's share of my hat-tips and I find it hard to imagine his equal in effectively voicing a pragmatic, little-l libertarian philosophy.

We differ on immigration, but I accept that. I differ with many I respect on that topic.

But I remain muchly vexed with Reynolds's unequivocal support for flex-fuel mandates, specifically the Zubrin Plan. I join him in looking forward to powering our cars and trucks on kudzu. But I wholly reject the idea of government mandates in the name of "energy independence."

To his credit, he offers the flip side today, if without mea culpas:

For the 2008-2009 period, fully 61% of vehicles had exemptions to run on gasoline. The mandate resulted in flex-fuel vehicles purchased for Puerto Rico and Hawaii, where E85 pumps don’t exist as it’s quite expensive to ship large quantities of ethanol. In some locations, said pumps are nearby but don’t accept government credit cards. So, despite all good intentions, the result is an increase in government gasoline consumption. Not mentioned in the article was that the billions of dollars in purchases went almost, if not wholly to the Detroit 2.8, as import manufacturers (still) don’t offer many flex-fuel cars or trucks.

Perhaps we could recoup the energy of Hayek spinning in his grave. Government does not have the information to dictate automotive design, nor would I trust them to make the right decision if they did. When those 0.99/gallon KudzuCo stations start opening up, consumers will demand flex-fuel vehicles where they are appropriate.

Posted by John Kranz at 11:51 AM | Comments (3)
But Perry Eidelbus thinks:

"a pragmatic, little-l libertarian philosophy."

If Reynolds were a real libertarian (capital L or not), then he wouldn't be supporting government mandates of any kind. Where is the liberty in forcing fuel standards on me or anyone else?

With that post today, he can't even admit the failure of his "pragmatism," can he? He can call himself a libertarian until the day he dies, but he's just another pseudo-libertarian who wants the government to regulate certain markets he thinks are failing/can fail. Real libertarians know that free markets work and can fix themselves better than any government bureaucrat can (Hayek, knowledge problem, Q.E.D.). Real libertarians don't want the government intervening, not just in things I like that don't harm others, but *especially* in things others do that I personally dislike but do no harm to others.

Posted by: Perry Eidelbus at December 1, 2008 4:04 PM
But jk thinks:

I wondered if he would relate that post of his to his ongoing support for the Zubrin Plan. I even sent him an email (there go my chances for a link in 2009, eh?)

To be fair, Perry, I think he would be the last one to stake a claim to being a "real" L|libertarian. And I think he does a great job advancing little-l philosophy. The race for the purest Libertarian fills the most comical pages of Brian Dougherty's Radicals for Capitalism: only the purest is allowed to stay in the room.

I still support the Iraq War -- excuse me, I mean "The Debacle in Iraq" -- so it's pretty clear from reading Gene Healy and David Boaz last week that I'm not invited to the party. I still believe in the importance of Deepak Lal's Liberal International Economic Order and will support blood and treasure to preserve it.

I do think the most trenchant description of libertarianism ever occurred on Instapundit when a reader said "I dream of an America where millions of happily married gay couples have closets full of assault weapons." That remains a good, quick definition for me.

Posted by: jk at December 1, 2008 4:54 PM
But Perry Eidelbus thinks:

And I think he does a great job advancing little-l philosophy. The race for the purest Libertarian fills the most comical pages of Brian Dougherty's Radicals for Capitalism: only the purest is allowed to stay in the room.

You don't have to be "pure," just not so diluted. Reynolds is to real libertarians what a light beer is to San Miguel. There are superficial similarities until you realize the difference in depth and complexity.

Sean Hannity has claimed "We're pretty libertarian on this show," and witness the emergence of "libertarian Democrats." It only goes to show the term is losing all meaning. It has to have clear definitions. It has to mean something.

I still support the Iraq War -- excuse me, I mean "The Debacle in Iraq" -- so it's pretty clear from reading Gene Healy and David Boaz last week that I'm not invited to the party.

It's a matter of why you supported the Iraq War. Do you believe in pre-emptive wars and nation-building? I felt Saddam was still a threat to the U.S. and have mixed feelings only because of how we handled the aftermath. By and large, we *were* welcomed as liberators. We just didn't know what to do once we toppled his government.

A libertarian can justify the action because Saddam had previously kidnapped Americans and was continually violating the cease-fire. If Saddam had not done those, then I couldn't have justified toppling him. But Ron Paul was right: we should have dropped all the political pretenses and had Congress formally declare war. If anything, it would have prevented the Kerryism of "I voted as a last resort, I didn't think we'd actually do it!"

Of course, all this would be irrelevant if Bush Sr. hadn't been a UN-heeding pansy, and Bubba was worse. There's nothing in libertarianism that says you can't retaliate in full force when your citizens are kidnapped, e.g. Jefferson's response to the Barbary pirates.

I still believe in the importance of Deepak Lal's Liberal International Economic Order and will support blood and treasure to preserve it.

Which isn't quite what Lal is talking about. The state can protect people, but the extent of what you're talking about is giving far too much credit to the state for protecting people. The danger is that people start relying on military protection of land and sea trade routes, much like Americans rely on police instead of themselves.

"I dream of an America where millions of happily married gay couples have closets full of assault weapons."

That's his own individual opinion, you see. The real libertarian way puts it more generally. I forget how Jefferson put it so wonderfully succinctly, but this is an expanded version: "I dream of an America where people have their unalienable rights to life, liberty and property: essentially, the freedom to do what they want -- including but not limited to forming legally enforceable contracts with homosexual partners, or owning whatever weapons they so desire -- so long as they do not infringe on the unalienable rights of others."

Posted by: Perry Eidelbus at December 2, 2008 10:25 PM

November 25, 2008

Tightly Controlled Oil Supply Slips Into Surplus

In June I posted a Cato Institute article "Get Ready for the Oil Price Drop." At the time I read (but never linked) a separate article on American.com that showed the careful balance between world supply and demand for oil that allows relatively small inventory changes to effect relatively large price changes.

The data available at the time was only through the end of 2007 and was still showing a supply deficit. The latest data, updated earlier this month, shows the first surplus since 2005 occurred in the second quarter of this year. It's not difficult to understand, then, how the predicted oil price drop materialized in the form of $1.70 gas replacing the $4 variety.

World%20Oil%20Balance%20November%202008%20%2870%20percent%29.bmp

The graph above is my own, created from EIA's Excel data, to which I've added the "Total World Supply Balance" data line comprising supply minus demand. Note that I had to multiply the resulting data by 10 in order to see plus or minus movement on the same scale as the overall supply and demand. The take away from this should be that adding as little as 1.9 million barrels per day (2.3%) to the world oil market at any time in the last 2.5 years would have put the market in surplus at the time. Remember that the next time someone says, "The small amount of oil we could produce domestically would not lower prices for 10 to 15 years."

Posted by JohnGalt at 3:13 PM | Comments (0)

October 14, 2008

Cheap Gas

I'm tired of hearing this, and I've only heard it twice. Here's GM doyen Bob Lutz:

"We may hate high fuel prices, but they've been driving us in the right direction when it comes to fuel economy. If we suddenly went to $1 or $1.50 a gallon, that would be really bad."

Rilly, rilly bad as Thomas Pynchon might say (Vineland -- five stars!) but I digress.

Larry Kudlow had a guest last night (not listed on the blog, sorry), an ostensibly conservative money manager, who was peddling this line. He wants $140 oil because he does not want to lose momentum in alternative energy. Kudlow suggested that it would have to drop to $50 or below to threaten that, but Mister Guest thought that the psychological value of oil had a huge influence.

'Scuse me fellas, but is anybody paying attention to what is happening? Three dollar gas will be a huge break for small business and the American consumer. It's one a few things that überoptimist Kudlow can seize onto.

I know Lutz has put all his chips on an electric car that will lose money at three times the price of a comparable combustion vehicle. I'm a Friedmanite and will support his defense of what's left of his shareholders' value. But for any responsible economist to root for more "back to the caves" (That would be Karl Popper, also five stars, but good luck finding it!) to prevent us from global warming has perhaps not noticed the correlation of per capita income and environmental concerns.

Bring back dollar gas, I'm in.

Posted by John Kranz at 1:56 PM | Comments (11)
But Boulder Refugee thinks:

The screed highlighted by tg is not news to The Refugee, either. However, it is usually followed by the line, "...and that's why we need higher gas taxes." The Refugee has no quarrel with the market driving up the price of gas and making alternative fuels economical. His problem is with governments stiffling production (supply) and increasing taxes to dampen demand.

Back to the original point, however: Lutz says,"We may hate high fuel prices, but they've been driving us in the right direction when it comes to fuel economy," as though he is powerless to make design decisions. If he wants to design a bunch of rubberband driven cars he can do it. The Refugee bridles at his attempt to used gas prices as an excuse for inaccurate market forecasting (to wit, Toyota got it right) and poor product design decisions. Those decisions were driven more by a union-based cost structure than "what Americans want." He was lucky it lasted as long as it did.

Posted by: Boulder Refugee at October 14, 2008 10:13 PM
But Boulder Refugee thinks:

And another thing: The Refugee is willing to bet that Kudlow's money manager has a lot of money riding on alternative fuel investments that would be jeopardized by lower gas prices.

Posted by: Boulder Refugee at October 14, 2008 10:16 PM
But johngalt thinks:

br (refreshingly) writes, "The Refugee has no quarrel with the market driving up the price of gas and making alternative fuels economical."

tr (curiously) writes, "T. Greer, confident in the future of democracy."

But what br's quote describes is democracy in action in the marketplace, while tg brings us the voices of America's enlightened youth claiming that high gas prices are "the solution."

As br and I have both asserted, high gas prices are an artificial result of authoritarian regulations and market interference on the part of government. (That the government was purportedly seated through democratic means does not innoculate it from the charge of authoritarianism.)

So what tg means is that he is, "confident in the future of democracy to force "the solution" upon ignorant rednecks who don't understand the urgency of wiping out the worlds most economical fuel source."

Democracy uber alles, except in the case of free markets. (Or any other instances when the majority wants the "wrong" thing.)

And while there's been nothing but the sound of crickets chirping on dagny's open letter to Obama supporters the ideas espoused in these comments from tg explain as well as I've seen how anyone could support Obama: For all their self-espoused enlightenment, Obama-tons just can't see how their beliefs are manipulated by the flowery rhetoric of statism.

Posted by: johngalt at October 15, 2008 3:27 PM
But T. Greer thinks:

@Jg: Almost correct. You forgot the phrase that ends the sentence:

I am confident in the future of democracy to force "the solution" upon ignorant rednecks who don't understand the urgency of wiping out the world’s most economical fuel source for that we may save humankind and Planet Earth.

The most curious thing about this is that many of the members of these high-gas-groups are Republicans. Furthermore, it has been my experience that most young Republicans use similar rhetoric and reasoning to defend current Republican planks.

~T. Greer, not quite sure that it is wise (or possible) to use statist means to accomplish libertarian goals.


Posted by: T. Greer at October 15, 2008 5:20 PM
But johngalt thinks:

No, I didn't forget the phrase "so that we may save humankind and planet Earth." (I did forget the apostrophe in "world's" however.)

No, the phrase at issue is implicit in the title "ignorant rednecks" along with many other phrases like, "spreading the wealth around is good for everybody" and "the cause of radical Islamic terror is American exceptionalism." You see, we ignorant rednecks don't "know" that continued use of gasoline will wipe out the planet and all of humanity along with it. We still adhere to quaint notions such as proof, evidence, causality, logic, reason.

We don't turn into drooling zombies at every mention of the latest crackpot hypothesis out of post-modern ivory towers merely because someone, somewhere, has the temerity to call it "science."

In order to "know" that gasoline is the harbinger of the end-of-days one must have "faith" in the preachings of his particular clergy who bring this important message from his particular deity.

As for this "ignorant redneck" ... I'm not a theist, therefore I don't "know" how evil gasoline is.

---

I do agree with you that it is impossible to use statist means to accomplish libertarian goals. So what sort of goals do you suppose statists really have?

Posted by: johngalt at October 16, 2008 3:16 PM
But T. Greer thinks:

Aye, point taken. Although I would note that things like "We need to stop giving those oil barons money they don't deserve" is often just as much a reason cited as any environmental concern there may be with the practice of consuming gasoline.

Before I answer your question, I think a distinction must be made.

There are statists who wish we would use statist methods to reach statist goals.

Then there are the folks who would balk at being called a statist, but who have been trained to think that the government can solve all of our problems, and as such, can't help but support statist methods to reach statist goals.

One who thinks that America should nationalize various industries so that the government can wield greater influence, provide greater security, or obtain a bigger budget is of the first sort.

One who thinks that it would be a good idea for the government to send a $200,000 check to every American family (see here: http://www.congress.org/congressorg/issues/alert/?alertid=11976981&content_dir=ua_congressorg) in order to ease America's financial woes is of the second sort.

The goal of the second person is to strengthen America's economy. This is not a goal exclusive to statists. Yet the means of accomplishing the goal -redistributing income- are undeniably statist.

I find the second man much more frightening than the first. It is easy to rob a statist of his masks. It is quite a bit harder to break that Faustian bond of big government and great expectations.

~T. Greer

Posted by: T. Greer at October 16, 2008 5:23 PM

October 7, 2008

Flex Fuel

Professor Mankiw has his damned (pronounce two syllables) Pigou Club and Professor Reynolds has his Zubrin plan. I should let it rest, but every time they push it I wonder how those two can be so off.

Dr. Zubrin massacres the Obama Energy proposal today. It lacks any mercy at all and should be read in full, several times a day. The lone happy note at the very end of the piece is that -- like Zubrin -- the Obama plan calls for mandates to force automakers to produce "flex fuel" vehicles.

The best part of Obama’s plan is his strong support of biofuels. In contrast to John McCain, Obama favors both the renewable fuel standard and ethanol production subsidies. These subsidies cost taxpayers $0.45 per gallon of ethanol produced but save the nation $3 in foreign oil purchases at the same time. Why John McCain prefers to send $3 to Saudi Arabia instead of $0.45 to Iowa is difficult to understand, especially given the strategic nature of the commodity in question, and the fact that the foreign oil money helps to finance acts of war and terror against the United States. Yet he does. So on this question Obama has it right and McCain has it badly wrong.

Moreover, there is one part of the Obama plan which is absolutely splendid, and that is his explicit promise to require flex fuel capability on all new cars sold in the USA by the end of his first term. This is indeed a potential real game changer, especially if the flex fuel standard is written to include not only automobile compatibility with gasoline and ethanol, but methanol as well. Methanol compatibility only adds about $30 to the cost of an ethanol-gasoline flex fuel car (which itself is only about $100 more expensive than a comparable gasoline-only car), but multiplies its versatility, since methanol can be made out of any kind of biomass without exception, as well as coal, natural gas, and recycled urban trash.


Now, I think biomass methanol and cellulosic ethanol are exciting technologies. I also like puppies and would like to see kids drinking clean water.

But Zubrin wants to pick the winner today. Screw the market, we'll mandate $130.00 extra cost to new American cars. T. Boone wants CNG cars. I am leery of some of his plans but CNG cars seem to make sense just on their own.

I propose that if you make $2 gallon Kudzu-ethanol, you will have a lot of Americans demanding flex fuel vehicles or upgrading their own. The $2.40 CNG on the Pickens Plan Commercial could do the same.

We might also find algae output that could go straight in a diesel engine or landfill waste or a rapid adoption of plug-in hybrids. Let's not have the gub'mint pick a winner first. And. Dr. Z, don't be shocked that Senator McCain would rather willingly send money to Saudi Arabia than be forced to send subsidies to Iowa. The difference is coercion, not geography.

Hat-tip: Instapundit, of course, who links favorably

Posted by John Kranz at 4:50 PM | Comments (1)
But Boulder Refugee thinks:

If we'd drop the tariffs on foreign ethanol, Brazil may well supply all we need. Then, we might not need to send $.45 a gallon to Iowa and Nebraska. Unfortunately, Grassley and Hagel have something say about it.

Posted by: Boulder Refugee at October 7, 2008 6:24 PM

September 15, 2008

Democrats on Energy

My illustrious Senator, Ken Salazar, was picked to provide the Democratic response to the President's radio address. I'm sure nobody missed hearing that, but let's go over some of our favorite parts, as the Senator sent me a copy:

Democrats are working for change, and it starts with being honest about our energy future.

We consume 25 percent of the world’s oil, but we have less than 3 percent of the world’s oil reserves. We simply can’t drill our way to energy independence.

In Colorado, we’re doing our part on drilling. We have more than 34,000 active gas wells. And we’re going to drill a whole lot more in the coming years.

But we also know that drilling alone is not sufficient. Yet that was the only idea that John McCain and his friends at the Republican National Convention offered. “Drill baby drill” – that’s not enough.

We need it all.

We need to replace the oil we import from countries that don’t like us with alternative energy sources that we produce right here at home. Biofuels. Wind. Solar. Hydrogen. Geothermal. Clean Coal. American energy, American jobs. That’s what we need.


There's more but you get the drift. Here's the audio if you want to relive the excitement!

This strikes me as one of the most amazing misrepresentations I have heard since "I did not have sex with that woman." Drilling was the only idea at the RNC? GOP legislators have been pretty clear about an "all-of-the-above" strategy with all of Senator Salazar's kumbaya fuels plus nuclear plus expanded offshore drilling. Salazar downplays the environmentalism that he knows won't sell too well with his rural constituents, completely ignores nuclear, and misrepresents the rest.

I'm a big boy. I can handle and dig a little spin, a little shading, and a little aggressive positioning. But this is an outright lie.

And it was heard by at least ten or twenty people!

Posted by John Kranz at 5:13 PM | Comments (0)

September 12, 2008

Millions of Green Collar Jobs!

It's -- like -- Senator Obama is already President!

Thin Film Solar Companies Raise Hundreds of Millions in Funding

Companies that make thin film solar cells continue to raise huge amounts of money from venture capitalists.

The latest thin film company to announce a large venture round is SoloPower, which raised close to $200 million, according to VentureWire.

In August, Nanosolar announced a $300 million fundraising round and AVA Solar raised an undisclosed, nine-figure sum, according to VentureBeat. In July, Miasole raised around $200 million, according to VentureWire.

Thin film solar cells, which are made from a material called copper indium gallium selenide, are cheaper and thinner than the crystalline silicon cells used in the vast majority of solar panels on roofs.


This could reduce our dependency on foreign oil, cut greenhouse gas emissions, and provide jobs in the clean energy sector! This is awesome stuff! I read the post twice, however, and could not figure out which government office or division was making this happen.

Posted by John Kranz at 11:49 AM | Comments (0)

August 21, 2008

Thank You Mister Stossel!

I wince at quite a few things that Democrats say. But a bipartisan wince-inducer is the call for "energy independence." John Stossel points out "how ideas with no merit become popular merely because they sound good."

To be for "energy independence" is to be against trade. But trade makes us as safe. Crop destruction from this summer's floods in the Midwest should remind us of the folly of depending only on ourselves. Achieving "energy independence" would expose us to unnecessary risks -- such as storms that knock out oil refineries or droughts that create corn -- and ethanol -- shortages.

Trade also saves us money. "We import energy for a reason," says the Cato Institute's energy expert, Jerry Taylor, "It's cheaper than producing it here at home. A governmental war on energy imports will, by definition, raise energy prices".


I ask people who champion this whether they are "food independent." "What if King Soopers decides to stop selling you food tomorrow? Your family will starve!!!" (I don't seem to get invited to as many parties as I used to...)

Stossel rips this one out of the park

Don't Obama and Pickens realize that we get something useful for that money? It's not a "transfer"; it's a win-win transaction, like all voluntary trade. Who cares if the sellers live in a foreign country? When two parties trade, each is better off -- or the exchange would never have been made. We want the oil more than the money. They want the money more than the oil. They need us as much as we need them.

Whole. Read, Thing. The. Hat-tip: Instapundit

Posted by John Kranz at 3:00 PM | Comments (0)

August 18, 2008

Your New Friends, Governor.

We need to switch to renewable energy, but we can't build anything. Environmentalists don't want to build the transmission lines to connect T. Boone Pickens's wind farms with consumers.

Even smaller scale projects are getting axed.

WSJ Ed Page:

In California, hundreds turned out at the end of July to protest a connection between the solar and geothermal fields of the Imperial Valley to Los Angeles and Orange County. The environmental class is likewise lobbying state commissioners to kill a 150-mile link between San Diego and solar panels because it would entail a 20-mile jaunt through Anza-Borrego state park. "It's kind of schizophrenic behavior," Arnold Schwarzenegger said recently. "They say that we want renewable energy, but we don't want you to put it anywhere."


Go ahead, say "It's kind of schizophrenic behavior" in your best Arnold Schwarzenegger voice -- I'll wait.

My buddies on the Ed Page have discovered the real agenda:

In other words, the liberal push for alternatives has the look of a huge bait-and-switch. Washington responds to the climate change panic with multibillion-dollar taxpayer subsidies for supposedly clean tech. But then when those incentives start to have an effect in the real world, the same greens who favor the subsidies say build the turbines or towers somewhere else. The only energy sources they seem to like are the ones we don't have.

Let the bastards freeze in the dark!

Posted by John Kranz at 2:12 PM | Comments (1)
But johngalt thinks:

Exactly right. They don't want "alternative energy sources;" they want "alternatives to energy sources." The only energy they'll endorse is naturally harvested sunlight and the only commercial product they won't oppose is hemp.

Unlike Charlie Brown, Americans will eventually recognize that the greens keep pulling the football away. I'm seriously hoping that a majority do so before November 4th.

Posted by: johngalt at August 19, 2008 3:06 PM

August 15, 2008

Roan Blown

The oil and gas lease auction for Colorado's gas-rich Roan Plateau was held yesterday and generated $114 million, just 1/20th of what some had predicted. Those who have followed the Roan process and debate know that Gov. Ritter and the Democrat legislature have been working diligently to raise taxes on energy producers, including proposed referendums and radio ads demagoging these producers. Senator Salazar has been working in Congress to increase the already-byzantine permitting process to make it simply not worth the effort. The significantly lower lease bids demonstrates that producers factored higher taxes, increased administrative costs and greater uncertainty and thus discounted their bids accordingly. Perfectly rational.

Do you suppose that Ritter, Salazar (the senator who would said he would not support expanded domestic drilling at $10 a gallon) and the Dems learned a lesson in basic economics? Do you further suppose that they now understand that companies are tax collectors, not tax payers? Maybe they concluded that raising taxes leads to lower revenue? Of course not. Who did they blame? President Bush, of course. The Refugee hopes that Ritter is merely playing politics not just plain stupid.

The Refugee, a dyed-in-the-wool Republican, has been pleasantly surprised by previous Democratic governors (ie., Dick Lamm and to a lesser extent Roy Romer.) However, The Refugee had low expectations of Ritter, expectations that Ritter continues to fail to achieve. This guy is terrible, and Colorado's tax coffers are suffering as a result.

Posted by Boulder Refugee at 12:01 PM | Comments (1)
But jk thinks:

Great post; I had missed that entirely. All these same Democrats will prohibit companies from exploring and drilling -- and will then ask "why companies are not using the leases they have now?"

Our state is lost, and I see little hope in the Colorado GOP or new voters' having the capacity or wisdom to resist it. I'm usually pretty upbeat. But I think brother jg is right: the state coffers are a golden goose to be fleeced by those who oppose the policies that created the gold.

Posted by: jk at August 15, 2008 2:48 PM

August 13, 2008

Energy Freedom Day

Sign the petition created by Senator Jim DeMint (R-SC) and Rep. Jeb Hensarling (R-TX) calling on Congress to let the drilling bans expire on October 1, 2008.

The related blog page can be accessed here.

Hat Tip: Human Events via Wayne at jeremiahfilms.com

Posted by JohnGalt at 3:14 PM | Comments (0)

August 12, 2008

Pelosi blinking

A week or so after telling democrats in competitive races it's OK to blame her for congress' inaction on energy legislation she now tells Larry King she's willing to allow a vote.

Pelosi, speaking Monday on CNN's "Larry King Live," said "We can do that. We can have a vote on (oil drilling)."

Why the sudden change of heart? Republicans are threatening to shut down the government.

In a letter from DeMint to Reid, DeMint indicates the GOP has the votes to sustain any veto of a continuing resolution that might get 60 votes.

But if Congress can't agree to a continuing resolution before Oct. 1, the government shuts down.

What do you call it when Republicans force a vote on lifting the drilling ban AND shut down the government in the process? I call it eating one's cake and having it too - killing two birds with one stone - bre'r rabbit getting thrown into that thar briar patch. Let's do it!

Unfortunately, Pelosi wants her precious government purse badly enough that she'll cave on the energy vote. She certainly also has known for some time what is now being reported: That the offshore and shale oil drilling bans will automatically expire on October 1 unless renewed by an affirmative act of congress. Sounds to me like a vote might be required in there somewhere.


SPECIAL BLOG BONUS!!!

I report - you decide - The fifth paragraph of the Fox News article I cited reads as follows:

This is setting the stage for a showdown in September with Senate Majority Leader Harry Reid, D-Nev., and most other Demorats who oppose this drilling.

I'm not making this up - that's how they spelled Democrats. Is it in their spell check dictionary that way or did they just click "ignore?" Either way, I smell a rat! :)

Posted by JohnGalt at 3:02 PM | Comments (2)
But Wayne thinks:

Great news ... updated Jeremiah Films' House Recess Really? post and added link to your post

Posted by: Wayne at August 13, 2008 2:51 PM
But johngalt thinks:

Thanks Wayne! I particularly enjoyed this Human Events article also linked from your site.

Posted by: johngalt at August 13, 2008 3:14 PM

August 7, 2008

Drill, Drill, Drill and King Dollar

I guess it is safe to say, sadly, that I am more like Larry Kudlow than Paris Hilton after all.

My comment on the Everyday Economist referenced in my Paris Hilton post engendered a thoughtful response from the EE. With his permission, here it is:

1. I mostly agree with your centrist position.

2. The government already uses the SPR to manipulate prices. The government has stopped filling the SPR, which reduces oil demand each day. Also, it uses the SPR when it believes that oil is priced above its fundamental value each time there is a natural disaster that creates supply disruptions and even did so during Desert Storm.

3. I do not believe the oil price reflects fundamentals. This is not to say that I know the correct price (although if you ask Vince Farrell he will tell you that oil typically trades at marginal cost, which is currently around $75). As you know from reading my blog, I do not believe in market failure -- at least as it is defined by mainstream economists. Markets are efficient so long as voluntary transactions are taking place as this signals that each individual is better off. However, we are not talking about free markets here. A large number of oil producers are countries rather than companies. In addition, the world remains awash in liquidity and the Fed is holding interest rates at artificially low levels.

4. A temporary increase in the supply of oil would lead to a decline in the price -- even if individuals know that the increase is likely temporary.

5. The Drill! Drill! Drill! plan will not be successful if real interest rates remain low. If the expectations of future prices are rising anywhere above zero at the moment, it is in one's best interest to keep the oil in the ground. One of my biggest pet peeves is that people fail to mention this on Kudlow's show when the Democratic talking points about unused permits gets thrown around. We need a three step process: (1) release some of the SPR, (2) Begin raising interest rates, and (3) start drilling. The problem is that there are too many players involved to believe that any combination of the three will take place. Instead, we will get promises of windfall profit taxes, rebate checks, "accountability", etc.


We're not way apart, and he his dead on most of his points and his conclusions. I don't hold out much hope for higher interest rates and disagree that drill-drill-drill by itself is not a great step.

It is my understanding that oil fields vary widely and wildly in their marginal cost; the $75/bbl figure he offers would be an average. By opening more fields, I expect they will find some that are more than 75 -- and probably some more than 150. But won't they also locate some more fields that are less than 75? Then they could pump the cheaper ones now at a profit at today's cost. They could leave the more expensive oil in the ground, discounted at his negative interest rate, against future rate increases and expectation of better future extraction technology.

Though I think it would be specious, I suggested it might be good politics to open the SPR and tie additional drilling to refilling. This would silence the "won't help for 750 years" crowd, prop up the Obama campaign, and provide instant additional supply without compromising future protections of the SPR. Drain it and refill it with new production. The feds could even hold futures to fill it as part of the bill.

Me, Larry, and Paris...

Posted by John Kranz at 10:41 AM | Comments (1)
But johngalt thinks:

I fear this macroeconomics discussion is far above the heads of most of our readers. I know that some of it is over my head. I'll trust JK to ensure it's not mere obfuscation.

I will go out on a limb and challenge EEs assertion that nobody is incentivized to extract oil during this period of expensive (I figured about double the typical market price) oil merely because "real interest rates remain low." I can't say much about the effect of interest rates but if I had reserves in the ground I'd be trying to get them to market right now.

Posted by: johngalt at August 10, 2008 3:40 PM

August 6, 2008

I'm Just Like Paris Hilton

Like Ms. Hilton, I have found a centrist position between two schools of thought on energy.

School of thought #1 is well represented by blog friend The Everyday Economist. In an interesting post, Hendrickson links to "an advanced copy of Paul Davidson’s article on oil speculation prior to its publication in the July/August issue of CHALLENGE." I recommend the entire post and linked article, but the EE gives us a synopsis:

As I have previously expressed, the rise in oil prices cannot be fully attributed to supply and demand because interest rates are at historically low levels (short-term real interest rates are negative). Thus there is little incentive to extract oil from the ground when the rate of interest is below the rate of growth in the price of oil.

Davidson's article recommends the use of the Strategic Petroleum Reserve (SPR) to break speculators, who have bid up the price beyond what Davidson says is supported by supply and demand.

I left a long comment on the EE site, but the short version is that I trust a vibrant international commodities market above government manipulation of supply with the SPR, and believe that a large and continuing addition to supply through drilling would have more impact on futures.

School of thought #2 is represented by one Lawrence Kudlow. Drill, drill, drill!

The drill, drill, drill political scenario coming out of Washington and spreading throughout the country is really helping Fed policy right now. Since President Bush launched his offensive to roll back the drilling moratorium, the oil price has dropped more than $30 from near $150 to below $120. The barrel price is actually down again today to around $118. In connection with the big oil drop, gold has fallen and the dollar has appreciated. Gas prices at the pump have come off about 25 cents. Presumably, headline inflation will moderate a bit next month.

So you might say drill, drill, drill along with reduced energy demands is lending a big helping hand to the Fed’s inflation worry.


Like Paris, I don't find these positions mutually exclusive. Let's open drilling both on the Outer Continental Shelf and in ANWR. Then, let's use the SPR to speed this new production to market, releasing a significant amount with the understanding that it will be refilled from new supply sources.

I'm pretty hot myself, huh bitches?

Posted by John Kranz at 5:35 PM | Comments (0)

July 17, 2008

Quote of the Day

It's a photo caption:

“Senate Majority Leader Harry Reid walks from his Chevrolet Suburban (left) to attend a news conference on energy efficiency Wednesday in Upper Senate Park. Reid rode in the sport utility vehicle from the Capitol to the event, which was across the street.”

Posted by John Kranz at 2:04 PM | Comments (3)
But AlexC thinks:

"We can't drive our SUVs and eat as much as we want and keep our homes on 72 degrees at all times ... and then just expect that other countries are going to say OK."

I wish I could remember who said that.

Posted by: AlexC at July 17, 2008 4:26 PM
But johngalt thinks:

For those who can't tell AlexC's tongue is planted firmly in his cheek (like I was until I looked up who said this) here's the reference: Link

I knew it sounded familiar! :)

Posted by: johngalt at July 17, 2008 7:39 PM
But jk thinks:

The competition is quite stiff, but I think that line is my least favorite Obama quote so far (some of our bitter Pennsylvanians might feel differently).

As if collectivism isn't bad enough, he has to add knee-jerk Malthusianism to the mix. This quote caused the Wall Street Journal to suggest he was running for the Second Carter Term.

Posted by: jk at July 18, 2008 10:34 AM

July 9, 2008

Oil Math

Way back in January 2007 some good folks at the Institute for Electrical and Electronics Engineers (IEEE) published the chart below along with an explanation that proposes a "Cubic Mile of Oil" as a new unit of measurement for the vastness of world energy consumption - along the lines of the light-year for measurement of distances in space. I find it more enlightening to use it as a measure of "alternative" energy sources:

One commercial wind turbine equals 0.000 000 61 CMO

One residential solar panel equals 0.000 000 000 22 CMO

ncmo01.gif

Before you say, "Wow, a cubic mile of oil must be a tremendously vast amount" consider this:

1 cubic mile of oil would cover the entire state of Pennsylvania to a staggering depth of: 1-3/8 inches.

The truth of the matter is that oil is an incredibly high-energy fuel. One gallon of gasoline has the same energy as 63 sticks of dynamite. An average lightning bolt, comprising 500 megajoules of energy, equates to just 3.8 gallons of gasoline. (Think about that the next time you talk on your cell phone while filling your tank!)

Click "continue reading" to read the comment I posted to the IEEE article. It's still being vetted by the webmaster.

I'm a little late to this conversation (and am amazed there's only 1 comment after all this time) but Mr. Rogers' comment compels me to add one of my own.

When I first learned of this article yesterday I found it a brilliant distillation of an immense subject - annual worldwide energy consumption - into terms that could be easily grasped and compared. A "cubic mile" of crude oil is far easier to visualize than is 26.2 billion (or is it million in the UK?) barrels.

More important is the comparision of the energy content of that fuel to various other sources. One finds that the lowly cubic mile of crude is quite potent - equalling fifty years worth of energy from a staggering collection of "alternative" energy sources.

I'll include a few more equivalents of my own:

A cubic mile of gasoline (one of the lowest energy components of crude oil) equates to 34,676 megatons of high explosive.

The largest fusion bomb ever detonated on earth (by the Soviets) was 50 megatons. A cubic mile of gasoline contains the same energy as 693.5 such bombs.

A single gallon of gasoline contains 131.76 megajoules of energy, compared to 2.1 megajoules in a stick of dynamite. 1 gallon of gas therefore equals 63 sticks of dynamite.

An average lightning bolt releases 500 megajoules, or 3.8 gallons of gasoline energy.

Crude oil truly is a "miracle fuel" and the alternative energy alchemists who try to replace it with air, sun or water will continue to require government subsidies to even begin to compete.

Posted by JohnGalt at 3:47 PM | Comments (7)
But johngalt thinks:

I'm bullish on PV electric generation too, because of their passive nature and virtually zero operating cost, but its uses are limited.

But be careful about comparing Moore's Law (which applied to integrated circuit density) to the efficiency of solar cells. The latter has a limit of 100% where the former related to size and not efficiency. While something can be miniaturized almost without limit, PV cell efficiency can only double about four times before it reaches the end of the line at 100 percent. At that point its CMO equivalent will be a whopping 0.000 000 000 88.

Whew - almost takes my breath away.

Posted by: johngalt at July 9, 2008 8:22 PM
But Perry Eidelbus thinks:

Here's some more math. One cubic mile is
1,101,117,150,000 gallons. That's over 1.1 trillion gallons.

There are 42 gallons in a standard barrel of oil. So one cubic mile of oil is 26,217,075,000 barrels.

World oil production has stagnated at 85 million barrels per *day* for the last three years (and yet there are so many idiots who think there's no supply problem!!!). At current global production levels then, it takes approximately 308.436 days to pump a cubic mile of oil.

So to replace what we could get from 308 days of global oil production, it would take 52 nuclear power plants 50 years. Or putting it another way, as much energy as 2600 nuclear power plants will produce in one year, or 3078 nuclear power plants in 308 days. To account for fluctuations, let's say 3000 nuclear power plants.

Posted by: Perry Eidelbus at July 9, 2008 10:05 PM
But jk thinks:

If we were on Kudlow, it would be time to bring out the boxing gloves animation -- looks like a ThreeSources Rumble!!!! I exaggerate. But I do disagree with two basic points:

-- jg: TJ Rodgers has put considerable money where his mouth is on PV (JG, TJ, PV, JK...) He does not see a limit and when Mister Moore was pontificating at Intel, I would expect only the wildest of futurists imagined the chip I have in my humble little $900 desktop. There is a limit to the energy in a mi3 of oil, there is not technically a limit on how much can be collected from the sun. Whether by nanotech or some yet unseen development, I think today's solar panels will be the 4MHz 286s of tomorrow.

-- Perry: You a peak oil guy? Say it isn't so. (Not the Perry I thought I --nevermind). I think the "supply" problem that you describe is a lack of will to drill by the United States, combined with a third-worldism and comfy cartelization of other suppliers. When they find a field, it always seems to produce a lot more than original guesses. New extraction technology rejuvenates legacy fields. Tar sands, anybody? I think there is sufficient oil supply.

Jonah Goldberg talks about 19th Century concerns that we were going to deforest the Continental US to power trains. We solved the urban horse manure problem and the deforestation problem (and the whale shortage) with petroleum. Do we really think nothing will come along to supersede it?

Posted by: jk at July 10, 2008 11:01 AM
But Perry Eidelbus thinks:

"This is not the Perry I knew"?

I do believe, firmly, that there's a supply problem. A severe one. And it's entirely man-made, because we're not drilling where we could. At this rate, we *will* have "peak oil," because of the tree-huggers.

Posted by: Perry Eidelbus at July 10, 2008 1:55 PM
But jk thinks:

Kumbaya, Brother Perry, we are on the same page after all. A self-imposed supply problem, absolutely.

Posted by: jk at July 10, 2008 5:42 PM
But Perry Eidelbus thinks:

I know I did that "Che" thing for April Fool's Day last year, but you should know me well enough by now! :)

Posted by: Perry Eidelbus at July 11, 2008 2:27 PM

July 1, 2008

Casey At Bat

Every few months some Democrat decides that oil companies are to blame for high prices.

Except they're not. It's Democrats who are at fault.

This time it's Senator Casey's turn.

The federal government is so poorly staffed to investigate oil speculation and price gouging that its agents might as well be “cops going after criminals with water pistols,” said U.S. Sen. Bob Casey Jr.

In a meeting Monday with the newspaper's editorial board, the Pennsylvania Democrat called for a national effort to define price gouging and make it illegal.


... because frankly their semi-annual effort has failed.
Oil and gas woes dominated the discussion with the editorial board as Casey cast doubts on what he called shortsighted proposals to expand drilling along the U.S. coastline and in the Alaska wilderness.

“Republicans believe we can drill our way out of this problem,” Casey said. “But only a small percentage of the area available for drilling is now being used.

“It would take about 10 years [to drill in Alaska] and we'd only get about six months' worth of oil out of there,” he said, noting that “those would be a really nice six months.” But, he added, we would lose a chunk of pristine wilderness forever.


Six months worth of oil: Lie. If we got it all out immediately and refined it and sold it our current consumption rates that's "possibly" what it would take. But you cannot drain an oil reservoir that fast (nor would you want to, you need to replace the oil volume removed with water to maintain pressure).

Even the oil volume potentially produced in those six months is not true. You cannot (and the Senate damned sure cannot) forecast advances in oil production and drilling technologies. Oil that was out of reach even 10 years ago is being produced with new techniques. Who's to say what big oil companies or service companies like Halliburton or Schlumberger will develop in the coming years?

Don't bet against ingenuity.

The 10 years of drilling is also a lie. It does not take 10 years to drill a well.

It takes weeks to drill a well... and one rig can only drill one well at a a time. So it might take years to bring more and more wells to production.

But first you must do exploration... which usually amounts to dragging microphones over the surface looking for oil.

We can't even do that.

If we took Senator Casey's (and the Democrat) acreage complaint to heart, it would only lead to more dry holes being drilled. If you do non-invasive exploration and no oil is found, of what use would drilling into nothing be? Of no use.

Once a company determines there's potentially oil under a lease, then they do exploratory drilling.

If they establish there's financially producable amounts of oil beneath a lease, THEN they go into production mode.

In the Alaska oilfields (an area with I have personal experience), if there is a production facility nearby, it's generally a matter of plumbing at that point.

However, all of the existing leases have already been explored and re-explored. All the oil that can be found in those location has been identified.

So when you hear dishonest Democrats saying "they have 80 million acres of leases"... this is true. But not every acre has oil under it!

If oil is discovered, and the nearest processing facility is thirty or forty or fifty miles away, a production facility needs to be built... which means years of environmental permitting and lawsuits.

It's not 10 years, it's more like 5.

If five years is too far out for oil, why should we spending billions or trillions to tackle .4 degrees of global warming in fifty?

Posted by AlexC at 12:19 PM | Comments (5)
But jk thinks:

Again, do these people do laundry or maintain their property? He is part of the 110th Congress of a 220 year-old nation. I can't see that thinking a whole freakin' decade out is too much for these people.

Martin Feldstein has a great piece today on how future supply would lower today's prices. (HINT: it rhymes with Weevil Escalators...)

Posted by: jk at July 1, 2008 1:46 PM
But johngalt thinks:

Casey's "...area available for drilling" reminds me of the old joke:

What are you looking for under this street light?
I dropped a contact lens. Will you help me find it?
Sure! Where do you think it landed?
Well, I dropped it way over there but the light's better here.

Posted by: johngalt at July 1, 2008 3:41 PM
But Perry Eidelbus thinks:

I've heard 6 years thrown out as the time from drilling to refinement. That still begets the question, so why didn't the Democrats let us start drilling 6 years ago? Oh, they couldn't have predicted the future? Nor can they now.

Good examination of the microeconomics by Feldstein, but I didn't see that he boiled prices down to a simple concept: prices reflect supply versus demand, not just in the present time, but in the *future*. All it would take is for Congress to approve drilling in ANWR, and before a single rig is set up, oil prices would start falling immediately.

Posted by: Perry Eidelbus at July 1, 2008 4:11 PM
But johngalt thinks:

Exactly right, Perry.

And the fact that speculators keep pressing the price higher and higher is proof positive of their conviction that it [ANWR drilling] won't be happening anytime soon.

Posted by: johngalt at July 2, 2008 7:41 PM
But johngalt thinks:

Exactly right, Perry.

And the fact that speculators keep pressing the price higher and higher is proof positive of their conviction that it [ANWR drilling] won't be happening anytime soon.

Posted by: johngalt at July 2, 2008 7:41 PM

June 29, 2008

Quote of the Day

My response to those who say that increased drilling is pointless because it won't yield immediate results -- like Arnold Schwarzenegger --is why worry about the greenhouse effect, then? Nothing we do will cool the planet immediately. Yet we're told immediate action there is vital. In fact, we're told that by none other than Arnold Schwarzenegger, in the very same speech. -- Instapundit, Glenn Reynolds
I wonder if these people do laundry ("won't have clean clothes for hours!") or repair their homes ("guy said he couldn't come out to fix the roof 'till Tuesday -- I told him to $%&* off!")? Never have people been so proud to lack any forward thinking.
Posted by John Kranz at 12:46 PM | Comments (0)

A Market Price for Crude Oil

Yves Smith asks in Slate Does Anybody Know How Much Oil There is in the World? The answer appears to be mostly "no" with various technological attempts to measure reserves throughout the world sometimes receiving the climate change slur "junk science." But there is evidence that despite International Energy Agency foreshadowing of current estimates being exaggerated, there is much more oil underground than anyone has previously been led to believe.

Indeed, some old oil hands argue that the entire method for computing reserves is fundamentally flawed. Richard Pike, president of the Royal Society of Chemistry, who spent 25 years in the petrochemical industry, contends in an article in the Petroleum Review that published estimates are less than 50 percent of their actual level. As the Independent summarized his argument:
Companies add the estimated capacity of oil fields in a simple arithmetic manner to get proven oil reserves. … However, mathematically it is more accurate to add the proven oil capacity of individual fields in a probabilistic manner based on the bell-shaped statistical curve used to estimate the proven, probable and possible reserves of each field. This way, the final capacity is typically more than twice that of simple, arithmetic addition.

Pike is no oil-industry shill and contends that producers understand this issue but prefer show lower totals, to help support high oil prices.

So what is the actual market-based price that oil would gravitate toward without all the meddling and misinformation on the part of so many disparate interests?

Japan's oil minister said, based on fundamentals, the price of crude should be $60 a barrel, not the $130 to $140 we see today. During congressional testimony, five oil-industry CEOs each gave estimates of where oil "ought" to be, with results ranging from $35 to $65 a barrel to $90. Even the implacable Saudis are reportedly about to increase production by half a million barrels a day, a sign that they are concerned that the current price is too high. Yet BP's chief recently said current price levels are warranted, and the oil bulls at Goldman forecast a "super spike" to $150 to $200 a barrel.

That last estimate is not really a "market price" figure. It is a speculator's prediction which takes into account all of that meddling and misinformation that won't be going away anytime soon. But what if it did? That's the question the others were answering. Their figures ranged from $35 to $65, or possibly as high as $90 per barrel. This is roughly half of the current "oil shock" price. Yet it's reasonable to expect such prices to return before long.

Consider this graph of U.S. gasoline prices adjusted for inflation since April of 1979.

gasprice%201979%20dollars.png

In the much more valuable dollar of 1979, premium gas cost about $1.20 per gallon in 1980 and, interestingly, is about the same price today (although it appears to be trending above that ceiling). But for nearly 20 years between the two "oil shock" periods noted the price was roughly half that - 60 cents per gallon in constant dollars.

These various data points give lie to the claim that oil prices are at record highs because the world is "running out" of oil. Instead they show that petroleum based motor fuels have been and continue to be the best bargain since the Louisana Purchase - excluding the backdrop of currency inflation, and absent the efforts of those who wish oil to cost more than their own "pet alternative fuel" preference.

Hat Tips: Slate article - The American Magazine; Fuel graph - johngalt's dad.

Correction: I had previously titled the graph "world oil prices" since corrected to "U.S. gasoline prices."

Posted by JohnGalt at 11:05 AM | Comments (1)
But Boulder Refugee thinks:

Very well argued, JG.

The Refugee attended a computer-related speech by a Chevron exec some time ago. He said that you cannot unlink known reserves and price. In other words, if you say, "What are our reserves at $4/bbl, the answer is zero. Even the Saudi's can no longer produce oil at that price. However, if you say, 'What are our reserves at $200/bbl,' the answer is trillions of barrels. At that price, many options are economical. Recoverable capacity is a function of price."

Posted by: Boulder Refugee at July 1, 2008 4:42 PM

June 25, 2008

Mad As Hell

Drop what you're doing and click over to Eidelblog. ThreeSources friend Perry Eidlebus takes on these two adorable little girls:


pyper_sadie.jpg


It seems Mommy and Daddy are cutting cable to pay higher fuel prices and Pyper and Sadie have taken to the streets. Perry educates the young ladies with a lesson a lot of grown-ups in Congress should learn (were there any grown-ups in Congress...)

Welcome to the real world, girls. Welcome to the lower quality of life that's inevitable when people let themselves be ruled by environmentalists. Those are the people you should be blaming, girls, not oil companies! Oil companies would love nothing better than to supply us with more oil and gas, and at lower prices: when you do the math, lower prices mean higher sales, so they earn more profit while we consumers still benefit from cheap, plentiful carbon fuels.

Instead of blaming the oil companies, Sadie and Pyper need to learn who's really at fault.


He even has an adorable picture of a polar bear enjoying a tasty snack. Awesome.

UPDATE: Taranto links to an AP pick up of the story. It points out that Sadie "carried a sign asking drivers to honk to lower gas prices" and ends with a sympathetic supporter:

"I think it's great," said Hamid Tayeb, who was walking past on his lunch break. "It's unfortunate that kids are doing it before we do."

Posted by John Kranz at 10:47 AM | Comments (0)

June 19, 2008

President Reagan on Energy

A nice clip Larry Kudlow ran of his old boss:


Posted by John Kranz at 6:05 PM | Comments (1)
But johngalt thinks:

Damn, I forgot how good it could be to have a conservative president who speaks deliberately and forcefully on principle. Could it have been his acting background? Is it too late to nominate a conservative movie actor for '08?

Willis/Romney2008.com

Can't you just see President Bruce Willis saying "Yippee Kai Yay..." to Al Gore?

Posted by: johngalt at June 21, 2008 1:01 PM

June 12, 2008

Drill! Drill! Drill!

That's Daniel Henninger's title in today's Opinion Journal column explaining how America is the only nation on earth that refuses to harvest its petroleum reserves. More of this stuff in media on a daily basis is just what this country needs. A tidbit:

Nikita Khrushchev said, "We will bury you." Forget that. We'll do it ourselves.

I emailed Dan to say, "If we could just get this message onto American Idol where the majority of Americans might see it then Pelosi, Reed and Nelson (and McCain) would change their tunes in a heartbeat."

The closing line - hammering McCain - is priceless. I won't copy it here. You gotta go read it.

Posted by JohnGalt at 2:34 PM | Comments (2)
But jk thinks:

This will be a great campaign issue for November as the Democrats put their environmental and regulatory constituencies ahead of the American economy. Then, the GOP nominee can step up to the plate and...oh, wait...never mind...

Posted by: jk at June 12, 2008 3:16 PM
But Boulder Refugee thinks:

This is an interesting year of cognitive dissonance for Democrats. The mantra of "The war is lost" is at odds with reality as is the "We can't drill our way out of this" platitude. The Refugee hopes that it takes Americans no more than four months to figure out that Democrats are living in an alternate (and fictional)universe.

Posted by: Boulder Refugee at June 17, 2008 2:29 PM

June 8, 2008

Get ready for the oil price drop

After crude oil jumped by $11/bbl in two days, Cato Institute's Alan Reynolds writes that the price hitting $200/bbl in the near future is "quite impossible."

Market analysts often claim oil prices are almost entirely determined by supply. Demand is said to be insensitive ("inelastic") to price. The standard example is that many Americans have to drive to work and most gas-guzzling SUVs will still be on the road even if the affluent few can trade theirs for a Prius. Whatever the price, we'll pay it.

This idea rests on two fallacies. The first is to exaggerate the United States' importance when it comes to ups and downs in worldwide oil demand. In fact, America is using no more oil than we did in 2004.

The second fallacy is to greatly exaggerate the importance of passenger cars in the United States. It's true that Americans are driving less and buying four-cylinder cars - but that's not where we should be looking for serious "demand destruction."

Reynolds goes on to explain that industrial use of oil fuels is already declining in most sectors, one of which we witnessed last week as airlines parked planes, cancelled some routes and reduced employment. But even without a US recession, Reynolds says, oil prices will still fall with industrial declines elsewhere.

In the United States and Britain, industrial production is nearly flat - only 0.2 percent higher than it was a year ago. In many other countries, however, industrial production has dropped over the past 12 months. It's down by 0.7 percent in Japan, 1.1 percent in Austria, 2.5 percent in Italy and Denmark, 2.9 percent in Canada, 5.4 percent in Greece, 5.7 percent in Singapore and 13.3 percent in Spain.

In April, industrial production also fell in India and China. Shrinking industry around the world shrinks demand for energy in general - and for oil in particular.

My college physics professor took great joy in explaining that alarming trends, such as population growth, never continue at the same rate for a very long time. The meteoric rise in the cost of oil is yet another of those trends.

Hat tip: 'The American' magazine

Posted by JohnGalt at 12:24 PM | Comments (2)
But AtTheWaterCooler thinks:

Great research, I linked to your post from Time to sell oil futures short?

Posted by: AtTheWaterCooler at June 11, 2008 2:09 PM
But jk thinks:

Thanks for the link. As far as shorting oil goes, I think the old joke applies here:

"The market can remain irrational longer than you can remain solvent." - John Maynard Keynes

Posted by: jk at June 11, 2008 6:58 PM

June 6, 2008

The Perfect Pigouvian Tax

Jim Glass takes Mankiw's Pigou Club to new heights.

Imagine a simple, single tax that can help avert global warming, de-fund Arab terrorists, save scarce natural resources, reduce pollution AND remedy the government's approaching funding crisis for Medicare (by heading off the coming diabetes epidemic, etc.) ... save private individuals billions of dollars of medical costs from avoided heart attacks and strokes and blood pressure medication prescriptions ... make the general population lean and good looking ... and improve your sex life too! That's the Fat-Gas Tax.

What's not to love?

Hat-tip: Don Luskin.

Posted by John Kranz at 11:08 AM | Comments (0)

May 30, 2008

More On Algae

I tried but failed to sell JohnGalt on being an early adopter for Algae farmin' (or is that Ranchin'?)

This Popular Mechanics article provides a sober look at the hype as well as the real cause for excitement under the hype.

Just choosing which kind of algae to start with is a herculean task. There are well over 100,000 species, each adapted to grow in different environments at different rates, and each capable of producing different amounts of oil—or none at all. The government collected more than 3000 different strains from all over the world in the 1980s, 300 of which were deemed promising. Today, many algal strains have been engineered into genetically modified superplants—the secret formulas of biofuel startups—but there is, as yet, no proven winner. Not to mention, there remains the small matter of how to make the algae flourish, how to cheaply dry several million gallons of subsequent slush, and how to get the oil out of minuscule cell walls and into the metaphorical barrel.

At the end, I have to think that straight photovoltaics offers a rosier path, with T.J. Rodgers saying that Moore's Law will apply to PV. Yet I still find the algae story intriguing.

Posted by John Kranz at 2:25 PM | Comments (1)
But johngalt thinks:

"Today, many algal strains have been engineered into genetically modified superplants..."

Visions of Cylon Centurions dance in my head...

Posted by: johngalt at June 3, 2008 11:42 AM

May 27, 2008

Democrats and Gas Prices

The truly scary thing is that Democrats might actually use their stance on energy to augment their leads in the House and Senate. Even NYTimes writers are laughing at them:

The lawmakers played their parts, too — showing mostly outrage and fury. “You all are gouging the American public and it needs to stop,” declared Representative Steve Cohen, Democrat of Tennessee. Other Democratic lawmakers openly questioned whether the companies were illegally fixing prices to hoard profits and voiced suspicions that they were in cahoots with Vice President Dick Cheney to enrich the energy industry.
[...]
In one of the more pointed exchanges, Representative Maxine Waters, Democrat of California, seized on the record $40.6 billion profit of Exxon Mobil in 2007. She pounded on the company’s senior vice president, J. Stephen Simon, demanding to know if gas prices would be lower if the company earned a few billion dollars less.

At another point, Ms. Waters brazenly suggested that perhaps the American oil industry should be nationalized, acknowledging that it was an “extreme step” but one that might be necessary if outsize profits and exorbitant gasoline prices continued.


Hat-tip: Gregory Mankiw, who excerpts Rep. Waters's quote and says "Oh Yeah, That Should Work"

Posted by John Kranz at 6:16 PM

Wi-Fi Allergy

Stop the earth - I want off.

Seriously, didn't most people have that same reaction to the 1970's nutjobs who wanted to outlaw drilling for oil in this country because it was "dirty?" Leave the idiots alone and look what it gets you - politicians who say things like "gasoline prices are not based on supply and demand, they're being driven up by reckless speculators and obscene oil company profits" and "we can't drill our way out of this problem" when, in fact, that is the ONLY way to bring gasoline prices down. And it makes us "less dependent on foreign oil" at the same time.

Posted by JohnGalt at 3:33 PM

May 13, 2008

Cap'n Trade

The Wall Street Journal Ed Page nails all the failings of Senator McCain's proposed Cap and Trade program for carbon credits:

The problem is that once government creates an artificial scarcity of carbon, how the credits are allocated creates a huge new venue for political rent-seeking and more subsidies for favored industries. Some businesses will benefit more than others, in proportion to their lobbying influence and how well they're able to game the Beltway. Congress itself will probably take the largest revenue grab, offering itself a few more bites out of the economy and soaking politically unpopular businesses.

Where I am not sure they are right is the politics:
But he will never be green enough for the climate-change fundamentalists. The Obama campaign and Democrats were already dinging Mr. McCain yesterday for half-measures. His concessions won't help him much in November, but they will make his governing decisions in 2009 that much more difficult if by some chance he does win.

My YouTube question for the GOP Debate was to ask which, if any, of the candidates would stand up and say that climate change is not sufficiently proven to threaten disruption of the energy markets. I was looking for somebody brave enough to say that it might be "hooey."

But we have the best candidate for 2008. I sure wish Senator McCain would propose something less intrusive than C&T, but I will concede that the "denier" I was looking fir would not have a chance in this "tick! tick! tick!" climate. It's Game Over and we have lost. I'd rather elect a free trader even if he is badly misguided on this issue.

Posted by John Kranz at 11:42 AM | Comments (2)
But Boulder Refugee thinks:

Just when I was starting to warm up to McCain, he pulls this loo-loo (pun intended). I was thinking, "Wow, we can really draw a stark contrast against Obama based on policy, because we sure aren't going to win on personality." It's a small consolation to realize that I was half-right.

Posted by: Boulder Refugee at May 13, 2008 1:36 PM
But jk thinks:

It's real bad, br, I cannot dress this pig up. But, as Larry said, we all knew it was coming. It will be hard to stay enthusiastic this fall, but it is worth it for free trade and the continued existence of Israel.

Posted by: jk at May 13, 2008 4:48 PM

May 7, 2008

Do You See The Light?

Support for Ethanol subsidies are now out of favor with the green elite. According to a WSJ editorial, the WaPo and TIME magazine have both "concluded that food-to-fuel mandates have failed."

All we can say is, welcome aboard. Corn ethanol can now join the scare over silicone breast implants and the pesticide Alar as among the greatest scams of the age. But before we move on to the next green miracle cure, it's worth recounting how much damage this ethanol political machine is doing.

To create just one gallon of fuel, ethanol slurps up 1,700 gallons of water, according to Cornell's David Pimentel, and 51 cents of tax credits. And it still can't compete against oil without a protective 54-cents-per-gallon tariff on imports and a federal mandate that forces it into our gas tanks. The record 30 million acres the U.S. will devote to ethanol production this year will consume almost a third of America's corn crop while yielding fuel amounting to less than 3% of petroleum consumption.


Just because everyone now knows it's a sham, don't look for subsidies to be repealed, mandates to be lifted or tariffs on imported Brazilian sugar cane to be reduced. And that's another trouble with gub'mint solutions. Perhaps the mandates might be scaled back, but the subsidies will be around 'till the end of time. As far as I know, the Federal government still subsidizes mohair because it was a vital component in WWI military uniforms.

Will anybody learn? It was clear from Senator Obama's speech last night, that the Democrats are poised to double down and harness the power of Government to "create millions of green jobs, &c..." I love Megan McArdle’s' take:

Gack. Now Obama is ranting about how he's going to make the corporations give us super fuel-efficient cars, find awesome new sources of oil, make renewable energy affordable, and invent a really delicious fat-free ice cream. However did we manage to get through the first 200 years without Barack Obama to beat some progress out of the corporations that have been holding us back?


Posted by John Kranz at 12:44 PM | Comments (3)
But mdmhvonpa thinks:

The 17 bazillion gallons of H2O is incorrect ... corn for fuel is not irrigated like food-stock corn.

Posted by: mdmhvonpa at May 7, 2008 3:11 PM
But jk thinks:

Interesting -- is fuel corn significantly different from feed corn? I'm city folk, the accent is just affectation.

Posted by: jk at May 8, 2008 10:02 AM
But johngalt thinks:

Under the heading "You learn something every day" some non-irrigated hybrid corn varieties apparently can out-yield the best irrigated varieties:

http://www.garstseed.com/GarstClient/GarstNews/news.aspx?NewsItem=10101

Posted by: johngalt at May 12, 2008 3:30 PM

May 6, 2008

Getting. Dumber. All. The .Time.

Blog Brother AlexC is flying (one of them newfangled Wye-Fye planes, I guess) and sends a link to MyDD:

Make it against the law for oil companies to pass the price of the windfall profits tax on to consumers, and then audit the oil companies' books. It is not a difficult accounting exercise to tax excess profits above a certain gross percentage per barrel of oil, or gallon of gas. Every major oil company has sophisticated profit segmentation reports that go to the very senior management of the company. These reports identify revenues, costs and profit at each level of the vertically integrated operation, broken down on a per barrel basis by product type, marketing region, you name it.

And if they pass along the cost of this tax, we'll...

Posted by John Kranz at 2:56 PM

1,147th. Dumbest. Idea. Ever.

ThreeSources friend Everyday Economist has signed an Open Statement Opposing Proposals for a Gas Tax Holiday.

Being a fair guy, he also provides a link to Bryan Caplan, who disagrees.

The American people want to "do something," and Hillary's tax cut will at least do little harm.

I think I'll throw my lot in with Caplan on this. I think the holiday is a gimmick and I think it will be completely ineffective and likely counterproductive and it's stupid and it will never happen. But this is campaign season with daily displays of foolish gimmicks and bad policy. I don't know that I'd pick this one to sign a petition. (In fairness, ex-guitar player would not be sufficient academic credit if I wanted to.)

Having three active candidates provides a bad idea every eight hours. The summer gas tax holiday seems, like Caplan says, one of the least harmful. The discussion around it has been rather informative. Senator McCain all but admits that it's a gimmick, but he just wants to give a little guy a little break. Senator Clinton wants to "pay for it" with a big tax on oil companies. Senator Obama gets points for recognizing its gimmickry, but I take a couple off for laughing that "it will only save 28 bucks!" If you live in a $3M mansion, $28 per person may seem laughable. But to masses of bitter white trash, Senator, that's a lot of arugula down at Whole Foods.

Stupid, yes. Compared to cap-and-trade for CO2, socialized medicine, re-importation of pharmaceuticals, windfall profits taxes, it seems pretty harmless.

Posted by John Kranz at 11:10 AM

May 4, 2008

Dumbest. Plan. Ever. WSJ's Take.

Here's what the WSJ editorial page has to say about Obama's election year plan to lower gas prices by raising the marginal corporate tax on oil companies ABOVE it's present level of 35%:

Mr. Obama is right to oppose the gas-tax gimmick, but his idea is even worse. Neither proposal addresses the problem of energy supply, especially the lack of domestic oil and gas thanks to decades of Congressional restrictions on U.S. production.

(...)

Last week Pennsylvania Congressman Paul Kanjorski introduced a windfall profits tax as part of what he called the "Consumer Reasonable Energy Price Protection Act of 2008."

And about energy policy politics in general:

This tiff over gas and oil taxes only highlights the intellectual policy confusion – or perhaps we should say cynicism – of our politicians. They want lower prices but don't want more production to increase supply. They want oil "independence" but they've declared off limits most of the big sources of domestic oil that could replace foreign imports. They want Americans to use less oil to reduce greenhouse gases but they protest higher oil prices that reduce demand. They want more oil company investment but they want to confiscate the profits from that investment. And these folks want to be President?

But there is hope:

Late this week, a group of Senate Republicans led by Pete Domenici of New Mexico introduced the "American Energy Production Act of 2008" to expand oil production off the U.S. coasts and in Alaska. It has the potential to increase domestic production enough to keep America running for five years with no foreign imports. With the world price of oil at $116 a barrel, if not now, when?

So does the AEPA have a chance of passing instead of the CREPPA? The chances may be slim but as Wayne Gretzky used to say, "You miss 100% of the shots you don't take."

Posted by JohnGalt at 1:46 PM | Comments (1)
But johngalt thinks:

Shamelessly commenting on my own post-

Disregard for a moment whether either of the proposed Acts would or could actually achieve its stated goal and instead consider the competing intents:

D-PA: "Reasonable" energy price protection for consumers.

R-NM: American energy production.

That pretty well sums it all up, doesn't it?

Posted by: johngalt at May 5, 2008 3:21 PM

May 2, 2008

I'll Stand Up For Grandpa

The Wall Street Journal Ed Page discusses the Rockefeller Scions who are beating up on Exxon-Mobil for, well, selling oil.

One luxury of being a Rockefeller is that you are wealthy enough to live in style even if Exxon's performance starts to slide. The same can't be said of millions of pensioners and small investors for whom Exxon's profits may be the main source of a secure retirement. If John D.'s heirs aren't satisfied with Exxon, they're welcome to invest elsewhere. Our guess is that few will, given how much money they've made over the decades on fossil fuels.

Companies create value for shareholders, that's their highest calling. I defended Google against freedom lovers on that account, I certainly will defend XOM against whiny, pampered heirs. Larry Kudlow tore into the scions last night: "they've never seen an oil field, they've never worked a day in their life..." (Especially Senator Jay, I'd add.)

But I come to praise John D. We call him a robber baron, but he made his money bringing heat and light to poor people. Bastard! Rich folk could buy wood or whale oil and have servants to tend it. Rockefeller brought five cent gallons of kerosene to the masses, who could now read or work past dark. He used more of the harvested oil than his predecessors who cracked it for a small part and threw the rest away.

Then, of course, he devoted much of his fortune to philanthropy. We should be building statues and not calling him names. And, as the WSJ says, if the grandkiddies want to invest in windmills or perpetual motion (algae maybe?) they certainly can.

Posted by John Kranz at 1:03 PM

May 1, 2008

Pretty Cool

Biofuel from algae? Selective hydrocarbon out? This seems pretty cool:





The highlight says "[W]e could grow all the fuel the United States needs using 1/10th of the land space of New Mexico." My musical career used to entail criss-crossing the great state of New Mexico. One tenth of its area is pretty big. All the same, it sounds more efficient than Ethanol. Maybe some of the "Big Algae" Senators will step up to the plate and subsidize this!

Hat-tip: His Instyness.

Posted by John Kranz at 1:14 PM | Comments (5)
But johngalt thinks:

Well, if efficiency compared to ethanol is the yardstick then just about everything is an improvement.

Posted by: johngalt at May 2, 2008 3:51 PM
But jk thinks:

I hear you. Though I was giving this credit for being potentially magnitudes more efficient. Instapundit once also linked to a home ethanol distiller that cost $9995 and brewed $1/gal Ethanol out of sugar.

The algae project does not intrigue me about covering 10% of New Mexico. But I do wonder about making a 20' diameter silo that could sit on a fellow's farm in, say North Central Colorado that could fuel all its owners vehicles, heaters, and itself. Crazy talk?

Posted by: jk at May 2, 2008 4:40 PM
But johngalt thinks:

"And itself?" Perpetual motion machine?

In the video I see an electrically circulated solution being exposed to solar radiation, so I guess that's a principal input. And plants require CO2 for respiration (or whatever you call it in plants) so that's another input. But the plants I grow (various forage grass species) also require nutrients. This spring's crop just received $1000 worth of petroleum derived nitrogen fertilizer. I'll need to see the complete cycle diagram with cost inputs before I invest in this plumber's nightmare.

One thing I DIDN'T see in the video was the giant vessel of "vegetable oil" produced at this quite impressively sized plant.

In north central Colorado I'll also have to shut it down and winterize it in late September. For a system primarily powered by solar energy I'm still leaning toward organic photovoltaic panels. (But not until all the fossil fuels are depleted - probably not in my lifetime.)

Posted by: johngalt at May 4, 2008 1:44 PM
But jk thinks:

Perhaps it's not for a sober, measured man such as yourself. I was thinking of a Randian family with some millenarian, survivalist instincts who would pony up a little extra to get "off the grid" and enjoy self sufficiency.

Winter would suck (New Mexico looks better and better) but I have no problem envisioning this as viable. It's not perpetual motion; it is essentially a solar play. My memories of pond scum would suggest that they don't require too expensive a nutrient medium.

I agree that I'd like to see the vegetable oil or the jet fuel before I signed up -- how complex is the extraction? Compared to Ethanol, jg...

Posted by: jk at May 4, 2008 7:32 PM
But johngalt thinks:

Oooh, sarcasm - I LIKE it! But I've already told you how I'm going to get off the grid: http://www.threesources.com/archives/005036.html

And I can use the waste heat to warm my wife's new riding arena in the winter.

I do need to work on a large capacity electrical storage system though. Electrochemical batteries are so passe. Hey, I know: hydrogen fuel cells!

Posted by: johngalt at May 5, 2008 3:29 PM

April 29, 2008

Global Food Crisis

Not content with helping Senator Obama to a victory in Pennsylvania, Senator Casey turns to solving the global food crisis.

How?

Government.

President Bush had previously requested $350 million for the year. Durbin and Sen. Robert P. Casey Jr. (D-Pa.) held a press conference Monday calling for an additional $200 million in food aid to be added to the upcoming war supplemental bill.

“This global food crisis now risks creating a series of failed states, as anger at inadequate food stocks spur riots and political instability,” said Casey. The Democrats said the additional $200 million would go primarily to the U.N.’s World Food Program, which provides emergency food aid for up to 78 million people annually.

Earlier in the day, White House press secretary Dana Perino said the administration is monitoring the situation closely; the administration recently announced it was releasing an additional $200 million in wheat reserves to be sent to developing countries.


Oh, and let's give it to the UN, of all people. A model of efficiency.

The President doesn't escape blame, but is anyone in government willing to look at the real cause of the global food crises?

Government.

... specifically the US and EU mandates for Ethanol production and consumption.

When it pays better to burn food for fuel than it does to sell it for food, is anyone, outside of Democrats and liberal do-gooders, really surprised?

Posted by AlexC at 2:58 PM

April 19, 2008

Outgassing

Insty links to a topic near and dear to my heart: where does oil come from? We all learned in school that it's rotten dinosaurs, everybody knows that.

When everybody knows something, look out. When I was in college, I was in a band with a PhD candidate in Physics (who was a pretty good guitar player as well). He had me over for dinner one night with the former President of the school, Dr. Sterling Colgate. Colgate has forgotten the cube of the physics I'll ever learn and was a fascinating personality.

This was in the late 70s when world oil supplies were a concern, and Dr. Colgate was adamant that the Earth, like most every other celestial body its size, was kicking out more hydrocarbons than we puny humans could ever be expected to burn. I was young and took the word of my intellectual betters. For better or worse, I have believed this ever since. The core of the planet "outgasses" small hydrocarbons and the pressures in the crust produce larger molecule versions.

I never hear this discussed at any level. Until today:

What does Gold have to do with the recent Brazil oil find? In 1999, Gold published "The Deep Hot Biosphere," a paper that postulated that coal and oil are produced not by the decomposition of organic materials, but in fact are "abiogenic" -- the product of tectonic forces; i.e., deeply embedded hydrocarbons being brought up and through the earth's mantle and transformed into their present states by bacteria living in the earth's crust.

The majority of the world’s scientists scoff at Gold's theory, and "fossil fuel" remains the accepted descriptor of oil. Yet in recent years Russia has quietly become the world's top producer of oil, in part by drilling wells as deep as 40,000 feet -- far below the graveyards of T-Rex and his Mesozoic buddies.

Is it possible that Thomas Gold was right again, and that the earth is actually still producing oil? It's tantalizing to think so. Meantime, whether or not Brazil's recent find adds support to Gold's theory, for sure it's good news for Brazilians: Government-run Petrobras is one of the world's leaders in ultra-deep offshore oil extraction, and Sugarloaf Mountain alone could transform Brazil into another Venezuela or Saudi Arabia.


I feel like a 9/11 truther or something, but I find this theory a lot more believable than the dead dinosaurs.

Posted by John Kranz at 12:03 PM | Comments (1)
But pquist thinks:

I recall reading Gold's theory in the late 70s or early 80s in the WSJ. Like you, I have never been able to totally discount the idea. The view that oil derives from fossils is dominant, but I do not believe that it can be proven.

Posted by: pquist at April 20, 2008 4:02 PM

March 3, 2008

I'm Thinkin' 't He's Drinkin' 't

Robert Zubrin did a podcast with Glenn Reynolds a while back, and I am thinking that he slipped a bit of biomass ethanol into the good Professor's drink. Glenn has since run about 754 positive blurbs about "The Zubrin Plan" to mandate that new cars sold in the US can run on gasoline or ethanol.

"You had me up until 'mandate,'" says I.

The proponents wash over the mandates with the assumption that these will replace other and worse pieces of legislation. The way Professor Mankiw sells his carbon tax as being better than cap and trade, The Zubrin Plan is always better than some other government abomination -- yet there's very little evidence our benighted 535 won't give us both. Reynolds and Zubrin claim it is better than CAFE standards and are likely right. But how bad would increased CAFE standards and mandated flex-fuel capability suck?

Zubrin defends himself from the mean old attackers at Science Magazine and the WSJ Ed Page -- and Reynolds dutifully links. Where Reynolds likes biomass ethanol, Brother Zubrin is still pretty pleased with the corn ethanol subsidies. By his math they provide a 600% ROI:

Let's start with the allegedly misbegotten incentives. The United States invests roughly $3 billion a year through a 51-cent per gallon credit to promote the production and use of renewable fuels like ethanol. The return on that investment? Taxpayers are saving approximately $6 billion that would otherwise be spent on counter-cyclical crop price supports, plus an additional $15 billion reduction in the country's petroleum import bill.

"The attacks continue." "That, not a blind and dangerous reliance on the status quo, should be our course." Defensive much? It's like watching Senator Clinton complain about getting the first question at debates.

I remain pretty excited about biomass. But I don't want to mandate solutions onto car manufacturers. Mr. Zubrin does his cause no favors with a petulant essay.

Posted by John Kranz at 3:00 PM

WSJ: Supply-Demand Thingy Works!

As crude-oil prices climb to historic highs, steep gasoline prices and the weak economy are beginning to curb Americans' gas-guzzling ways.

In the past six weeks, the nation's gasoline consumption has fallen by an average 1.1% from year-earlier levels, according to weekly government data.
[...]
This time, however, there is evidence that Americans are changing their driving habits and lifestyles in ways that could lead to a long-term slowdown in their gasoline consumption.


The article then points out that a rally in crude prices has kept this from feeding back into lower gas costs, so don't reprint the textbooks just yet.

I point it out because I see a new promising free market solution to our soi disant oil addiction every week, and yet the insane calls for gub'mint solutions come every day.

I think Economics textbooks will be updated in a few years to include the folly of subsidizing corn-based ethanol. A corn-producing state has two powerful Senators, one in either party, so the government throws [insert magnitude here]s of dollars at a "solution" which costs more, requires more energy, and emits more greenhouse gases -- a policy trifecta!


Posted by John Kranz at 11:24 AM

February 15, 2008

A Green Hero

Free market deity, T.J. Rodgers, is bringing Moore's Law to Solar Power. He wants to save the world and make a pile of cash. What a guy!

I had a brief and very unsuccessful stint in my younger days selling ad space for "Photovoltaics Magazine." My problem was that I was not a good closer; the PV industry's problem was that it competed for Silicon with the likes of Intel and Texas Instruments. One sold a square inch for $300 and one sold 4 x 8' sheets. You get the idea.

Rodgers saw a similarity others did not: Moore's Law. It was a semiconductor industry and the advances in chip fabrication would pay off in solar power. He bought a power company with his own money when his board would not go along and now "SunPower is rapidly becoming a more important business to Cypress than semiconductors themselves."

So, it goes without saying that when the word "green" comes to mind, T.J. Rodgers, the ultimate free market libertarian, is probably the last person you'd ever think of. And yet, here he is, at the absolute epicenter of the Green Revolution, helping lead the charge that will likely very soon make solar power as inexpensive as other sources of electricity.
[...]
The story of how T.J. got to this point is one of the great untold business stories of the new century. And it should serve as an object lesson to those who wish to change the world by fiat, rather than by market forces.
[..]
The husband of a woman I grew up with has worked for T.J. for many years in international sales. It's been a good job, so when I heard a few years ago he was being transferred to SunPower, I felt sorry for him, figuring it was a demotion. These days he's adding new wings to his house

These are from a great piece by Michael Malone on abc.com. Read it all and send a copy to your favorite Democrat.

Posted by John Kranz at 3:29 PM | Comments (1)
But johngalt thinks:

A fledging Loveland, Colorado company named AVA Solar is on the verge of pilot production of a new type of low-cost photovoltaic panel. They claim to have an infrastructure cost comparable to the same kwh generating capacity using fossil fuels. The difference, of course, is that operating costs for solar photovoltaic are virtually zero since there is no fuel cost.

I believe a German company is already in production with a similar technology.

It appears that solar electric generation is on the cusp of an energy economy revolution that will make ethanol, biodiesel and methane composters seem like just a bad dream.

You may have noticed that hydrogen fuel cells are missing from my list of failed energy gambits. That is because hydrogen is not a fuel, and fuel cells are not engines. Instead they are analogous to batteries and have the capability of being "charged" by solar photogenerators. I'm not endorsing this, just saying that it will remain a competitor for future energy storage applications. (At least until the first "Hinden-yugo" explosion on an urban motorway.)

Posted by: johngalt at February 15, 2008 10:32 PM

February 7, 2008

A Physics Hoss

I am linking to a one hour and 35 minute video. It's a huge investment. But I know we have some geeks around here and I encourage each to ignore politicians and pundits and spend some time with a true genius. (Hat-tip: Samizdata. Dale Amon says "For those who have not spent a lifetime watching the world of Physics, Dr. Bussard is one of the elders of the field. He is no outsider and no crank. He is one hell of a serious physics dude."

The talk is all Physics, but quite a bit of politics and economics unwittingly enters.

ABSTRACT This is not your father's fusion reactor! Forget everything you know about conventional thinking on nuclear fusion: high-temperature plasmas, steam turbines, neutron radiation and even nuclear waste are a thing of the past. Goodbye thermonuclear fusion; hello inertial electrostatic confinement fusion (IEC), an old idea that's been made new. While the international community debates the fate of the politically-turmoiled $12 billion ITER (an experimental thermonuclear reactor), simple IEC reactors are being built as high-school science fair projects.

Have fun: http://video.google.com/videoplay?docid=1996321846673788606

Posted by John Kranz at 12:11 PM

January 15, 2008

Jeremy!

It is probably too late to start a draft Jeremy Clarkson for President campaign, Especially since we would need to amend the Constitution to allow the foreign born star of Top Gear to hold the position. And his general contempt for America and her people would be a PR challenge.

But I still wonder:

A couple of weeks ago, plans for a wonderful new coal-fired power station in Kent were given the green light and I was very pleased.

This will reduce our dependency on Vladimir’s gas and Osama’s oil and, as a bonus, new technology being developed to burn the coal more efficiently will be exported to China and exchanged for plastic novelty items to make our lives a little brighter.

It’s all just too excellent for words, but of course galloping into the limelight came a small army of communists and hippies who were waving their arms around and saying that coal was the fuel of Satan and that when the new power station opened, small people like Richard Hammond would immediately be drowned by a rampaging tidal swell.
[..]
I’ve argued time and again that the old trade unionists and CND lesbians didn’t go away. They just morphed into environmentalists. The red’s become green but the goals remain the same. And there’s no better way of achieving those goals than turning the lights out and therefore winding the clock back to the Stone Age. Only when we’re all eating leaves under a hammer and sickle will they be happy.


Senator McCain he ain't!

Hat-tip: Samizdata

Posted by John Kranz at 5:11 PM

January 4, 2008

Uniquely American

You see one of these "Cold Fusion" stories every month or so. I'm still waiting for the nation to be powered by the scraps from the Tyson poultry plant.

Yet I hope that this one is true because it represents a uniquely American solution.

“Check it out. It's actually a jet engine," says Johnathan Goodwin, with a low whistle. "This thing is gonna be even cooler than I thought." We're hunched on the floor of Goodwin's gleaming workshop in Wichita, Kansas, surrounded by the shards of a wooden packing crate. Inside the wreckage sits his latest toy--a 1985-issue turbine engine originally designed for the military. It can spin at a blistering 60,000 rpm and burn almost any fuel. And Goodwin has some startling plans for this esoteric piece of hardware: He's going to use it to create the most fuel-efficient Hummer in history.

Goodwin takes the largest American cars and fits them with electric drive and a fat burning jet 60KRPM jet to recharge supercapacitors. "Like a Prius on Steroids," he says. Well, Mr. Goodwin, I know Steroids. Steroids are a friend of mine. And your solution goes beyond steroids.

Let our beloved, European allies buy smaller and less powerful cars. Whether Goodwin's approach ever sees an integral market share or not, this is the way for Americans to beat the "fuel crisis:" with big, fast, mighty cars, If it indeed runs on french-fry grease, we might just get energy-independence after all.

Hat-tip: Insty

Posted by John Kranz at 4:22 PM

October 28, 2007

Imagine...

"Imagine if a two hundred and fifty year supply of energy were right here at home."

"Black hydrogen" never looked so good.

Hat tip: Blog brother Cyrano.

Posted by JohnGalt at 3:14 PM | Comments (1)
But jk thinks:

I'm sold on coal.

Posted by: jk at October 28, 2007 5:16 PM

September 30, 2007

Did somebody say bubble?

The NYTimes reports an ethanol "glut."

Only last year, farmers here spoke of a biofuel gold rush, and they rejoiced as prices for ethanol and the corn used to produce it set records.

But companies and farm cooperatives have built so many distilleries so quickly that the ethanol market is suddenly plagued by a glut, in part because the means to distribute it have not kept pace. The average national ethanol price on the spot market has plunged 30 percent since May, with the decline escalating sharply in the last few weeks.

“The end of the ethanol boom is possibly in sight and may already be here,” said Neil E. Harl, an economics professor emeritus at Iowa State University who lectures on ethanol and is a consultant for producers. “This is a dangerous time for people who are making investments.”

While generous government support is expected to keep the output of ethanol fuel growing, the poorly planned overexpansion of the industry raises questions about its ability to fulfill the hopes of President Bush and other policy makers to serve as a serious antidote to the nation’s heavy reliance on foreign oil.


We did talk about an alternative energy bubble last week. As long as Senator Grassley breathes, however, I think ethanol providers are safe. And the article makes clear that the problem is not a lack of demand as a lack of distribution, so I am not flying my schadenfreude flag just yet.

UPDATE: The WSJ weighs in as well:(paid link)

Financing for new ethanol plants is drying up in many areas, and plans to build are being delayed or canceled across the Midwest, as investors increasingly decide that only the most-efficient ethanol plants are worth their money.

Some ethanol companies are "under deathwatch" now, says Chris Groobey, a partner in the project-finance practice of law firm Baker & McKenzie, which has worked with lenders and private-equity funds involved with ethanol.


Posted by John Kranz at 1:43 PM | Comments (4)
But mdmhvonpa thinks:

Watch for an interesting flux in the (corn) feed futures.

Posted by: mdmhvonpa at October 1, 2007 10:32 AM
But Perry Eidelbus thinks:

I wonder when the American corn industry will do as French winemakers have, and demand more government subsidies so they don't lose money from the glut that government subsidies created in the first place.

Posted by: Perry Eidelbus at October 1, 2007 1:18 PM
But jk thinks:

The WSJ article goes on to say that ADM and the big players will still do well, so I think you have a Baptists & Bootleggers alliance that will keep Grassley and Harkin out. ADM will use the downturns to buy the little guys.

Posted by: jk at October 1, 2007 3:27 PM
But TrekMedic251 thinks:

Well,..there may be a good side to this. With a corn glut, tacos will be cheaper in Mexico and that should decrease the flow of illegals into the US,....um,....right??

Posted by: TrekMedic251 at October 2, 2007 10:15 PM

September 22, 2007

The Power of Regulation

Professor Reynolds links to this as good news:

"The economist reports that Concentrating Solar Power (CSP) systems that capture and focus the sun's rays to heat a working fluid and drive a turbine, are making a comeback. Although the world's largest solar farm was built over twenty years ago, until recently no new plants have been built. Now with the combination of federal energy credits, the enactment of renewable energy standards in many states, and public antipathy to coal fired power plant, the first such plant to be built in decades started providing 64 megawatts of electricity to Las Vegas this summer. Electricity from the Nevada plant costs an estimated 17 cents per kilowatt hour (kWh), but projections suggest that CSP power could fall to below ten cents per kWh as the technology improves. Coal power costs just 2-3 cents per kWh but that will likely rise if regulation eventually factors in the environmental costs of the carbon coal produces."

To be fair, Instapundit doesn't give it a glowing endorsment, but the link asks "A BRIGHT FUTURE for large-scale solar farms?"

I expected to read of a technological breakthrough in Photovoltaics, inspired by nanotechnology -- or something. Instead I read that Federal regulation and "public antipathy" are now deemed sufficient to rethink a process that is six times less efficient than existing mechanisms. Oh boy.

Where can I go long public antipathy? I think that's a growth market.

Posted by John Kranz at 5:08 PM

August 30, 2007

Big Oil Collusion

Are you sure about that?

Big oil companies did not conspire to raise U.S. gasoline prices last summer, as it was high crude oil costs and supply problems that caused the spike in pump prices, government investigators said on Thursday.

The Federal Trade Commission said that about 75 percent of the rise in gasoline prices was due to a seasonal increase in summer driving, higher oil costs and more expensive ethanol that was blended into gasoline.

The other 25 percent of the price increase stemmed from lower gasoline production as refiners moved to using ethanol as the main clean-burning fuel additive and lingering damage from hurricanes Katrina and Rita that reduced refining capacity.


So what they're saying is that fluctuations in supply and demand cause prices to go up (and down?) Not some cabal of evil white men?

Get outta here.

Posted by AlexC at 3:33 PM | Comments (4)
But jk thinks:

They buried the lede: 25% was caused by ethanol mandates (government intrusion). It was evil white men, ac -- Sen Harkin, Sen Grassley, Sen Lugar, Sen Durbin...

Posted by: jk at August 30, 2007 4:09 PM
But johngalt thinks:

OK, I'll be your conspiracy theorist. Ever notice how gasoline prices rise quickly and fall slowly? My hypothesis is that the retail price rises immediately whenever the wholesale price goes up, but when the wholesale price drops the retailers only lower their price as much as they have to as dictated by their nearby competition.

Not everyone plays this game, however. While 91 octane premium still commands 3.13 to 3.35 per gallon (north Denver metro) Costco gasoline has been selling their Sinclair wholesaled 91 octane for 2.99 for at least a month.

Posted by: johngalt at August 30, 2007 11:55 PM
But TrekMedic251 thinks:

JK,..I direct you to this piece on ethanol:

http://www.philly.com/inquirer/opinion/pa/20070828_Kudos_to_kudzu_as_source_of_energy.html

Posted by: TrekMedic251 at September 1, 2007 1:05 PM
But jk thinks:

I liked it just fine until they suggested genetically modified kudzu. I'm no Luddite, but one can easily see GMK taking over and destroying all life on Earth.

I'm actually very keen on biomass energy and have long been intrigued with generating power from poultry offal and by-products. Just as long as it's neither subsidized nor mandated, sign me up.

Posted by: jk at September 1, 2007 5:36 PM

July 24, 2007

No War but the Price War

I love these things.

A price war with the Hess station across the intersection at Union Boulevard and Airport Road had seen gas prices down more than a dollar a gallon.

The Wawa and Hess stations were charging $1.94 for a gallon of regular. That was $1.02 below the national average of $2.96, a savings that had long lines of cars waiting to fill up.

So many people arrived, that the crowding became an inconvenience for the very food and beverage customers the low gasoline prices were intended to draw into the stores.


The margins on pump gas are so incredibly low (pennies per gallon to the retailer) that the majority of the station's profit is generated from burnt coffee and old hot dogs.

But losing a buck a gallon doesn't seem like it could go on very long.

Posted by AlexC at 1:48 PM

July 21, 2007

Drilling Ordered to Stop

Newsday/AP

A federal appeals court has ordered Shell Oil to stop its exploratory drilling program off the north coast of Alaska at least until a hearing in August.

The order, issued Thursday by the 9th U.S. Circuit Court of Appeals, comes after the federal Minerals Management Service in February approved Shell's offshore exploration plan for the Beaufort Sea.

"Vessels currently located in the Beaufort and Chukchi seas shall cease all operations performed in furtherance of that program, but need not depart the area," the order said.

Opponents contend that the Minerals Management Service approved Shell's plan without fully considering that a large spill would harm marine mammals, including bowhead and beluga whales. They say polar bears could also be harmed, and they question whether cleaning up a sizable spill would even be possible in the icy waters.


Oil is at $75 per barrel in case you missed it.

Posted by AlexC at 12:05 PM | Comments (2)
But jk thinks:

The Ninth Circuit -- wow, that will never be overturned...

Posted by: jk at July 21, 2007 12:48 PM
But Perry Eidelbus thinks:

I can't help but wonder what's in these judges' portfolios...

September 07 crude was almost $76.50 on Friday, the day after the announcement. August 07 gasoline was over $2.15 -- the wholesale price, mind you. Prices have dipped a little since, but only a little. And then you have all the idiots who cry "gouging" when it's the courts that **** things up like with this bull**** ruling. From a purely business standpoint, there's no such thing as raising prices only when the more expensive shipment arrives. Gas stations have to raise prices *today* so they can afford to buy the next shipment.

Posted by: Perry Eidelbus at July 24, 2007 4:26 PM

June 22, 2007

Again, Bullwinkle?

That trick never works. So say Senators J. Bennett Johnson and Don Nickles in a guest editorial in today’s Wall Street Journal. (Paid link, TNSTAAFE[ditorial])

If the American people are suspicious of bold pledges from Washington about energy independence and reform, they have good reason to be. Since the first energy crisis almost 35 years ago, our nation has had a very expensive education in such matters. Whether it was President Nixon's Project Independence that called for the elimination of foreign oil imports, or President Carter's mandate that 20% of all domestic energy be supplied by solar technologies -- both of which were set to be achieved by 2000 -- projects have come and gone to no avail.

Wishful thinking is again on full display this week as Democrats and Republicans alike have assembled an ambitious energy policy agenda. Our hope was that Congress would embrace past lessons and forge pragmatic and workable solutions. But that hasn't happened.


They then enumerate a frightening list of Congressional intrusion: price-gouging, alternative energy mandates, renewable fuels standards, windfall profits tax, &c.

The bipartisan team, to be fair, hails from the oil states of Oklahoma and Louisiana. But they puncture each mandate and ask the current Congress to "recognize and act upon the difference between hope and reality."

Posted by John Kranz at 12:15 PM

June 20, 2007

Thirtieth Birthday

A project to which I quite literally owe my livelihood to celebrates it's 30th birthday today.

The Trans-Alaska Pipeline.

Figurin' that I'm about thirty years from retirement, here's hopin for another thirty!

Posted by AlexC at 7:57 PM | Comments (1)
But jk thinks:

I'm hoping for 30 years of ANWR oil as well.

Posted by: jk at June 21, 2007 9:42 AM

June 4, 2007

Regulating Gas Prices

Yeah, this will work.

State Rep from Washington County Mike Solobay wants to regulate gasoline like milk, and wants to duplicate a bill California drafted years ago.

"It basically set up a board similar to our Milk Marketing Board, but it gave the authority to a public utility commission to regulate the pricing and cost of what the pricing could be for fuel and processing of gasoline and different oil products."

He's planning to talk with folks at the PUC and the milk board, then draft a blueprint to help prevent gouging at the pumps.


Did anyone notice that milk, like cigarettes are sold at state minimum prices? Those prices are act as an artificial floor for cigarettes and milk. The government of Pennsylvania is actually costing you money. Milk and smokes could be cheaper. Really.

Think of the millions of poor who are overpaying for those sundries.

What "needs" to be done is setting a state maximum price for gas... which always leads to shortages.

If the high cost of fuel is really a problem, surely the state could forsake it's cut of your gallon of gas. They didn't drill for it. They didn't produce it. They didn't refine it. They didn't deliver it. They didn't store it. They didn't even sell it!

Pennsylvania collects $0.32 per gallon of gas. How much would that save you per week?

He's a Democrat, btw...

Posted by AlexC at 12:19 PM

May 25, 2007

Gouge 'em

The lead WSJ Editorial today suggests that Congress look in the mirror if it wants to know who is causing "excessive" gasoline prices. The big anti-gouging law will only enrich a few lawyers.

What does "gouging" mean anyway? No one on Capitol Hill can answer that question. The House bill prohibits energy companies from charging a price that is "unconscionably excessive." There's a precise legal term. It further explains that it shall be a crime whenever "the seller is taking unfair advantage of unusual market conditions" or "the circumstances of an emergency to increase prices unreasonably."

Still confused? Perhaps this will help. Gouging occurs, says the bill, whenever "the amount charged represents a gross disparity between the price" sold at the pump "and the average price at which it was offered for sale by the seller during the preceding 30 days." That could cover any price spike for any reason. Or gouging may occur when "the amount charged grossly exceeds the price at which the same or similar crude oil, gasoline, or natural gas was readily obtainable by other purchasers in the same geographic area." So if your oil supplier charges more than a competitor's does and you then raise prices, you could be a felon.

In other words, we are all criminals now. No one seriously believes this law will lower prices for consumers, but you can bet that brigades of lawyers will earn fat fees sorting out what exactly is meant by "unreasonably," "gross disparity" and "excessive."


Now that this law has passed, prices are sure to plummet.

UPDATE: link changed to free site -- thanks to johngalt.

Posted by John Kranz at 7:11 PM | Comments (2)
But johngalt thinks:

The link was public this morning: http://www.opinionjournal.com/editorial/feature.html?id=110010132

Posted by: johngalt at May 28, 2007 12:04 PM
But johngalt thinks:

The line that caught my eye, and sent me looking for the story, was this one: "Now that this law has passed..." What? Did the Senate vote on it? Has the president signed it? No, it appears that only Pelosi and Soros' House of Representatives has passed it.

Once actual grownups begin debating this measure, sponsored by the aptly named "Bart Stupak" (D-MI) someone is sure to point out that it will cause gasoline shortages during price spikes. Faced with the government imposed alternatives of selling their product at a loss or comitting a felony, retailers will do neither. Instead they'll just turn off the pumps and wait for the government to cave.

Bart STUPak needs to read this cartoon and the 'Who is Gouging Whom?' excerpt that follows it.

Posted by: johngalt at May 28, 2007 12:15 PM

May 21, 2007

Sounds like my diet...

I have had this story in a browser window all day. I don't know what to say but it is too good not to share.

The Wall Street Journal details (paid link, sorry) what pig farmers are feeding their livestock as corn is being diverted to Ethanol production.

GARLAND, N.C. -- When Alfred Smith's hogs eat trail mix, they usually shun the Brazil nuts.

"Pigs can be picky eaters," Mr. Smith says, scooping a handful of banana chips, yogurt-covered raisins, dried papaya and cashews from one of the 12 one-ton boxes in his shed. Generally, he says, "they like the sweet stuff."

Mr. Smith is just happy his pigs aren't eating him out of house and home. Growing demand for corn-based ethanol, a biofuel that has surged in popularity over the past year, has pushed up the price of corn, Mr. Smith's main feed, to near-record levels. Because feed represents farms' biggest single cost in raising animals, farmers are serving them a lot of people food, since it can be cheaper.

Besides trail mix, pigs and cattle are downing cookies, licorice, cheese curls, candy bars, french fries, frosted wheat cereal and peanut-butter cups. Some farmers mix chocolate powder with cereal and feed it to baby pigs. "It's kind of like getting Cocoa Puffs," says David Funderburke, a livestock nutritionist at Cape Fear Consulting in Warsaw, N.C., who helps Mr. Smith and other farmers formulate healthy diets for livestock.

California farmers are feeding farm animals grape-skins from vineyards and lemon-pulp from citrus groves. Cattle ranchers in spud-rich Idaho are buying truckloads of uncooked french fries, Tater Tots and hash browns.

In Pennsylvania, farmers are turning to candy bars and snack foods because of the many food manufacturers nearby. Hershey Co. sells farmers waste cocoa and the trimmings from wafers that go into its Kit Kat bars. At Nissin Foods, maker of Top Ramen and Cup Noodles, farmers drive to a Lancaster, Pa., factory and load up on scraps of the squiggly dried noodles, which pile up in bins beneath the assembly line. Hiroshi Kika, a senior manager at the company, says the farm business is "very minor" but helps the company's effort to "do anything to recycle."


Of course, if we did not provide 50 cents a gallon subsidies for Ethanol and apply 51 cent tariffs to a gallon of Brazilian Ethanol -- never mind, you know the rest.

My wife just hopes they don't find a way to make biofuels out of coffee.

Posted by John Kranz at 7:31 PM | Comments (1)
But TrekMedic251 thinks:

...are downing cookies, licorice, cheese curls, candy bars, french fries, frosted wheat cereal and peanut-butter cups.

Sounds like the desk of the lieutenant at the firehouse!

;-)

Posted by: TrekMedic251 at May 21, 2007 10:47 PM

May 8, 2007

Chuck Schumer: Feel the Love

Perry at Eidelblog refers to the Senior Senator from New York as:

  • biggest Congressional hypocrite of all time

  • such a goddamn putz

  • Moron

  • satanic rectal spawn

What a great post!

Seriously, one of his constituents on a blog points out what no newspaper or magazine will dare. The good Putz Senator cannot oppose every refinery project, every drilling project, and every attempt to lighten the regulatory burden on refineries -- and then attack the oil companies for under production.

If Schumer wants to know the fundamental problem with American refineries, he need not look anywhere but a mirror. The New York Times reported two years ago that "Over the last quarter-century, the number of refineries in the United States dropped to 149, less than half the number in 1981." Worse, the United States hasn't seen a new refinery built since 1976. Every time a company would like to build one, they can't get past the hurdles that Congress, and state and local governments too, made to satisfy the tree-huggers. The blame falls mainly on Democrats, but also on "environmentally minded" Republicans who'll court any vote to win elections.
[...]
However, when it comes to getting people to vote for you, truth just doesn't compete with creating fear, including the fear that somebody just might have more than you. So Schumer will continue to harp on "income inequality" and oil companies' supposedly obscene profits, notwithstanding that, as my friend Josh Hendrickson pointed out a while back, oil companies' profits are hardly the highest compared to other industries, when you look at the percentages.

Well done.

Posted by John Kranz at 12:29 PM | Comments (2)
But TrekMedic251 thinks:

You had me at "satanic rectal spawn!"

ROFLMAO!

Posted by: TrekMedic251 at May 8, 2007 9:41 PM
But Perry Eidelbus thinks:

I can't take credit for that one. 'Twas one of my friends who feels much the same way about Chuck the Schmuck.

Posted by: Perry Eidelbus at May 8, 2007 11:15 PM

April 26, 2007

Windfall Profits Taxes, Again.

It will save us money at the pump.

No, really. Ask Bob Casey.

In response to the new round of oil profits, Sen. Bob Casey, D-Pa., introduced legislation Thursday that he hopes will curtail rising gas prices. Casey's bill would impose a windfall profits tax and close certain tax loopholes for big oil companies and use the money for research into biofuels and other related projects.

Follow the logic here.

1) Oil companies make excessive profits.
2) Levy a windfall profits tax (level to be determined)
3) Oil companies say, "you know, you're right, we're going to lower our prices to avoid the tax."

Be careful not to laugh too hard.

In the real world, step three would be.
3) Oil companies say, "damn, profits are eroding, let's make that up by raising prices" (thereby passing the tax on to the consumer)

The "real" step three never crossed Bob Casey's mind? Governor Ed Rendell had the guts to lie to us and say he'll prevent the oil companies from passing on the tax... perhaps Casey thinks we won't notice?

Posted by AlexC at 5:41 PM

February 7, 2007

Another Liberal Idea

that could lead to famine.

Tens of thousands of people have marched through Mexico City in a protest against the rising price of tortillas.

The price of the flat corn bread, the main source of calories for many poor Mexicans, recently rose by over 400%.

President Felipe Calderon has said the government will clamp down on hoarding and speculation to ease the problem.

But some blame the rise on demand for corn to make environmentally-friendly biofuels in the United States.


You're kidding overhyped subsidized demand for a dubious product raising it's demand? You learn something new everyday.

Posted by AlexC at 12:02 AM | Comments (8)
But johngalt thinks:

And what does Josh say about the reduction in available labor for auto mechanics, welders, electricians, and brain surgeons when all those grown up farm kids head back to Metropolis to grow a crop for which the demand is more genetically altered than the seed corn is? Or the price of other crops that are crowded out by government corn? Or the spike in demand for scarce irrigation water that is already in a semi-natural balance? Or...?

Posted by: johngalt at February 7, 2007 2:45 PM
But johngalt thinks:

I'd also like to call attention to a comment by El-Visitador (that languished in the junk comments bin for far too long due to more than one embedded hyperlink): *** CORRECTION *** No corn mandate *** (sixth comment)

In addition to the correction of his previous assertion he adds, "Ethanol could be made in the U.S. from a cheaper, more efficient per acre source: sugarcane. But sugarcane is heavily dutied and protected (which is why sugar is 4 times costlier in the U.S. than in most places around the world), whereas corn is subsidized. This is why most ethanol is currently made from corn."

Posted by: johngalt at February 7, 2007 3:00 PM
But jk thinks:

Good point -- I don't want to take a great blogger (and valued commenter) out of the 'sphere. I think he might lease some of that permafrost tundra prime farmland to ADM or Cargill, and they could turn it for him.

The point is that subsidies interfere with but do not invalidate the market. I don't want to encourage ethanol subsidies, but rising corn prices is a bogus argument, when there are a million good arguments.

Mexico, as was noted in the same discussion, has import quotas on US grain and now flirts with price controls. The enemy of my enemy may or may not be my friend, but to argue against ethanol subsidies because of tortillas is the wrong reason.

Posted by: jk at February 7, 2007 4:58 PM
But mdmhvonpa thinks:

Hmmm ... pound your chevy's into plowshares ... Forget corn, sugar-beet is the wave of the future boy! And yes, the Mrs would castrate me should I even mention the IDEA of moving back to the wilderness where you live in the 'town' if you can see your neighbor's house. Even if it is 10 miles away.

Posted by: mdmhvonpa at February 7, 2007 10:01 PM
But El-Visitador thinks:

"subsidies interfere with but do not invalidate the market. I don't want to encourage ethanol subsidies, but rising corn prices is a bogus argument, when there are a million good arguments."

Agreed 100% with JK.

But I just enjoy pointing out to the do-gooders that their ethanol mandate is sending hungy kids to bed in thirld-world countries.

Posted by: El-Visitador at February 8, 2007 11:33 PM
But jk thinks:

Yeah, that is too good to leave on the table, isn't it?

Posted by: jk at February 9, 2007 10:54 AM

February 3, 2007

Fuel Efficiency

Hooray! Alternative fuels come to Philly!

The Shell gas station at 12th and Vine Streets now offers ethanol and biodiesel fuels.
Customer John Maratay's truck can run on regular gas or e85, a fuel is comprised mostly of ethanol made from corn byproduct.

On Friday, he filled it the first time with e85 gasoline.

"You know the carbon footprint might be a little smaller now," said Maratay.

Customer Jack Waterloo said he drove 25 miles to test out the gas station's biodiesel pump.


Would I brag about driving 25 miles out of my way to get some biodiesel?

Probably not.

Think of the CO2 emitted. He's killing polar bears and contributing to global warming climate change so he can feel better about himself.

No, I wouldn't brag about it unless it's less than used to drive for a biodiesel fix.

“I'll drive this car from this gas station on biodiesel to Miami, which is 1,200 miles away, without refueling. I'll average over 60 mph per gallon,” said Waterloo.

He said he's done it before but had to drive to Baltimore[105 miles. -ed] to fill up.


Saving the environment or feeling better about yourself? You be the judge.

Someone get this guy a Pious.

1002_its_a_hybrid.jpg

Posted by AlexC at 12:40 PM | Comments (8)
But johngalt thinks:

If you follow the link in my Ethanol Myth post you'll see some related articles (subscription required) that discuss ethanol fuel:

Hot topics in the ethanol debate says - "Considering the entire “well to wheel” process, including growing and harvesting the corn, and producing, shipping, and burning the ethanol, David Friedman, the clean vehicles research director at the Union of Concerned Scientists, says that E85 made from corn provides an 8 to 15 percent reduction per mile today. That is countered by Tad Patzek, professor of geoengineering at the University of California at Berkeley. He says the “equivalent CO2 emissions from corn ethanol are 50 percent higher than those from gasoline.”

Tests of ethanol vs. gasoline shows NOx emissions from gasoline as 9 ppm vs. 1 ppm from E85, but HC and CO emissions are identical at 1 pmm and 0 ppm, respectively.

Posted by: johngalt at February 3, 2007 6:00 PM
But Guy Montag thinks:

Yep, if they were driving the kind of 'hybrid' I drive this would not be a problem at all :)

Still debating Holly or Edelbrock hydrogen delivery systems for the six-pack . . .

Posted by: Guy Montag at February 4, 2007 2:33 AM
But johngalt thinks:

Edelbrock! That's what feeds the 340 4 bbl. in my convertible '68 Barracuda.

Posted by: johngalt at February 4, 2007 6:23 PM
But Guy Montag thinks:

Fuel efficiency is defined by turning fuel into horsepower at the fastest rate possible.

Posted by: Guy Montag at February 4, 2007 8:06 PM
But jk thinks:

I had a 6-pack Holly in my younger days. I could never get the linkage adjusted properly. It was a 2-barrel until floored when all six would kick in.

Posted by: jk at February 5, 2007 10:30 AM
But Guy Montag thinks:

Was that on a MOPAR or something else? On MOPAR the outboards open from the vacume, not a mechanical linkage.

Posted by: Guy Montag at February 7, 2007 4:46 PM

January 29, 2007

Silver Lining?

All the sturm und drang about energy has seemed to have no upside. Like Paul Gigot, I enjoyed Senator Grassley's giddy abandon when ethanol subsidies came up at the SOTU, but I expect government meddling and spending and interference will make things worse, not better.

Maybe there is a bright spot (a glowing lump of U-235?) The Wall Street Journal reports a rush to license and build noocyoolur plants.

A flood of applications seeking permission to build at least 30 reactors, primarily in the South, is expected to pour into the Nuclear Regulatory Commission beginning late this year. If built, the reactors would boost the nation's electricity supply by more than 30,000 megawatts, or 3%. A megawatt is enough to power at least 500 homes.

'A Horse Race'

Under recent legislation intended to jump-start development, Congress is dangling more than $8 billion worth of subsidies, plus loan guarantees, in front of the first few plants that get built. Practically speaking, companies must apply to the NRC this year or next to qualify for the special assistance -- a process that can cost $50 million apiece.

"It's like a horse race," says Adrian Heymer, senior director of new plant development at the Nuclear Energy Institute, a Washington, D.C.-based trade organization. "Most companies are striving to submit applications as fast as they can."


Of course, they wouldn't have to pony up billions in subsidies if they'd establish reasonable criteria for permitting and licensing. In the end, however, I think nuclear power is our best bet for clean domestic power. Nuke plants powering plug-in hybrids could fill a lot of needs with present or near-term technology.

Posted by John Kranz at 11:09 AM

January 26, 2007

Whither Pigou

I part with the beliefs of Greg Mankiw reluctantly. I respect the good doctor. But his recent pushing of Pigouvian taxes and creation of the Pigou club have left me cold.

Today, Charles Krauthammer joins the Pigou Club and is applauded by ThreeSources's own LatteSipper. I sense an unholy alliance building between LS, Mankiw, and Krauthammer -- a triumvirate I'm not prepared to consider.

Josh at Everyday Economist has a thoughtful post on the topic today. Like me, he's a Mankiw fan but like me he is unconvinced.

Individuals respond to incentives. So, if a tax is placed on a good, individuals will be inclined to change their behavior. Pigouvian taxes work especially well on things like cigarettes and alcohol. The increased taxes cause many to cut down on their unhealthly habits; or even quit. However, there is something quite different between tobacco use and automobile use.

Most people use their cars to drive to work, the store, and to see friends and family. If the tax on gasoline was raised, Mankiw argues, individuals would consume less. However, individuals would still have to go to work, pick up the groceries, and presumably visit with family. Thus there would be little wiggle room for reducing consumption.


With regard to Charles Krauthammer's piece, I hate to interrupt the comity implied by LS's improbable link, but I can't agree with that plank of his piece either. Krauthammer has a three-part path to energy independence: "Tax gas. Drill in the Arctic. Go nuclear."

If my friend LatteSipper will sign on for all three of those, I'll compromise on the gas tax. Building nuclear power plants and increasing domestic drilling would be good moves. As far as Krauthammer's Pigouvian leanings, I think he makes a big mistake confusing economics with capitalism:

No regulator, no fuel-efficiency standards, no presidential exhortations, no grand experiments with switch grass. Raise the price, and people change their habits. It's the essence of capitalism.

I would suggest that capitalism would be allowing the market to decide the balance of energy sources and trusting the pricing model to spur innovation.

Sorry, LS, the big group hug is put off 'till another day.

Posted by John Kranz at 7:13 PM | Comments (1)
But johngalt thinks:

Well, I'm certainly glad that ONE of us read Latte's link. That Latte is a sneaky guy!

I'm also thrilled to learn the academic source of Washington's belief that it can alter reality by raising taxes: English economist Arthur Cecil Pigou and his "Pigovian tax."

I daresay that thinking like his is what brought us the very idea of DAWG. Like class-action lawyers beating the bushes for plaintiffs, proponents of Pigou's "Economics of Welfare" needed a club with which to malleate a mostly free world market into something more to their liking. DAWG is, without a doubt, the closest they've come to date.

Posted by: johngalt at January 27, 2007 2:59 PM

The Ethanol Myth

That's not just this gas guzzlin' global warming denier talking, those are the words of the respected consumer journal Consumer Reports.

A recent Harris Interactive study of vehicle owners found that more than half were interested in purchasing an FFV, mostly for reduced dependency on petroleum and improved fuel economy.


But after putting a 2007 Chevrolet Tahoe FFV through an array of fuel economy, acceleration, and emissions tests, and interviewing more than 50 experts on ethanol fuel, CR determined that E85 will cost consumers more money than gasoline and that there are concerns about whether the government’s support of FFVs is really helping the U.S. achieve energy independence.

CR goes on to explain how:

- The fuel economy of their test SUV dropped 27% when running on E85 compared with gasoline.
- When gasoline was $2.91 per gallon, the mileage equivalent price per gallon for E85 was $3.99.
- A tankful of gasoline would take the SUV 440 miles; a tankful of E85 goes only 300 miles.
- Most FFVs are large SUVs which use more of whatever fuel you run them on.
- E85 is almost nonexistent anywhere outside of the upper midwest.

And finally, the real reason for the boom in FFV production:

The FFV surge is being motivated by generous fuel-economy credits that auto-makers get for every FFV they build, even if it never runs on E85. This allows them to pump out more gas-guzzling large SUVs and pickups, which is resulting in the consumption of many times more gallons of gasoline than E85 now replaces.

But this isn't all. The Wall Street Journal explained Who Is Hurt By Oil's Fall (paid link) in the January 19, 2007 issue. The lede says it all. "Drillers, Ethanol Makers Lead Pack Of Stocks That Could Be Hit Hardest" This is because the cost of producing ethanol fuel is so high relative to gasoline. Not because the oil economy is subsidized, but because it requires only refinement to become a fuel, not an elaborate and energy intensive fermentation and distillation process.

Still want more? There's a huge debate raging over this issue with claims such as "it cannot contribute to the formation of deposits" coming mostly from domains such as ilcorn.org, mncorn.org, ncga.com (national corn growers assn), and contradictory claims of "increased intake valve deposits by more than 350%" from the addition of just 10% ethanol to gasoline. (This sounds a lot like the global warming debate, with opposing sides making bold claims. I wonder if either of them could be bending the truth a bit?) I suspect the ethanol messiahs are conveniently ignoring the corrosive effects of moisture that is naturally absorbed by anhydrous ethanol.

when AlexC wrote The Dark Side of Ethanol yesterday I wondered, what is the bright side?

Posted by JohnGalt at 1:24 AM | Comments (2)
But lattesipper thinks:

Rare is the day I agree with JohnGalt and Charles Krauthammer (Energy Independence?)

Posted by: lattesipper at January 26, 2007 8:43 AM
But Everyday Economist thinks:

Okay, I will be the first to stand up and complain about government subsidies of ethanol. However, this analysis by Consumer Reports purports to dispel the "myth" of ethanol when, in fact, their analysis is flawed.

First, it is unfair to compare the current cost of ethanol to the current cost of gasoline because in most areas ethanol is monopolistically priced. Ethanol is only available is certain areas of the country. Further, even in areas of the country where it is available, it is offered at only a few places.

Second, if we were to allow Brazilian ethanol to be imported, ethanol would be much cheaper. After all, that which is produced in the United States is done by an infant industry that has yet to develop economies of scale.

These lower prices would make ethanol more practical and more affordable.

The "myth" associated with ethanol is that we can subsidize the industry to the hilt and thus immediately reduce our oil dependence. Even if the industry becomes successful in the future and is able to produce ethanol at a much lower cost, it is not a short run solution.

Subsidizing industries has more to do with "creating" jobs than it does with solving the problem. Subsidation is not the panacea that the government pretends it to be.

However, ethanol is not the problem; it is the ignorant subsidation of an American ethanol industry.

Posted by: Everyday Economist at January 26, 2007 10:35 AM

January 24, 2007

The Dark Side of Ethanol

It's like something out of the twilight zone.

Hungry Mexicans.

Soaring international demand for corn has caused a spike in prices for Mexico's humble tortilla, hitting the poor and forcing President Felipe Calderon's business-friendly government into an uncomfortable confrontation with powerful monopolies.

Tortilla prices have jumped nearly 14 percent over the past year, a move the head of Mexico's central bank called "unjustifiable" in a country where inflation ran about 4 percent.

Economists blame increased U.S. production of ethanol from corn as an alternative to oil. The battle over the tortilla, the most basic staple of the Mexican diet, especially among the poor, demonstrates how increasing economic integration is felt on the street level.


It's good to know that Big Oil aren't the only ones blamed with collusion.
The federal government's antitrust watchdog announced this week it was investigating allegations companies were manipulating corn prices, and making deals to limit the supply of corn to boost prices of tortillas.

For low-income Mexicans, who earn about $18 a day on average, the increasing prices have hit hard. According to the government, about half of the country's 107 million citizens live in poverty.

"When there isn't enough money to buy meat, you do without," said Bonifacia Ysidro, but "you can't do without" tortillas.

Posted by AlexC at 9:26 PM | Comments (7)
But Everyday Economist thinks:

Price manipulation?

The increase in the price of corn will cause corn producers to produce more. As supply increases, the price of corn will fall as will the price of the tortilla.

We heard this same argument with regards to oil just a few short months ago, yet the price of oil has plummeted. Go figure.

Posted by: Everyday Economist at January 25, 2007 12:32 PM
But jk thinks:

Well said, EE. You're dead right in a real market. My concern is the government manipulation through subsidies. The tortilla baker has to compete against a subsidized ethanol plant.

No wonder Senator Grassley was weeping tears of joy.

Posted by: jk at January 25, 2007 1:46 PM
But Everyday Economist thinks:

Subsidies are unlikely to push up prices. In fact, a government subsidy often encourages overproduction and thus lowers the price. This is why foreign farmers find it so hard to compete with countries with large farm subsidies.

Unless the United States were to develop some type of New Deal-style subisidy that was designed to limit the supply, it is unlikely that we will see a sustained rise in corn prices.

The idea behind the ethanol subsidies is to encourage more production. Currently, both tortilla-lovers and ethanol producers are competing for the same scarce resource. The subsidies will eventually lead to increased production and thus lower prices.

Posted by: Everyday Economist at January 25, 2007 3:21 PM
But johngalt thinks:

I'm afraid our friend Everyday Economist is vastly oversimplifying the situation by failing to account for the myriad ripple effects of government manipulation of the marketplace.

He's also mistaken about just exactly what the subsidies JK mentions are for. It is not corn production that is being subsidized, but ethanol production. That, combined with the "maize only" mandate that El-Visitador claims (the validity of which I have no reason to doubt), creates an artificial spike in demand, which has a predictable effect on price.

Meanwhile, ethanol as a practical fuel is a disaster.

Posted by: johngalt at January 26, 2007 1:17 AM
But El-Visitador thinks:

*** CORRECTION *** No corn mandate ***

I appreciated johngalts' comment regarding my comment, but it made me reflect on what my source was. And my source was my memory, which has been known to fail from time to time.

So I looked at a number of sources, including the Act itself, the Energy Policy Act of 2005. Corn is not mandated by law at all.

Nonetheless, most ethanol in the U.S. is made from corn, which obviuously results in rising corn prices. And the U.S. does produce (or at least formerly produced) 70% of worldwide corn exports; therefore, any increases in the internal U.S. market have immediate consequences in the (mostly poorer) countries elsewhere that import corn as either human or animal foodstock.

Ethanol could be made in the U.S. from a cheaper, more efficient per acre source: sugarcane. But sugarcane is heavily dutied and protected (which is why sugar is 4 times costlier in the U.S. than in most places around the world), whereas corn is subsidized. This is why most ethanol is currently made from corn.

some sources:
http://www.heritage.org/Research/EnergyandEnvironment/wm1053.cfm
http://en.wikipedia.org/wiki/Energy_Policy_Act_of_2005

Posted by: El-Visitador at January 26, 2007 2:46 AM
But jk thinks:

You're both right (I'm a uniter). I'll do a post about this, but Cafe Hayek has more on tortilla-gate. It seems Mexico has a quota to limit imported corn:

So because of a bad law in the United States (the requirement to put ethanol in gasoline), the Mexicans have decided to pass a bad law that can only lead to a tortilla shortage.

Posted by: jk at January 26, 2007 10:16 AM

January 23, 2007

Gas Prices Dropping

Do you hear that?

It's the sounds of 10,000 conspiracy theorists silenced.

Today’s Patriot-News survey of 10 stations in the region put the average price for a gallon of regular unleaded at $2.164, down 9.3 cents from last week and 16.6 cents since Jan. 9.

Prices dropped at all 10 outlets, and ranged from $2.03.9 to $2.22.9.

On the national scene, prices also continue to drop. Today’s AAA Daily Fuel Gauge Report was at $2.158, down 7.1 cents from last week.

The U.S. Energy Information Administration on Monday posted an average of $2.165, which was down 6.4 cents from Jan. 15 and 17.1 cents lower than a year ago.


... and here I thought gas prices were being manipulated by the President for his electoral benefit. (Well, there was that SOTU address)

Actually, as someone in the petroleum business, I should be crying. But strangely, I'm not. It's like a tax-cut for consumers. Yay, capitalism!

Posted by AlexC at 11:43 PM | Comments (4)
But jk thinks:

$1.99 for regular unleaded around these parts.

I read yesterday that GM is actually concerned about low gas prices. Now that they are betting the farm on hybrids and smaller vehicles they do not want to see demand drop.

Posted by: jk at January 24, 2007 10:25 AM
But mdmhvonpa thinks:

The thing that bothers me the most: Citgo has the lowest price in the area and 3 new stations have been opened near me. Fargin' Hugo.

Posted by: mdmhvonpa at January 24, 2007 10:28 AM
But TrekMedic251 thinks:

I just a pre-approved credit card from Citgo. Voided it and sent it back with a note saying "We don't support South American dictators here. Stop soliciting my name and address. Remove both from your mailing lists!"

Other than that, give me Sunoco, or give me death!

Posted by: TrekMedic251 at January 25, 2007 9:44 PM
But jk thinks:

Catchy!

Posted by: jk at January 26, 2007 10:17 AM

January 5, 2007

100 Hours

Well this didn't take very long.

    Opponents of oil drilling in an Alaskan wildlife refuge are going on the offense after playing defense for a quarter of a century. They want the new Democratic Congress to make an oft-challenged drilling ban permanent.

    Legislation introduced in the House of Representatives on Friday would make the oil-rich 1.2 million-acre (490,000 hectares) coastal strip of the Arctic National Wildlife Refuge a permanently protected wilderness and end repeated efforts to open the area east of the Prudhoe oil field to energy companies.

    "The consensus is that there should not be drilling in the refuge, so the logical next step is to pass legislation which turns it into a wilderness," Rep. Edward Markey, a Massachusetts Democrat and chief sponsor of the legislation, said in an interview.


He's introduced it before, but with Democrat majorities, it's going to be a lot easier.

Posted by AlexC at 5:54 PM | Comments (1)
But johngalt thinks:

If there's a consensus that there should not be drilling in the - ahem - "refuge" then why must further debate be prohibited? Could it be that Democrats are afraid that, one day, the consensus could be different? How much more proof does one need that Democrats value democracy only when the majority happens to support their priorities?

And just what is the difference between a "refuge" and a "wilderness" anyway?

Posted by: johngalt at January 6, 2007 12:20 PM

December 7, 2006

Open Markets

I'm really digging the blog, Open Market.

A sample post today: Let them use Solar!

    It’s a heart-warming ad, literally. A poverty-striken mother and daughter sit freezing in their unheated home in the dead of winter, trying to warm themselves with a small cooking stove. But then a fuel truck pulls up and a band of smiling deliverymen pile out and fill up the family’s oil tank. Now they’ll be warm.

    The tagline, if I remember it correctly from when I saw the tv spot earlier this week, is “low-cost oil for those in need, brought to you by the good people of Venezuela and Citizens Energy.”


Read the rest.

Open Market is a blog of the Competitive Enterprise Institute.

Posted by AlexC at 12:29 PM | Comments (1)
But jk thinks:

CEI could not buy the publicity they've received from the Rockefeller-Snowe letter. I trip across something of theirs once a day now.

Posted by: jk at December 7, 2006 4:21 PM

December 4, 2006

DAWG Bites DAWGMA

Wikipedia tells us that Claude Allegre is a "French geochemist and politician" and "member of the French Socialist Party." Google news search tells us... nothing. (Well, nearly nothing. There's a letter to the editor of the BYU paper mentioning what I'm about to mention.) The French (tabloid? newsmagazine?) L'Express.fr printed an editorial by Msr. Allegre stating, in part, "So, the question that arises is whether there is climate warming or not? [...] Greenhouse effect plays no significant role in these processes." (English translation here.)

Fox News Channel told me, and the Majority members of the Senate Committee on Environment and Public Works corroborates, that Allegre's skepticism is "newfound" and that "one of the most decorated French geophysicists has converted from a believer in manmade catastrophic global warming to a climate skeptic."

The Senators write:

Allegre's conversion to a climate skeptic comes at a time when global warming alarmists have insisted that there is a “consensus” about manmade global warming. Proponents of global warming have ratcheted up the level of rhetoric on climate skeptics recently. An environmental magazine in September called for Nuremberg-style trials for global warming skeptics and CBS News “60 Minutes” correspondent Scott Pelley compared skeptics to “Holocaust deniers.” See: http://www.epw.senate.gov/fact.cfm?party=rep&id=264568 & http://www.cbsnews.com/blogs/2006/03/22/publiceye/entry1431768.shtml In addition, former Vice President Al Gore has repeatedly referred to skeptics as "global warming deniers."

This increase in rhetorical flourish comes at a time when new climate science research continues to unravel the global warming alarmists’ computer model predictions of future climatic doom and vindicate skeptics.

Allegre concludes:

Glaciers’ chronicles or historical archives point to the fact that climate is a capricious phenomena. This fact is confirmed by mathematical meteorological theories. So, let us be cautious. But the exposure of man’s responsibility as regards global warming allows us to sit idly by (the effect of the measures advocated will be felt only in half a century!). On the other hand, the crusade against extreme theories can be led with tangible results! However, as this is not fashionable, we choose to remain passive. In the meanwhile, the ecology of helpless protesting has become a very lucrative business for some people!

Which is more incredulous: That a long-time DAWG might actually recant, and, become active for a "not fashionable" cause, or that the only source for this news in America is a bunch of Republicans on a senate subcommittee? Wait - don't answer that.

Posted by JohnGalt at 3:17 PM | Comments (1)
But jk thinks:

Dammit, jg! If you keep supporting this "Obfuscation agenda," the US Senate is going to shut ThreeSources down.

"Glaciers’ chronicles or historical archives point to the fact that climate is a capricious phenomena."

Writing your own Taranto headline is left as an exercise to the reader.

Posted by: jk at December 4, 2006 3:58 PM

November 29, 2006

Oil, That Is

In case you were wondering...

    About half the oil and more than a quarter of the natural gas beneath 99 million acres of federal land is off-limits to drilling, the Bush administration says in a report that had been sought by industry to highlight environmental and other hurdles to development.

    Just 3 percent of the oil and 13 percent of the gas under federal land is accessible under standard lease terms that require only basic protections for the environment and cultural resources, according to the survey, which was ordered last year by Congress.

    An additional 46 percent of the oil and 60 percent of the gas "may be developed subject to additional restrictions" such as bans to protect animals and sensitive terrain during parts of the year.


Another example of government being the primary obstacle to lower gas prices. They're in the way, as usual.

Posted by AlexC at 1:12 AM | Comments (1)
But mdmhvonpa thinks:

Hey, the fact we buy oil abroad which funds terrorists is a good thing. I mean, when was the last time a terrorist tried to blow up a rock that the seven toed blind newt was using as a breeding créche. Now, if we could get Al Kookda to declare a fatwa against the flora and fauna of America as well ... oh, boy. The Nature freaks would ... well, freak.

Posted by: mdmhvonpa at November 29, 2006 11:12 AM

November 20, 2006

Monopolies

I came across this great ad from 1976 the other day, I wish I knew the complete context behind the it.

monopoly_thumb.jpg

It struck me as interesting in two ways.

First, it's an ad in National Geographic by an oil company taking an unapologetic look at the state of it's industry. It's actually pretty aggressive in it's own defense.

    You're looking at some of the brands and names of companies that sell gasoline. Some people say oil companies are a monopoly. If so, it's the world's most inept monopoly.

    This "monopoly" is so inept, it offers the world's richest country some of the world's most inexpensive gasoline.

    This "monopoly" is so inept that it lets everybody and his brother horn in on the action. Did you know that of the thousands of American oil companies, none has larger than 8.5% share of the national gasoline market?

    In fact, this "monopoly" is so inept, that you probably wouldn't recognize that it is a monopoly, because it looks so much like a competitive marketing system.

    People who call us a monopoly don't know what they're talking about.


Self-defense from a company or industry is always fascinating. The American Petroleum Institute did this a year ago when they compared their profit rates with other industries. Oil came in in the middle of the pack at about 7.5 cents on the dollar. Banking was at 20%.

There's also a great defensive cartoon from the 50's.

Secondly, thirty years later, some things have changed.

ExxonMobil, the largest American oil company now controls something like 15% of American gasoline refining, Roughly double the "largest" block in 1976. By contrast Coke and Pepsi are at 41% and 31% of the soft drink market, respectively.

Of course that's comparing apples to oranges. Coke and Pepsi compete globally. There is no OPEC of dyed sugar-water. XOM's market is artificially manipulated.

Looking the companies shown, you have ask yourself, how many of these are still around? Most have been merged into other brands. Perhaps only Sunoco, Shell and Tesoro are the only companies still existing in the same sense as 30 years ago.

Of the large oil companies listed above, Gulf, Sohio, Texaco, Conoco, Amoco, Getty, Chevron, Union, Arco, Union, Exxon, Mobil, Phillips 66, Hess and Citgo have all been acquired by another or merged with each other in some way... and that's without counting up the minors and regional players.

Overall, pretty neat stuff.

(graphic from GasSigns.org)

Update: An email from a friend of mine who really should be blogging.

    In 1976 the oil companies a.k.a. "big oil", were under attack not only for their usual evilness but also for the companies' operations known as "vertical integration". (A term that came and went like so much political wind.) Which meant they held ownership of upstream and downstream companies; the entire oil delivery mechanism. There was political talk about breaking that "monopoly" up.

    As ever, it was a politically motivated extortion threat generated out of the heat for Congress to "do something" after one or more of the '70s oil shocks. The McCain-Feingold act of the time, sorry, I can't remember its name, forbade the companies from donating directly to politicians. Political Action Committees (PAC)s were the result. I suspect the ad that you show - and a zillion others of the time - was financed by one of the oil company PACs.

    PACs probably still exist but have probably morphed into a "Section 1701" or some similar techno-lawyer rubbish term for the same thing.

Posted by AlexC at 2:25 PM

November 19, 2006

Dems to Raise Gas Prices

Apparently the latest drops in fuel prices have really sent the Dems into a titter.

To rectify this problem, it's time (yet again) to stick it to the oil companies.

    House Democrats are targeting billions of dollars in oil company tax breaks for quick repeal next year. A broader energy proposal that would boost alternative energy sources and conservation is expected to be put off until later.

    Hot-button issues such as a tax on the oil industry's windfall profits or sharp increases in automobile fuel economy probably will not gain much ground given the narrow Democratic majorities in the House and Senate.

    Incoming House Speaker Nancy Pelosi, in an outline of priorities over the first 100 hours of the next Congress in January, promises to begin a move toward greater energy independence "by rolling back the multibillion dollar subsidies for Big Oil."


So which subsidies are they going to do in?
    -Tax breaks for refinery expansion and for geological studies to help oil exploration.

    -A measure passed two years ago primarily to promote domestic manufacturing. It allows oil companies to take a tax credit if they chose to drill in this country instead of going abroad.


That's the top of their list.

Say hello to three dollar gas soon, and a screeching halt to the current boom in oil field projects and workers.

Posted by AlexC at 12:23 PM | Comments (3)
But jk thinks:

I'm a big fan of big oil, ac, please don't take my question the wring way, but: "Is it wrong to end subsidies in such a profitable industry?"

Precisely for the reasons that I would argue forcefully against windfall profits tax, the subsidies you mention seem anti-market. It seems if you craft some way to get government the hell out of the way, refinery capacity would skyrocket without tax breaks. Ditto for domestic drilling.

If gas costs three dollars without government subsidies, that's what it costs. Now a coffee subsidy...

Posted by: jk at November 19, 2006 1:36 PM
But AlexC thinks:

I don't think it should be anyone but the shareholders business what the profits of a company are, and "are they enough?"

I think the fact that a "subsidy" like this exists is a symptom of the fact that some government inspired imbalance in the free-market exists.

Rather than asking "Should be cancel tax breaks?" the question should be, "What has government done that we need to do tax breaks?"

In that sense, we agree. But it's government "solving" a problem of it's own creation.

In the end, we don't know what gas costs. It's being meddled with innumerable ways.

Posted by: AlexC at November 20, 2006 2:22 PM
But johngalt thinks:

I absolutely agree with AlexC, although it took his reply to jk's comment before I realized we'd both been snookered by NoCal Nancy's misleading terminology.

When is a subsidy not a subsidy? When the money at issue was looted from the beneficiary in the first place! Nancy nearly persuaded us of her delusion that those "multibillions" belong to "the people."

JK even referenced this in his comment: "...if you craft some way to get government the hell out of the way, refinery capacity would skyrocket without tax breaks, [i.e. getting government the hell out of the way.] By the time you include regulatory limitations, some of which are defensible but most are not, the burden upon "big oil" is disproportionate in the same way as the burden on individuals - those with a "greater ability to pay" are compelled to do so.

Posted by: johngalt at November 20, 2006 5:40 PM

October 29, 2006

The Power of Cane

Investor's Business Daily

    Bill Clinton's back, now touting tax hikes for ethanol to California voters. "If Brazil can do it, so can we," he said, claiming an ethanol switch ended Brazil's need for foreign oil. Once again, he's telling whoppers.

    Brazil did achieve independence from foreign oil all right. It happened this past April. But Clinton, true to form, doesn't quite recall the critical point showing how it was done.

    Here's a clue for the semi-retired former president and policy wonk: Brazilian President Luiz Inacio "Lula" da Silva didn't celebrate the oil independence milestone out in an Amazon sugar field.

    No, he smashed a champagne bottle on the spaceship-like deck of Brazil's vast P-50 oil rig in the Albacora Leste field in the deep blue Atlantic. Why? Brazil's oil independence had virtually nothing to do with its ethanol development. It came from drilling oil.


Brazil's independence has been touted by politicians all over the American left.

The numbers were never practical for the United States. There's simply not enough room to grow all of the necessary ethanol.

Turns out there isn't enough in Brazil either.

I wish I knew who to tip the hat to. Damn.

Posted by AlexC at 10:41 PM

October 24, 2006

Windfall Losses Rebate?

When oil prices were rising, oil executives were called in front of preening Senators to explain why -- dammit why -- they were making so much money. These "windfall profits" were deemed to be worthy of special taxation. After all, why should the oil companies get to keep the money they made?

I wonder if Debbie Stabenow will have a hearing to discuss tax rebates for big oil. It seems their profitability is hurt by falling prices as it is helped when they rise.
The Wall Street Journal reports:

oil_price_profit.gif
Even before the steep drop-off in prices, earnings had been blunted by side effects of the commodities boom. Oil-field costs have skyrocketed for many projects because of higher demand for everything from steel to software among energy companies eager to cash in on the boom. Competition for new prospects has heated up, ratcheting up auction prices for fresh exploration acreage.

If oil prices stabilize or drop further, cost inflation could also subside. But costs generally take time to catch up with swings in commodity prices. That poses a growing challenge to profitability in the short term.

Neil McMahon, a London-based oil analyst at Sanford C. Bernstein, says recent trends of lower commodity prices and higher costs mean quarterly results this time around aren't likely to offer much positive surprises for investors. In a note to clients Friday, he said he expects to see further evidence of cost pressure when companies report this week.


Commodity boom huh? Sure glad I didn't jump in on that. (Kidding, kidding.)

Posted by John Kranz at 10:20 AM | Comments (1)
But AlexC thinks:

I think we're perilously close to time for a Chrysler style corporate rescue.

Posted by: AlexC at October 24, 2006 11:49 AM

Google Shmoogle

Since JK's "gratuitous swipe" last Thursday, GOOG's share price has soared another 54 points, an increase of more than 12 percent in just two trading days. Which means it is finally almost 10 points above its all-time high of $471.66 on 11 January, 2006. I'm sure this comes as a relief to the many casual traders who bought in January since the share price has been largely under water since then prior to last week.

Google's year-to-date appreciation is indeed about 16%, but stodgy old Exxon-Mobil checks in with nearly 25% gain since January 1. And, has dividends to boot!

goog ytd.gif

Add to this that XOM's P/E ratio is 11 while GOOG's is 61 and the same dollar invested in Exxon delivers more than five times the earnings as does that slick tech fad.

When I said in January that paying $400 a share for Google would earn you the moniker "moron" it was because Google is the exact same formula that created (and burst) the 1999-2000 tech bubble: Hype and buzz and very little hard assets. If you want to ride that firecracker again then don't let li'l ol' me stop you!

Posted by JohnGalt at 12:54 AM | Comments (3)
But jk thinks:

Well played, friend, well played.

I'll agree with your premise of XOM over GOOG, but dispute that the current GOOG run is all hype or comparable to pets.com.

Does your cool charting tool do PEG ratios? I contend that Google's high P/E is supported by growth of earnings -- exactly what the bubble stocks did not have.

I should point out to anybody choosing sides that jg has a farm to bet and I lost everything on a start-up I was working for. I take my gratuitous swipes from a house of glass.

Posted by: jk at October 24, 2006 10:11 AM
But johngalt thinks:

I have to admit to not knowing what a PEG ratio is but I've since learned that it isn't generally a charted value, presumably because it doesn't change very fast. I also learned that a PEG ratio (P/E ratio divided by expected long term growth rate) of more than 1.0 is poor, less than 1.0 is good, and less than 0.5 is excellent.

Finance.yahoo.com lists the 5-year expected PEG ratios for GOOG and XOM as 1.58 and 1.53, respectively. These are virtually equal, which tells me that Exxon's earnings growth is not great (to be expected for the leading company in a mature market) and that Google's earnings growth is almost good enough to counteract its huge P/E ratio.

One may conclude that investing in Google is as wise as investing in Exxon Mobil, except for that insane share price. And why does Google keep it so high instead of splitting it down to the 25-50 range? I'm just guessing but I suspect the founders restrictions on the selling of shares are tied to number of shares instead of percentage of outstanding shares or dollar value. If shares are worth $500 each then they can cash out bigger faster. More investors buying Google only helps them more.

Posted by: johngalt at October 26, 2006 4:12 PM
But jk thinks:

Perhaps they're big Berkshire-Hathaway fans...

I brought up the PEG ratio to show that Google's higher multiple is supported by its highert growth rate.

Posted by: jk at October 26, 2006 4:23 PM

October 20, 2006

Black Gold

Most obvious geological prediction ever.

    A University of Washington economic geologist says there is lots of crude oil left for human use.

    Eric Cheney said Friday in a news release that changing economics, technological advances and efforts such as recycling and substitution make the world's mineral resources virtually infinite.

    For instance, oil deposits unreachable 40 years ago can be tapped using improved technology, and oil once too costly to extract from tar sands, organic matter or coal is now worth manufacturing. Though some resources might be costlier now, they still are needed.

    "The most common question I get is, 'When are we going to run out of oil?' The correct response is, 'Never,'" said Cheney. "It might be a heck of a lot more expensive than it is now, but there will always be some oil available at a price, perhaps $10 to $100 a gallon."


Any economist would have told you that.

We're not going to leave the oil age for lack of oil. It's going to because something new (and cheaper) showed up.

Posted by AlexC at 8:39 PM

October 9, 2006

Up Yours, Chavez

Blood is thicker than oil.

    In Alaska's native villages, the punishing winter cold is already penetrating the walls of the lightly insulated plywood homes, many of the villagers are desperately poor, and heating-oil prices are among the highest in the nation.

    And yet a few of the small communities want to refuse free heating oil from Venezuela, on the patriotic principle that no foreigner has the right to call their president "the devil."

    The heating oil is being offered by the petroleum company controlled by Venezuelan President Hugo Chavez, President Bush's nemesis. While scores of Alaska's Eskimo and Indian villages say they have no choice but to accept, others would rather suffer.

    "As a citizen of this country, you can have your own opinion of our president and our country. But I don't want a foreigner coming in here and bashing us," said Justine Gunderson, administrator for the tribal council in the Aleut village of Nelson Lagoon. "Even though we're in economically dire straits, it was the right choice to make."

Posted by AlexC at 10:04 PM | Comments (1)
But mdmhvonpa thinks:

Well, shit. I'm guessing that the DNC is not really all that interested in the Aleut Vote after that.

Posted by: mdmhvonpa at October 9, 2006 10:47 PM

October 5, 2006

Dead Sea Oil

An Israeli company has found some small amounts of oil in the Dead Sea.

    Initial tests have found that the site would yield between 100 to 150 barrels daily, said Eli Tannenbaum, geologist for the Ginko oil exploration company. While this is minuscule by global standards - No. 1 producer Saudi Arabia produces 9 million barrels a day - Tannenbaum said there are signs that larger amounts of crude are nearby.

This stuff is everywhere. You just have to have the right market to produce it.

Posted by AlexC at 8:26 PM

September 30, 2006

The Sky is Falling!

For my record, first time ever, fitfh consecutive blog post I'm going to talk about ... alternative energy. You know, the alternative you can buy at any street corner for less than the cost of Perrier - gasoline. Some of what I'm about to say is based on this article in India's Rediff.com. Much of the rest is pulled straight from a dark place so fact checking by AlexC is encouraged.

Gasoline comes from oil. Oil comes from geologic deposits underground. The entire earth has been surveyed and all existing oil reserves have been located, mapped and accounted for on a gigantic spreadsheet at Iranian Oil Company. In fact, A M S Bakhtiari there says "peak oil" (the day when oil production reaches its maximum and begins a steady decline until it is gone in 40-50 years) will occur in 2006-2007. Shell oil experts disagree. They posit that the date will actually be in 2025 or later.

So who is right? Probably neither. Energy economist C M Lynch says there is "no visible peak."

All of this is reminiscent of the "population explosion" hysteria in the seventies. That fallacious prediction was based on extrapolation of then current birth rates, ignoring the reality that birthrates change over time. Similarly, the "peak oil" and "no more oil" predictions are based on current KNOWN reserves and historical rates of discovering new reserves (like Chevron's recent find in the Gulf of Extralegalalienville). But rates of discovery, like rates of baby making, are not constant over time. Large areas of the US remain untapped because the oil deposits are relatively small. Technology now exists to pinpoint these pockets and they are becoming economically viable to collect. And the prospect of actually running out of oil will cause monumental efforts to locate more and more oil in the coming decades.

These and other factors make the fossil fuel "alternative" a very attractive one. Not the least of these factors is that many currently vogue fuels like ethanol and bio-diesel have an EROEI factor (energy returned on energy invested) of less than 1. Like bin Ladin's, the reports of fossil fuel's death have been greatly exagerated.

Posted by JohnGalt at 11:56 PM | Comments (8)
But johngalt thinks:

Hmmm, no commentary by AlexC yet. Either my "dark place" punditry is spot-on or he's commuting to or from the 49th state again.

Posted by: johngalt at October 1, 2006 5:19 PM
But Perry Eidelbus thinks:

An Iranian talking about Peak Oil? I'd sooner believe Ted Kennedy talking about how alcohol makes one a better swimmer. Hmm, wonder why Iranians would be talking about this. Could it be because we're finding new deposits all the time, depressing prices and thus rendering Madman Mahmoud's "oil as a weapon" as effective as spitballs?

I call the Peak Oil doomsayers, the ones who genuinely believe we're running out as opposed to those trying to create a false panic to drive up market prices, Malthus' philosophical descendants." I look to much earlier than the 1970s, John, for the first instances of "population explosion" Chicken Littles: we're all living proof that Malthus' 1798 prediction of mass starvation was pretty boneheaded. Similarly, the oil doomsayers are being proved wrong as we speak.

http://eidelblog.blogspot.com/2005/05/malthus-philosophical-descendants.html

Last year I wrote about John Tierney's bet with oil doomsayer Matthew Simmons. The latter thinks we'll have such a scarcity that by 2010 the price per barrel will be over $200 (in 2005 chained dollars). In hindsight, I think they shouldn't have bet an absolute number of dollars ($5000), because what if the price is $199? It would have been better to negotiate some sort of option, where Tierney can make his own prediction of oil's future price. That way the winner's profit would increase with how correct he was.

http://eidelblog.blogspot.com/2005/08/call-it-dumb-call-it-clever-ah-but-you.html

Let's say Tierney thinks oil will average $60 per barrel for 2010, so they contract that Simmons will buy 100 barrels from Tierney at $130 each (the midpoint). If oil averages $60 per barrel, then Tierney will profit $70 per (less broker fees). If oil averages $200 per barrel, then Simmons will profit $70 (again less broker fees). And the more the winner is correct, the more he'll profit.

Anyway, in that entry, I noted Don Luskin pointing out how our *proven* oil reserves are constantly increasing. As you guys noted last month, U.S. reserves are now up by an estimated 50%, 15 billion barrels. That's on top of the Chinese buying PetroKazakhstan (owned by Canada -- will the wonders of globalization never cease?) so they can explore tar sands in Alberta, and OPEC nations developing their own reserves. The latter for years have *already* been pumping (pun intended) profits back into exploration and development.

Strictly speaking, I won't say "we" should be going nuclear. There are lots of us who are content with fossil fuels for specific reasons, although I think nuclear reactors are great for household electricity. All I ask is that you don't have to subsidize my choices, that I don't have to subsidize yours, and that you don't force me to trade in my gas-powered car before I'm ready. The new nuclear pellets are very promising indeed, but the Department of Energy subsidized the project, while Congress still has environmental regulations that keep nuclear power too expensive, or entirely restricted in a lot of jurisdictions. Sigh.

Indian Point, which is pretty antiquated, and I are on opposite sides of Westchester County. There are two radii for determining evacuation, depending on the severity of any problems. I'm inside the second, I think, but I don't worry about it. The biggest problems are the perpetual ones keeping the damned warning sirens working. The occasional reactor problem is far less dangerous to me than the idiot drivers along I-684 and Route 22.

The environmentalist nutjobs are always trying to shut down the reactor. They know they can't, but their lawsuits make IP much more expensive to operate. Thus its electrical output is much more expensive than it should be, in addition to all the environmental restrictions. Some putz years ago tried telling me that nuclear energy is the most expensive kind, and I had to educate him on why.

Posted by: Perry Eidelbus at October 1, 2006 9:36 PM
But jk thinks:

I actually think we're all in agreement here (mirabile freakin' dictu!)

Sorry for the side road. I certainly don't want to take away anybody's gasoline or subsidize any alternative. I believe that nuclear power is economically feasible without subsidy if we could protect the utilities from excessive regulatory burdens.

Posted by: jk at October 2, 2006 10:27 AM
But mdmhvonpa thinks:

Hmmmm, if all the parties agree, does that mean that 3Src has jumped the shark? All here in favor of building Nukes and stop buring oil for electric say Yeah! All against? (crickets...)

Ok, next order of business is that confounded wormhole technology allowing us to suck matter from the core of a black-hole and convert it directly into energy. If that damned Enron Front company had not failed, we could have kept it under wraps until our Alien Associates gave us the key-codes to unlock the regulator. When is Karl getting back from Plantet Halliburton?

Posted by: mdmhvonpa at October 2, 2006 11:38 AM
But AlexC thinks:

I disagree. Not all of the earth's surface has been surveyed for oil. I'd venture to say that most of the oceans have NOT been completely surveyed.

In fact, known oil fields are re-surveyed as seismic technology improves.

Not to mention improved methods of production.

Let's conserve (it's good to be efficient), and let's explore (it's good to provide what people want). But let's quit with the hysteria.

Posted by: AlexC at October 2, 2006 7:32 PM
But johngalt thinks:

Thanks for sharing your thoroughly enjoyable prose on these here pages, MDM. (This is just a glimpse of his greatness, folks. For more see http://www.mdmhvonpa.blogspot.com/)

And yes, we are still all in agreement as my assertion "all existing oil reserves have been located, mapped and accounted for..." was said with tongue in cheek. I was counting on the "gigantic spreadsheet at Iranian Oil Company" for the proper context. (Poorly written, I know.)

Excellent conclusion AlexC: Quit with the hysteria. (But how else for the environmentalist nutjobs to change what "people want?")

Posted by: johngalt at October 3, 2006 11:33 AM

September 22, 2006

Chavez Offers US Foreign Aid

Grrr.

    Margaret Williams of Hughes in the Interior said it doesn't matter who's providing the heating fuel, which costs about $6 a gallon in the Koyukuk River village of 69.

    "We sure could welcome it," she said. "As long as we don't have to pay."

    In the Kobuk River village of Ambler, heating fuel is running more than $7 a gallon.

    Residents in the village of 283 and surrounding villages are ecstatic, said tribal administrator Virginia Commack. "It's a miracle," she said.

    Each household will save more than $700 in fuel costs this winter, freeing cash for people to spend on gasoline so they can hunt more caribou and moose, she said.


Ooh. There's a bargain for liberals. They've got to stick it to the caribou so that Chavez can stick it to the President.

An unsigned Anchorage Daily Worker News editorial piles on the snark.

    Alaska has a similar program funded entirely with federal dollars. The Low-Income Home Energy Assistance Program distributes funds to needy Alaskans to help pay the high cost of heating oil. But federal funding is at the same level today as it was 20 years ago, which means it's far short of what is needed. Gov. Frank Murkowski this year asked legislators to appropriate $8.8 million in state cash to supplement the program, but lawmakers gave the governor -- and low-income Alaskans -- the cold shoulder and rejected the request.

    Good thing for those Alaskans that another country is coming to help.

    BOTTOM LINE: If you're cold and can't afford fuel oil, who cares about the political motives of the giver?

Posted by AlexC at 12:34 AM | Comments (1)
But johngalt thinks:

Doesn't the state of Alaska give each and every state resident an annual oil royalty check in the thousands of dollars? How can ANY Alaskan claim to not afford heating oil?

As for Chavez's stunt, even 100 million barrels of free oil given to the proletarians of 18 states is not going to change any votes. How many proletarians vote GOP anyway? It's like paying an eskimo to wear a coat!

Posted by: johngalt at September 22, 2006 1:19 AM

September 21, 2006

Oil

$61.92 a barrel, if you haven't noticed.

Posted by AlexC at 11:11 PM | Comments (1)
But johngalt thinks:

Excellent. I'll take three this month. Would you have one of your boy's help me out to the truck with them?

Posted by: johngalt at September 22, 2006 12:25 AM

September 15, 2006

Blaming Bush, Again

MyDD's Chris Bowers looks at George Bush's approval ratings vs the price of gasoline.

    Bush's approval is not up because of his speeches on terrorism, or some other baseless, purely conjectural reason. Bush's approval is up because gas prices are down. This is probably related to releasing part of the strategic reserves this spring, just as in 2004 around election time it was related to making a deal with the Saudis to increase oil production. It didn't stop raining because God stopped peeing. Bush's approval is not up because he is using better talking points in his speeches.

    That gas prices are dropping around election time is no surprise at all. In fact, I predicted it would happen five weeks ago. When a power-mad administration is this marinated in the oil industry, and when it isn't exactly a state secret (except, apparently, for journalists) that Presidential approval has long been tied to the price of gas, of course the Bush administration was going to do something to lower the prices of gas around election time.


I don't think Chris has any idea about the oil supply line and market reaction times.

If releasing oil from the Strategic Petroleum Reserve in the spring cuts prices in September, how can Saudi production increases "around election time" have an immediate affect on gas prices? Shouldn't they both be instant? or both delayed?

The post begs the question, why "a power-mad administration this marindated in the oil industry" that has enough control over the price of oil, would allow fuel prices to rise? Why not keep us all fat, dumb and filling our Hummers? It's easier for a President to get his way if he's liked.

But don't sweat the details. According to Mr Bowers, there's no need for concern about the numbers unless the Republicans can gain another three or four points.

He doesn't say what that means, but since we're in conspiracy mode, I think it means that Republicans are in Diebold range.

Update: Incidentally, lest you believe that this is a fringe liberal idea... here's a picture of Chris Bowers meeting with former President Bill Clinton the other day.

Posted by AlexC at 2:59 PM | Comments (1)
But jk thinks:

I disagree AlexC. We're not quite in Diebold range yet and I think we'll have to keep African-Americans from voting.

Posted by: jk at September 15, 2006 3:20 PM

September 11, 2006

Energy Users Pay Kyoto Cost

I love the idea of a "Chinese Wall" between a newspaper's Editorial and News departments. The New York Times could add a few bricks and touch up the mortar of theirs.

But I wonder if the Wall Street Journal news staff writers ever go out to lunch with -- or read the work of -- their counterparts on the back of the A Section.

Jeffry Ball, in a bylined piece today (paid link) delivers the miraculous news that energy users are paying the costs of Kyoto compliance, while the utilities have played the market disruptions to their advantage.

Because CO2 emissions now carry a cost, Germany's largest utility, RWE AG, is spending to improve the efficiency of its aging coal-fired power plants, including its biggest power station here in the country's industrial heartland.

Carbon dioxide also is padding the profits of RWE and other utilities, because they have been able to raise electricity rates to more than cover the new costs. Manufacturers that use a lot of juice are fuming. "The utilities get a huge amount of windfall profits, and the energy users get windfall costs," complains Markus Weber, a manager responsible for CO2-allowance trading at steelmaker ThyssenKrupp AG.


I don't think this caught Gigot & Co by surprise. This is a pretty obvious conclusion and a good reason to not follow the articles suggestion that such controls are headed across the Atlantic.
Although the U.S., the world's biggest emitter of CO2, has rejected the Kyoto Protocol, many U.S. business leaders say it is only a matter of time before the country imposes some sort of carbon constraint. Earlier this year, Congress discussed how such a nationwide cap might be structured. Last month, California passed a law that will impose the U.S.'s first cap on global-warming emissions. Now the state has to figure out how to put that mandate into practice.

I repeat my call. We can debate its existence and causes, but let's agree to not damage the economy while we determine the best course to take.

Posted by John Kranz at 10:38 AM

September 5, 2006

Texas Tea

Black gold, that is.

    A trio of oil companies led by Chevron Corp. have tapped a petroleum pool deep beneath the Gulf of Mexico could boost the nation's reserves by more than 50 percent.

    A test well indicates it could be the biggest new domestic oil discovery since Alaska's Prudhoe Bay a generation ago. But the vast oil deposit roughly four miles beneath the ocean floor won't significantly reduce the country's dependence on foreign oil and it won't help lower prices at the pump anytime soon, analysts said.


...
    Chevron's well, called "Jack 2," was drilled about 5.3 miles below sea level. Chevron has a 50 percent stake in the field, while partners Statoil ASA of Norway and Devon Energy Corp. of Oklahoma City own 25 percent each.

    During the test, the Jack 2 well sustained a flow rate of more than 6,000 barrels of oil per day, but analysts and executives believe the payoff could be much larger than that.


It's hard to understand how they know they've got a super-mega field based on one well and a few tests... no doubt there is some insider information that we're not privy to, but it's good news for our energy interests.

... but it goes to show that all the easy oil's been had.

Except for that enormous patch in Alaska.

Posted by AlexC at 5:19 PM | Comments (8)
But jk thinks:

Josh at The Everyday Economist reminds that this was caused by high oil prices, i.e. the market working: http://everydayecon.wordpress.com/2006/09/06/oil-discovery/

Not to be a wet blanket, but where are we going to refine this? How about refineries in Mexico?

Posted by: jk at September 6, 2006 11:40 AM
But silence dogood thinks:

Thank you johngalt! Now, if you don't mind me usurping your point, how about applying it to ethanol, wind, solar, nuclear, etc? That being, why is the argument against all these things that in and of themselves and with current technology that they will not single handedly meet all our energy needs? It seems akin to the Wright Brothers looking at their Flyer, concluding that it will never fly passengers across the Atlantic, and thus deciding that it is not worth it.

Posted by: silence dogood at September 8, 2006 3:19 PM
But jk thinks:

May I suggest Federal subsidies as the difference? If Wilb & Orv had cozied up to Senator Thurmond (I think he was there) and got a hunk of US largesse to promote aviation, I think you might have heard complaints.

I love alternatives, I just question funding those that don't seem viable. Ten points for including nuclear though, I bet all ThreeSourcers are in. You're a uniter, not a divider.

Posted by: jk at September 8, 2006 3:28 PM
But silence dogood thinks:

Thanks JK. I too am a nuclear fan. There is waste, yes, but everything is a tradeoff - the manufacture of solar cells and batteries has environmental effects as well. As for funding are you really going to claim that oil exploration is not federally funded? There are some whopper big tax breaks out there which seem to me to be funding by a different name.

Posted by: silence dogood at September 9, 2006 9:30 AM
But silence dogood thinks:

Oh yes, maybe Wilb and Orv didn't get get federal funds, but those confounded flying machines were only up in the air for a little over a decade when Uncle Sam noticed their military application. From then on it has been military spending that has given us every major aviation advancement. It's hard to argue that commercial aviation would not have grown on its own, but I don't think we would have gotton from Kitty Hawk to commercial trans-atlantic service in under 40 years without some Federal funding.

Posted by: silence dogood at September 9, 2006 9:43 AM
But jk thinks:

Stop me if I'm beating this to death but:

I'll join you in cutting subsidies to oil, they're not there to celebrate my beliefs. Yet if I wave my magic wand and remove them, the oil business carries on, barely wobbling in its axis. If I remove Ethanol subsidies the Ethanol industry shrinks to one tenth of its size.

It's also hard for me to take military procurement out of the free market and in with subsidies. Buying fighter aircraft that advance technology seems pretty Hayekian to me.

Posted by: jk at September 9, 2006 10:25 AM

August 8, 2006

The WSJ Imitates AlexC

The Prudhoe Principle


Opponents of opening the Arctic National Wildlife Refuge (ANWR) to oil drilling have long argued that the supply wouldn't make a difference to prices. Well, that claim took a spill yesterday with BP's announcement that it is shutting down its operations at Prudhoe Bay due to a damaged pipeline that could take months to patch.

U.S. crude soared $2.25 on the news, taking oil to nearly $77 a barrel, with experts predicting another five- or 10-cent a gallon price increase at the retail gasoline pump -- possibly to a new high. This market reaction came as some surprise to various newspaper scribes and politicians, given that Prudhoe Bay "only" supplies about 400,000 barrels a day, or less than 2% of daily U.S. oil consumption.

These are the same folks who've delighted in informing Americans in recent years that opening up nearby ANWR to drilling would "only" result in an extra one million barrels a day. This argument -- that ANWR isn't worth the effort -- might have some currency if oil were plentiful and gas prices were still "only" $1.50 a gallon. But with the margin between global oil supply and demand so thin, any supply counts. ANWR is exactly the sort of home-grown oil cushion that would help smooth out supply disruptions from the likes of Katrina or the BP leak, if "only" Congress could get a clue.

As it happens, House Republicans are mounting yet another effort to get ANWR legislation past John Kerry and his fellow Senate filibusterers. A majority of the Senate supports it. The latest bill promises to devote federal ANWR revenues to "alternative energy" programs, an enticement that has already gathered some Democratic support. If Congress really wanted to impress voters when it got back from its August recess, it'd use the BP mess as an excellent reason to increase U.S. energy supplies.


I may have to turn in my ThreeSources Optimist badge, but I see this as a net loss for ANWR. This will contravene the assertions that the work will be environmentally friendly and the environmentalists will use it to play up the dangers.

Posted by John Kranz at 6:14 PM | Comments (3)
But AlexC thinks:

I disagree.

It's an example of them catching the problem AHEAD of time. It's no secret that things will degrade in a 30 year-old field.

They were watching.

Posted by: AlexC at August 8, 2006 6:27 PM
But jk thinks:

I hope you and Mr. Gigot are right. Once again, though, I find myself in the position of hoping the voter is paying attention and being rational. While the anti-ANWR folks can just show pictures of oil covered birds from the Valdez spill.

Posted by: jk at August 9, 2006 4:41 PM
But johngalt thinks:

It's no secret to anyone who's mechanically inclined that pipelines require maintenance. Voters, on the other hand...

But what I wonder is, why didn't it occur to BP? How many times do we hear about pipelines being shut down for repair? Don't most pipeline operators have plans in place to minimize downtime? The fact that this one is operated by BP, the oil company that apologizes for being an oil company, makes me wonder if they have any idea what they're doing up there.

Posted by: johngalt at August 10, 2006 12:33 AM

Political Opportunists

I've come to the conclusion that Democrats simply don't stand for anything outside of bashing big business.

Now some are calling for Congressional investigations. Congressman John Dingell, the House Energy and Commerce Committee top Democrat.

    "This sudden loss of [400,000 bbls of] production will dramatically increase oil prices and the American people will be footing the bill for this combined failure of DOT's regulatory oversight and BP's corporate responsibility," he said.

    Congress is now out for its month-long summer recess, and any hearings on the shutdown would not take place until lawmakers return in early September.

These Democrats are the same ones that argue that ANWR's additional oil production will only be a drop in the bucket.

Especially when the Energy Information Administrations thinks that there might be anywhere from 600,000 to 1.9 Million bbls per day available from ANWR.

Either an additional 1,000,000 bbls is important to our nation, or 400,000 isn't.... and based on the doomsday rhetoric from the media regarding the Prudhoe Bay shutdown, it sounds like it is.

Posted by AlexC at 8:06 AM | Comments (3)
But mdmhvonpa thinks:

I heard that nearly 5 barrels of oil spilled ... where is the Sierra club when you need them! Greenpeace? Hello?

Posted by: mdmhvonpa at August 8, 2006 12:43 PM
But AlexC thinks:

No no no.... Despite oil only being measured in barrels, you have to say 5*42 = 210 gallons!

Posted by: AlexC at August 8, 2006 6:29 PM
But johngalt thinks:

795 liters! (pardon me, "litres")
3,360 cups!
161,280 teaspoons!
Wait... 795 million microliters!!

Posted by: johngalt at August 9, 2006 1:19 PM

July 20, 2006

Subsiding the Rich(er)

Does the PA government really need to be involved in this business?

    The state will give $500 to Pennsylvania residents who buy a hybrid electric vehicle.
    State Sen. Jake Corman said it's the second round of funding through the Hybrid Electric Vehicle program.

    The initial rebate program issued $1.5 million in rebates in fewer than 10 months.


Let's call it what it is, a handout to the rich.

Hybrid owners make on average $100,000 per year.

An average family's income? $70,700

Posted by AlexC at 4:25 PM | Comments (6)
But steve f thinks:

well a part of that is wrong. Smug people who brag about own hybrids make over 100k.

a prius is no more then a accord, camry, legacy or maxima.

average income of these car owners are middle america at 45-70k.


If i had the money for a Prius i'd prolly put some LIthium polymer batteries in at. If your comute is under 150 miles round trip youd burn 1 gallon of gas.

Posted by: steve f at July 20, 2006 8:09 PM
But steve f thinks:

for some dumb reason it wont let me post about e85.

E85 is pointless. Here is why. Its subsidized by the state and federal goverment .

here is how much 60-80 cents a gallon.
its generally 20-30 cents a gallon cheaper.

What happens if we remove all the subidations?
Well gas around here is $3.20 a gallon we dont get e85 here so lets jsut take off 25 cents a gallon and be in the middle of the raod

Okay so that makes E85 2.95 a gallon here. Lets remove the goverment kick backs state and federal 70 cents a gallon.

so now E85 is $3.65 a gallon. But theres more goverment pork barreling going on here. on raw corn. its very high corn is one of the indursties where you make money throwing the crap out. So if we remove that it would ad about 15 cents a gallon.
so now E85 costs $3.80 a gallon. so it costs 60 cents a gallon more.
But sadly there is even more. E85 has 20% less BTUs then gas. So now you gotta buy 1.2 gallons of e85 to go the same distance on gas.
That now makes gas $4.56 a gallon to go the same distance.


Now here are problems. E85 cant be put in a pipeline it collects water so it must be shipped via rail and truck. So if it was to be offered anywhere out of the Mid west then it would go up about another 50 cents if a refinery wasnt with in about 500 miles of you.

Now for those who like in smog state where the MTBE was replaced with 10% ethanol. This is a reason why your gas is abotu 20 cents a gallon above the national average. Since ethanol has less energy then gas whats the impact on your MPG?

just about nothing. Here is how you can figure it out. e85 85% ethanol 15% gas. yet it takes 1.2 gallons to get the same energy as gas.

So take 1.2 and devide by 85% thats the impact of each percent of ethanol has on the BTU value of gas since the goverment requirs 10% ethanol in 15 states thats 1.4% less MPG then pure gas.

Why does the govermetn make us get it?

Good question back in the day it would trick the car into running lean so it wont pollute as much.

This has been made obsolete with the invention of the o2 sensor. yes its been obsolete since modern electronic fuel injection IE 20-25 years ago.


So what good does ethanol do? Even with the engery needed to produce it. Its carbon nuetral which means it takes the same amount of carbon from the earth when its made as co2 as it makes


steve

Posted by: steve f at July 20, 2006 8:26 PM
But jk thinks:

Steve. Thanks for the comments. I am especially interested in O2 sensors’' obsolescing oxygenated fuels. We have a 10% mandate in the Colorado Front Range. If you have a link to any information on that, I'd love to read it. I'll Google a bit.

Regardless of the income and pricing, there are two huge flaws with this. One, you are asking people who cannot afford a new car to pitch in $500 for someone who can. And two, you are interfering with market innovation mechanisms. Pennsylvania will be sending $500 checks to hybrid owners long after better technology is available.

Posted by: jk at July 21, 2006 9:55 AM
But mdmhvonpa thinks:

You know, I should buy a hybrid just to get my state income tax back. Spite, it's what's for dinner!

Posted by: mdmhvonpa at July 21, 2006 11:43 AM
But jk thinks:

Good for Yoooooou!!! (with a South Park "thumbs-up")

In all seriousness, I don't see it at all wrong to accept a tax break even if you disagree with it. You pay enough taxes with which you don't agree.

Posted by: jk at July 21, 2006 11:57 AM
But Silence Dogood thinks:

JK, I'll put in an unsubstantiated thought on oxygenated fuels, according to a CU professor that my buddy used to work with (part of my vast liberal left network), all the testing was done at standard temperature and pressure. This is common for chemical experiements, but it was instituted before the effects could be proven here at 5200 ft.

Posted by: Silence Dogood at July 22, 2006 12:45 PM

June 25, 2006

The Case Against Ethanol

Jeffrey Alan Miron

    The first alleged benefit is, in my view, routinely overstated. There is no "oil weapon" because Middle East oil producers must sell their oil somewhere. In a world market any refusal to sell to the U.S. is irrelevant.

    The second and third alleged benefits are also likely emphemeral. Given that ethanol production requires substantial energy use, any reduction in pollution or greenhouse gases has to be minor.

    So who benefits from ethanol subsidies? Corn farmers in the Midwest and the politicans who have caved to their interests. Taxpayers and the economy are the losers.


The greater Philadelphia area has recently had a 10% Ethanol blend introduced into the system. What does that mean?

Gas is still about $3.05 for the cheap stuff. In neighboring Berks County, but "outside" the area, I paid $2.83. I've always attributed the discrepancy due to the boutique blends, but it's never been so large.

Not to mention since the switch, our Mini Cooper has had trouble on it's first start in the morning. So much so that we switched from Premium to Midgrade on recommendation from Mini. I'm also convinced that my highway mileage in the Magnum has dropped from 27-ish to about 24.

Posted by AlexC at 12:25 PM | Comments (3)
But jk thinks:

For a couple of decades, the Colorado Front Range counties have had an "oxygenated blend" of at least 10% Ethanol or MTBE mandated in the winter months.

When it was enacted, my mechanic begged me not to put “that stuff” in my 1979 280Z. But driving 100 miles to refuel is a losing proposition.

I didn't test mileage or anything but after a lot of fear, I don't remember anyone having troubles. Are we paying more? Hell yeah, but that's government intrusion fer ya. (And I'd've dreamed of 24 mpg in that Z...)

Posted by: jk at June 25, 2006 4:18 PM
But TrekMedic251 thinks:

"Given that ethanol production requires substantial energy use, any reduction in pollution or greenhouse gases has to be minor."

I've always been a believer in market-driven technology. At some point, demand for ethanol will produce:
1 - A sensible network of delivery, similar to the oil pipelines in place now

2 - Higher-yielding corn strains, capable of producing more ethanol per pound

3 - A more efficient method of converting the corn to ethanol.

Just a reminder, Brazil, which is swimming in sugar cane, has a mandate to go all-ethnaol by 2011.

Posted by: TrekMedic251 at June 25, 2006 10:11 PM
But jk thinks:

Or, in a free market:

4 -- It will be shown to be non viable considering the climate at his latitude and the opportunity costs for arable American farmland.

Sadly, #4 will be not be given a chance. The Greens and the Ag lobby have both parties too frightened to concede that.

Posted by: jk at June 26, 2006 10:49 AM

June 12, 2006

Cheap Oil

Platts (don't you read this everyday?)

    Oil prices are "very likely" to fall from current levels of around $70/barrel to $40/barrel in the medium term and could dip as low as $25/barrel in the longer term as new reserves are developed, BP chief executive John Browne predicted in an interview published Sunday.

    But Browne, talking to German magazine Der Spiegel, said he expected prices to remain high in the short term.

    Asked whether he though it possible that prices, currently trading above $70/barrel, were likely to return to levels below $40/barrel, Browne said: "Absolutely. Prices can hardly be expected to drop sharply in the short term, but it is highly likely that in the medium term prices will be at an average of around $40. Very long-term, even a price of $25-30 is conceivable."

    He did not define short, medium and long term.


Cheap energy drives our economy. But it's also a testament to the strength of our economy that it's doing so well with high oil prices.

It would be out of control with $25/bbl oil!

Tip to Cato@Liberty who writes...

    The interesting thing to me about the “are we running out of oil” debate is that those who know the most about the oil business and with the most at stake in the answer - the major investor-owned oil companies - by and large aren’t worried. The further away you get from the oil producers themselves, the more you encounter worriers.

True story. The oil patch workers I work with are not concerned with "peak oil." At least not "global peak oil."

Sure, each field has a peak oil event. But the real key is dollar / barrel lifting costs. At some level, depending on the field, it's no longer economical to produce. Operations & Maintenance costs eventually become too high.

But peak oil? It's not an issue. Because globally, we'll never reach it.

Posted by AlexC at 10:43 PM | Comments (4)
But johngalt thinks:

Which do you think will appear in the Smithsonian transportation museum first: Hummer or Prius?

Posted by: johngalt at June 13, 2006 2:35 PM
But AlexC thinks:

It depends. How heavily armed is the Hummer?

50 caliber roof mounted lead throwers?

Posted by: AlexC at June 13, 2006 3:08 PM
But silence dogood thinks:

Yes, but what you are (correctly) saying is that it is more about production capacity and production and refining costs than about finding resources. As to the power and knowledge of Exxon and BP executives, their companies are really small potatoes compared to the big boys, the governments of Russia, Saudi Arabia, Iran, Iraq, and Venezuela. Which of these is so stable that their investing in oil production infrastructure for the long term is a good bet?

Posted by: silence dogood at June 13, 2006 3:09 PM
But johngalt thinks:

Actually, I think Iraq is probably the most stable of those you cited. But Silence is right. American oil companies really should get off their asses and start producing from the known resources in and around our own country. What the heck are they thinking?

(Sorry, I've been in an unusually beligerent mood ever since the MSM failed to find a cloud around the silver lining of al Zarqawi's al destruction.)

Posted by: johngalt at June 14, 2006 1:45 AM

June 7, 2006

"Defending Yourself"--Comment

Thanks AlexC!! I enjoyed that!! I recommend the "Destination Earth" video, too; here is what I say:

Once upon a time, people had a much cleaner epistemology -- for the non-philosophers, that means they could understand the world sharper and more clearly, because they followed better rules of logic and reasoning than most people now-a-day. (Well...should I say, simply, they followed rules at all!!)

Following the post of AlexC (thanks!!), I highly recommend you watch the short cartoon “Destination Earth”, made in 1956.

Here is a good review of it:

Reviewer: jr0dy - - December 26, 2005
Subject: Makes Economic Sense

This was a great piece of animation and an even better explanation of market forces. Essentially, Ogg is any statist, command economy that publicly owns the means of production - most likely an allusion to Stalin, particularly because of his mustache. The sequence that shows the Martian energy source as an enslaved Martian running on a gear is probably allegorical for the fact that under Stalin's rule, his economic plan consisted primarily of collectivizing farms, seizing all crops produced, and selling them and using the money to invest in state-owned industry, despite the mass starvation of those working the farms. A theme of Austrian economics, particularly F.A. Hayek's variety, is the fact that collectivism is slavery - which is exactly what it is shown as in this film. Competition, the use of market forces to more efficiently distribute scarce resources, is obviously the better alternative. I also loved the way in which Ogg arbitrarily chose the Earth as Colonel Cosmic's destination - a great critique of central planning, as essentially all decisions made by planners are misinformed and to a large degree arbitrary. Only the free market can provide reliable information and provide a guide as to where resources would be best allocated. In addition, I particularly enjoyed the way in which it showed that the oil industry has its own costs with which it must contend, showing why it cannot simply be distributed freely, as some people seem to think it should be. Furthermore, price acts as a signal and a method through which oil can be rationed and distributed to those that need it most urgently. When price is high, it acts as a signal not only to current oil producers to rev-up production and increase quantity supplied, but also acts as a signal for new producers to enter into the market. This is where competition comes into play. The more firms acting in a market, the higher the liklihood that some will invent new cost-cutting measures that will allow them to cut prices and supply the consumer with more oil at a cheaper price, essentially the paradigm of any free economic system. Our own economy was consistently a laissez-faire prior to the Progressive movement of the early 20th Century - it worked, plain and simple, and it was the most efficient and best for all involved; there is no "optimism" necessary. I do not consider this film propaganda in the least, but instead a call to return to the economic system that served us so well in the past. Sure, perhaps a laissez-faire system would be the best for the oil companies that produced this film, but the truth is it would be the best for anyone and everyone; the film serves as a great example of the way in which the private ownership of the means of production can bring about an unprecedented high standard of living, and in the Martian case, facilitate the overthrow of a totalitarian dictator. The Martians did not want to be forced into going to see Ogg and Colonel Cosmic speak, let alone labor for Ogg as he told them to, they wanted to do their own thing, decide how best to apply their own faculties and labor to better themselves - shouldn't everyone be given that ability? C'mon Americans, if the Martians gained this ability, shouldn't we reclaim it?

I highly recommend the cartoon. It gets a lot right, and is a joy to watch. You will be hard-pressed to find anything like it today.

Unfortunately, the film makers did not grasp that capitalism is based on natural, individual rights. It is NOT based on "competition." Competition is a secondary by-product -- one that has great benefits, as the film points out, but still secondary.

Yes, they point out the importance of freedom, but still, that is not fundamental enough. What grounds freedom in reality? Only the concept of natural, individual rights can do that. You have freedom in society because, in this universe, you are rational and self-sovereign, and own what you create -- if you are the cause of something, it is proper to you...i.e., it is your property. That applies to the good you do, and any harm or evil you do -- you are responsible, and reap what you sow.

Since you are rational and self-sovereign by nature, it is right and proper that you should be free in a social context -- i.e., that you should not be subject to coercion by other people. But that means only coercion they initiate; they are free to defend themselves against any coercive action you might make against them. It is proper that each person take whatever action he sees fit to take, as long as he does not initiate force against another.

It would be better if the film makers pointed out how capitalism is based on reason and objectivity -- but that would be way too much to expect of them...

The short cartoon “Make Mine Freedom”, from 1948, is also good, but not as good as "Destination Earth." And it has the same shortcomings.

The short “What We Have”, from 1950, is lame. It white-washes communism and totalitarianism. If you want to see what totalitarianism is like in practice -- outside of living there -- read We the Living by Ayn Rand. Rand tells it like it is: harsh, brutal, and hazardous to human health.

One idea in "What We Have" which is wrong, is the idea that 'there are the same brains and brawn' in a dictatorship as in a free society. (The same ideas is seen implicitly in "Destination Earth.") They are totally off the track here -- downright derailed. Minds do not function under coercion. The society on Mars in "Destination Earth" could not invent and maintain the technology it did independently. Like any other dictatorship, it would decay and collapse under its own malignant weight. Minds, trained in the educational system to obey orders, not to see things independently, would stagnate through the years.

There are other features of the short film which make me call it lame, but We the Living will clear up enough...

Posted by Cyrano at 9:56 PM | Comments (1)
But johngalt thinks:

Excellent stuff, Cyrano. Thanks.

Another film in the same vein, although feature length rather than a short, is the 1944 adaptation of Pearl S. Buck's 'Dragon Seed.' If you can get past the idea of Katherine Hepburn as a Chinese woman the movie is quite excellent. (It's also notable as a part of the filmography of actress Agnes Moorehead. Anyone? Anyone? Buehler? ... She played Samantha's mother Endora on TV's 'Bewitched.')

Posted by: johngalt at June 9, 2006 3:51 PM

Defending Yourself

Cato @ Liberty wonders why Big Oil doesn't stand up for itself like it used to.

    Check out this 1956 short film produced by the American Petroleum Institute. Now THAT’S what a self-confident, take-no-guff industry looks like. Someone should tell “Big Oil” to take it’s thumb out of it’s mouth and start defending their right to exist.

It's actually pretty neat for the 1950's cartoon camp.

Posted by AlexC at 4:12 PM

May 19, 2006

Supply & Demand

AP

    The House rejected an attempt late Thursday to end a quarter-century ban on oil and natural gas drilling in 85 percent of the country's coastal waters despite arguments that the new supplies are needed to lower energy costs.

    Lawmakers from Florida and California led the fight to maintain the long-standing drilling moratorium, contending that energy development as close as three miles from shore would jeopardize multibillion-dollar tourism industries.

    "It's a grievous assault on Florida and other (coastal) states," declared Rep. Adam Putnam, R-Fla., of attempts to end the drilling prohibitions that Congress first imposed in 1981 and has reaffirmed every year since.

    The moratorium bars oil and gas development in virtually all coastal waters outside the western Gulf of Mexico, where most of the country's offshore oil and gas wells are concentrated.


Is Congress tone deaf or incredibly stupid?

Last time I checked high oil prices were a collossal problem in this country. Yet, we're intentionally keeping oil sources closed? While Cuba and China are drilling in nearly the same places?

Good thinking.

Posted by AlexC at 10:28 AM | Comments (3)
But mdmhvonpa thinks:

Hmm, and we should not put windmills off of Nantucket either ... because of the tourists. Soon enough, when the tourists cannot afford to travel to Florida and California, we will hear the California Whine of how we should have drilled on the North Slope, eh?

Posted by: mdmhvonpa at May 19, 2006 1:34 PM
But johngalt thinks:

This really is outrageous. Impeach congress!

It also serves as evidence that there is NOT an oil crisis. If there were then you can bet this vote would have fallen the other way.

Posted by: johngalt at May 20, 2006 11:14 AM
But jk thinks:

Millions of Americans believe that prices are high because of "gouging." Not even the Republicans will dissuade them from this nonsense.

Somebody needs to tell people about supply and demand. I don't know who that's gonna be.

Posted by: jk at May 20, 2006 11:29 AM

May 3, 2006

Living for All Of Us

Sometimes you have to wonder how, after all these years, and the rock and roll lifestyle, Keith Richards is still alive.

    His spokeswoman said Richards suffered a mild concussion while on vacation in Fiji and went to a hospital as a precautionary measure. She gave no details on what happened or what his condition is.

    According to New Zealand's Sunday Star-Times, Richards fell out of a coconut tree and suffered a serious headache. The paper reports he felt well enough to get on a jet ski, but then got into an accident.


For the record, this cements my "Rolling Stones are better than the Beatles" flamebait. Ringo would never climb a coconut tree... nevermind falling out and getting on a jet ski. Neither would those other guys.

Posted by AlexC at 11:52 AM

Gas Wars

Two gas stations get in to an old fashion gas war dropping prices on each other.

So what happens?

State Police break it up.

    Matuszky, manager of Glassmere Fuel Service about a quarter-mile east of the BP station, noticed the price change Tuesday morning. She soon got orders from the store's corporate headquarters to lower the price 7 cents per gallon, bringing the regular fuel rate to $2.89.
    An hour later, Seeger countered by lowering BP's regular fuel price to $2.89 as well.

    The gas war had begun.

    "I was told that every time they change the price, we change the price, so that's what I did. Now they started a war," Matuszky said.

    By late afternoon, fuel prices at both businesses had plummeted another 50 cents per gallon, which drew dozens of motorists as lines of cars and trucks grew to five deep at most pumps. More drivers waited along Route 30.

    "They're pretty much giving it away, so I'm filling up," said Anita Copelli, of Latrobe.

    At one point, prices dropped to $2.36 per gallon.


$2.36 is $0.53 cheaper than it is my neck of the woods!
    The price war ended almost as fast as it started following a minor accident involving cars stopped along Route 30.

    State police asked the owners of both stations to help alleviate the traffic jam, and both agreed. BP raised its price to $2.89 per gallon for regular and Glassmere raised the price to $2.86.

Posted by AlexC at 11:35 AM | Comments (1)
But jk thinks:

Thankgawd the local authorities were there to stop it!

Posted by: jk at May 3, 2006 12:28 PM

April 30, 2006

Supply & Demand

Tim Russert had the Energy Secretary on this morning's Meet the Press to discuss high gasoline prices.

In today's show, Mr Russert, former demonstrated complete ignorance of supply and demand.

    MR. RUSSERT: Mr. Secretary, if, if demand is up but supply is down, why are the profits so high?
    MR. BODMAN: For that reason.

    MR. RUSSERT: No, think about that.

    MR. BODMAN: You know?

    MR. RUSSERT: Play it out.

    MR. BODMAN: Demand is up.

    MR. RUSSERT: Correct.

    MR. BODMAN: Right?

    MR. RUSSERT: Right.

    MR. BODMAN: So you’ve got more demand, you’re going to force price up.

    You’ve got, you’ve got limited supply, and you’re going to have…


Expose the Left has more of the transcript and video!

Posted by AlexC at 11:50 PM | Comments (1)
But jk thinks:

Across the dial on the evil FOXNews network, Juan Williams accused the oil companies of price gouging. Bill Kristol said that profits were up 7% on sales that are up 8%. Williams thought that that demonstrated gouging....ooooookay...

Posted by: jk at May 1, 2006 10:13 AM

April 29, 2006

Gas price "fix?"

This gas price hysteria we've been subject to lately is really something else. The price of gas went from $2.50 a gallon, where everything was apparently hunky dory if the lack of attention it received was any indicator, to 3 bucks, which apparently signifies the end of days. For those like Illinois Senator Dick Durbin (for whom every problem is a nail) there is only one possible explanation: Corporate malfeasance. The proof? Exxon Mobil's chairman recently retired and was awarded, gasp, a retirement bonus.

Very well then, let's just regulate the cost of gasoline nationwide so that "Big Oil" no longer has the latitude to gouge innocent consumers ever again. How about fixing the price of a gallon of gas at the pre-hysteria price of $2.50 per gallon, allowing increases only for the rate of inflation of the dollar. That ought to fix their wagon, and protect the consumer, right? Not so fast comrade commisar!

Check out the chart below that shows historical gasoline prices in constant 2006 dollars. (from www.factsonfuel.org)

US Pump Prices 1918-2006.jpg

If gas prices had been fixed at $2.50 (2006 dollars) in the past then we'd all have been OVERPAYING by more than 50 cents a gallon for the 22 years since 1984. Who's the gouger now mister price control?

While it's true that gasoline now costs roughly 50% more than when I was born, and roughly 20% more than when I got my driver's license, it still hasn't reached a record high price. The real cost of gasoline was greater than today's at two times in history: One was at the birth of gasoline as a motor fuel in 1918, and the other was the transition between the Carter presidency (when oil supplies were pinched and inflation soared) and the Reagan era, when supply tightness eased and inflation was brought back to earth. In all likelihood the prices we see today are as transient as those of the early 80's.

Is it possible that we'll see record high prices? (Over $3.25/gallon as an annual average.) Yes, but this wouldn't negate my transitory argument. It would merely illustrate the power of the government to add more costs than have been eliminated by efficency improvements made by "greedy capitalists." (Such a development would also be an awesome marketing tie-in with the new 'Atlas Shrugged' movie!)

Posted by JohnGalt at 11:00 AM

April 28, 2006

The Energy Plan

So I've been meaning to write a little about the latest plan from the Senate leadership on cutting prices at the pump.

But honestly, it's hard for me to get excited about.

Included is a $100 rebate on gas per year. At 18.4 cents per gallon in taxes, that's like getting a break on taxes for about 30 fill ups. Plus to get it will be no doubt byzantine. Yawn.

Taxing oil producers? Senators should know better than that. Companies don't pay taxes! Sure, they fill out the forms, but where does that money come from? That's right! The consumer!

Another call for drilling in ANWR, which is long overdue.

    ``We have been trying for years to do something about supply without their help,'' said Senator John Thune, a South Dakota Republican, said of the Democrats.

    ``We wouldn't be in the situation we are in today'' if President Bill Clinton had not vetoed legislation in 1995 to open the Arctic refuge to drilling, said Republican Senator Rick Santorum of Pennsylvania.


It's all too easy to blame Democrats for the high price at the gas station. Though Ann Coulter does a pretty bang up job of it.
    I would be more interested in what the Democrats had to say about high gas prices if these were not the same people who refused to let us drill for oil in Alaska, imposed massive restrictions on building new refineries, and who shut down the development of nuclear power in this country decades ago.

    But it's too much having to watch Democrats wail about the awful calamity to poor working families of having to pay high gas prices.

    Imposing punitive taxation on gasoline to force people to ride bicycles has been one of the left's main policy goals for years.

    For decades Democrats have been trying to raise the price of gasoline so that the working class will stop their infernal car-driving and start riding on buses where they belong, while liberals ride in Gulfstream jets.


Oh, and the hysterical global warming shrieking must end. Other types of shrieking to curtail would include "exhorbitant profits", "price fixing!" and "BushCo oil buddies". It's nonsensical and ungrounded in reality, and worst of all, it's lazy.

Ultimately it's all our fault. It's both a supply and demand problem. There's not enough supply, and there is too much demand.

Increasingly supply is at multi-fold.
1) Open up drilling in more areas of the country (not just ANWR, though we're pretty much right next door). It also creates jobs. Tons of them.

2) Diversify refining locations. Putting a large percentage of our refining capacity in one spot that's in the crosshairs of storms is silly. One large storm takes it out. Severely curbing supply. Dumb.

3) Diversify the kind of supply. E85 and other blended fuels are a start. Biodiesel, obviously. Even CNG. The trouble is, those alternate fuels are not necessarily price competitive with petroleum. (This is also a chicken-egg problem, as well.)

4) Something like 70% of the world's oil reserves are under the control of state-owned industries. Central planning of business is very effective in collosally screwing things up. Where's the motive for those "companies" to extract or produce as much as possible? Plus there wouldn't be political reasons to jerk production levels around. The oil companies just want to get it out of the ground and down the pipeline.

That's a tougher problem to fix, however. ("war for oil" and all that)

Decreasing demand again has multiple facets.
1) Stop driving as much... car pooling, or saving your errands for one day is a start. Most of us can do that, at least.

2) Use hybrid tech. More MPG means more less need to tank up.

3) Easy to do is inflate your tires, drive the speed limit and use cruise control.

4) Some dollar level exists where driving will decrease because the price is too high. Isn't that what the climate change people (ie liberals & Democrats) want anyway?

In the end, we're all swimming in the stream of the energy market and government forces only tend to push prices in one direction. The wrong way.

Posted by AlexC at 3:20 AM | Comments (2)
But jk thinks:

Man, don't get me started on the $100 rebates. Please tell me somebody will have the gumption to kill that idea.

I have to add to your conservation side: Telecommuting. I work at home and never buy gas. More folks could do this. Silence is keen on tax breaks to promote it. That's a little too much gub'mint for me, but it solves traffic problems as well.

I've been at it about six months and find the autonomy empowering, though not as much as a lemon bundt cake (Buffy joke, sorry!)

Posted by: jk at April 28, 2006 9:49 AM
But johngalt thinks:

AlexC's demand reduction step 3 is incredibly effective. The difference in fuel consumption between 75 mpg and 80 is surprising. It's comparable to the economy improvement of step 2 "use hybrid tech" plus it costs less and doesn't look gay.

But you forgot to include 5) raise federal CAFE standards. Of course that will have the unintended consequence of raising America's health care costs but hey, were talking about conservation here. A few more dead people along the way will barely be noticed.

For those of you unwilling to wait for the corporate puppets in congress to "do the right thing" just trade in your Hyundai wachamacallit for a motorized skateboard. It has better fuel economy than a motorcycle and ... still has four wheels!!

Posted by: johngalt at April 29, 2006 10:24 AM

April 26, 2006

Texas Tea and Central Planning

Let's not forget.

    The problem is that the vast majority of the world’s remaining oil reserves are not possessed by private enterprises. Seventy-seven percent of known reserves belong to government-owned companies. That means oil will be produced with all the efficiency associated with central planning. Michael Economides estimates, for example, that it will take $4 billion in investment to keep Venezuela’s oil production at current levels. Yet that country’s Castro-wannabe president, Hugo Chavez, is investing just half that.

    If ChevronTexaco, ExxonMobil, or other private companies actually owned the reserves, the world would be in a much more secure position with regard to oil production. Instead, we are subject to the whims of figures like Chavez, Russia’s Vladimir Putin, and Iran’s Mahmoud Ahmadinejad, and must worry about the doubtful stability of their personalities and regimes. (To be sure, even a private reserve under such a regime would face the constant threat of nationalization or other interference.) In the mid-1990s, the world had more than 10 million barrels per day of spare production capacity. That figure has fallen to between 1 and 2 million barrels, which means that any significant disruption in supplies can cause prices to soar.


Really too much to excerpt, just go read the whole thing.

Posted by AlexC at 11:57 PM

A Ton of Coal

Popular Mechanics has a cool chart, comparing different fuels' capability to take a car from NY to California.

Four-and-a half barrels of crude to make 90.9 gallons of gas, fifty-three bushels of corn + a half bbl of crude for the 176 gallons of ethanol. My favorite was a ton of coal to provide the electricity. A ton of coal?

Posted by John Kranz at 3:52 PM

April 23, 2006

Pius and the Market

There's only one answer to this problem ya know...

    The fact is, hybrids just aren't selling like they used to. While the Toyota Prius is still a hot item, Ford is offering incentives on its hybrid SUVs, and sales for other hybrid vehicles are softening.

    One reason is that most hybrids, unlike the Prius, are not distinctive. A Toyota Highlander Hybrid looks like a Toyota Highlander. A Ford Escape Hybrid is a Ford Escape. "So the hybrid becomes another powertrain option," said Anthony Pratt, an analyst with J.D. Power and Associates.

    That means that consumers are increasingly putting hybrid systems through the same cost/benefit analysis to which they would subject any other high-cost option.


With those same looking cars costing $3,500 to $8,000 more, what's the point of buying one? Especially if it takes years to break even on it.

But there is another option.

    Another answer might be to buy a vehicle with a less complex, less expensive hybrid system. It might not be quite as fuel-efficient but it will pay for itself faster.

    The Saturn Vue Green Line hybrid SUV, coming out this summer, will cost about $2,000 more than a regular Saturn Vue. It's sticker price will be about $23,000, making it the cheapest hybrid SUV you can buy.


Really the correct solution to this problem would be for the federal government to subsidize the purchase of a hybrid to the tune of the price difference between a hybrid and a regular version. I mean, when it comes to the environment, there's no problem the government couldn't solve, and no dollar amount too much.

1002_thaaannks.jpg

Posted by AlexC at 10:19 AM | Comments (1)
But jk thinks:

I still say that the picture you posted is the reason that sales are slow. Not that South Park punctured sales. But the folks who wanted to be seen in a hybrid have already bought them. South Park helped stop it from going mainstream (from metastasizing in healthy tissue).

Posted by: jk at April 23, 2006 5:21 PM

March 31, 2006

Why $5 Gas Is Good for America

I came across an article in the Dec '05 issue of WIRED which argues that high oil prices should be welcomed, not feared, and that the market will provide the answers without any help from government subsidies. All of the companion pieces ("As Prices Rise, Technologies Emerge", "$20-$30", "Digital Oil Fields", "$30-$70", "Ethanol", "$70 and up", "Oil Shale") which can be reached from "Plus" section of the initial article are worth the read as well. You guys will love it.

Posted by LatteSipper at 7:26 PM | Comments (1)
But jk thinks:

You may have tapped into the magic that is ThreeSources. There is no shortage of argument among those who vote alike nor paucity of agreement between (among now) those who vote differently.

The article makes a great case that price is a valid communication medium and incentive. "The cost of developing entirely new energy supplies is daunting, but the money is available - and we're not talking about the $14.5 billion porkfest served up by Washington's recent energy bill. The global oil industry will rake in three quarters of a trillion dollars this year. And when that kind of money is up for grabs, investors are never far away."

What it misses is the lack of free markets in energy. Oil is cartelized by the producing countries, regulated in its refinement and distribution and then taxed heavily to the purchaser. I suspect a truly free oil market would give us dollar gas.

The other missing piece is the proclivity of Congress to regulate actual profits. You missed that discussion around here, but the specter (pun intended) of windfall profits tax will dampen progress on these technologies. Five dollar gas may bring more gaseous senate hearings than Hydrogen-spewing superbugs.

Posted by: jk at April 1, 2006 9:07 AM

February 27, 2006

If you can't lick 'em

Instead of complaining about Kyoto adding 20% to the cost of energy in the EU, I should have been playing the future's market. Iain Murray writes in TCS Today about "The Kyoto Bubble."

It is well known that Enron was a keen enthusiast for limits on carbon dioxide emissions under the aegis of a cap and trade scheme, which would enable companies to trade permits for the right to emit carbon dioxide. Enron documents released to the public reveal that executives thought such restrictions would, "do more to promote Enron's business than almost any other regulatory initiative outside of restructuring the energy and natural gas industries in Europe and the United States." We can now see why. In Europe, such a scheme has been introduced, and the energy companies and their advisers are very happy.

"The carbon market is going very well. We've seen tremendous growth this year," Henrik Hasselknippe, senior analyst at Point Carbon, told Agence France Presse on February 12. "Carbon is now being used as a commodity on the same lines as other energy commodities." According to his estimates, CO2 trading will be a $40 billion annual industry by the end of this decade. The current price for a metric ton of carbon is $31, while a year ago it was $8. Others are equally bullish. Thierry Carol of Powernext Carbon, a CO2 trading market, told the same reporter, "Things are taking off. This is just a start."


" UBS itself concluded that there is a significant risk of a windfall profit tax being placed on the industry." Talk about full-circle -- whom would I root for if there were a windfall profits tax on greenhouse gas markets? I get dizzy just thinking about it.

I know we have some fundamental disagreements on global warming around here, but perhaps we can all agree that Kyoto is a bad idea? Oddly enough, the free-marketer in me loves the idea of cap and trade. But I would like to use it for real pollutants, not what plants breathe.

Posted by John Kranz at 12:10 PM

February 2, 2006

Energy Solutions

Y'all will have to excuse JohnGalt and Sugarchuck if their posting and commenting is light this week. I except that both of them are checking out Federal subsidies available if they convert their farms to Switch Grass production.

Posted by John Kranz at 2:59 PM

February 1, 2006

Oil Prices

Think oil and gasoline prices are high now?

Wait till Senator Specter gets through with them.

    The chairman of the Senate Judiciary Committee said Wednesday that Congress would attempt to address growing concerns about rising fuel prices and soaring oil industry profits.

    "We intend to do something about" rising prices to consumers, Chairman Arlen Specter said at a hearing into whether oil industry mergers in recent years have made gasoline more expensive at the pump.

    Specter said he was shocked by the size of oil company profits, adding, "It just may be time to legislate in this field."


He's a Republican, by the way.

Posted by AlexC at 5:48 PM

January 30, 2006

Cheap Oil!

Joining the Commonwealth of Massachusetts, the People's Republic of Philadelphia will be receiving oil from Venezuela courtesy of Hugo Chavez.

Congressman Chaka Fattah (D-Philly) was a part of the negotiations.

    Congressman Chaka Fattah today announced a new program that will offer deeply discounted home heating oil to low and modest income residents in Philadelphia and surrounding counties.

    The program, which the Congressman brokered with CITGO and Citizens Energy Corp. of Boston as partners, will be available to residents who have exhausted their benefit under the federal Low Income Home Energy Assistance Program for this heating season.

    The government of Venezuela, which owns CITGO through its national oil company, will make 5 million gallons of heating oil available for 60 percent of the retail price. Up to 200 gallons of oil will be available to each eligible resident.

    “We have developed an extraordinary partnership involving the public sector, the private sector and the nonprofit sector,” said Congressman Fattah. “It will produce real help in the depths of the winter heating season for tens of thousands of people in Philadelphia and the nearby counties.”

    The public sector involves the Congressman’s office and the government of Venezuela, which has provided the oil through CITGO, a century-old U.S. petroleum company owned by the Venezuelan state oil company, PDVSA.


Actually it's not Philadelphia, but also the surrounding counties. Not that that really changes the deal.

Though I'm sure there are homes in Philadelphia that are oil heated, I thought the vast majority were heated with natural gas, courtesy of the city owned Philadelphia Gas Works.

And an obligatory link to the left.

    When do you know your President is in bed with oil executives?

    ...How about when leaders of other Countries start sending places like Philadlphia foreign aid, in the form of oil to heat the homes of poor people?


Imagine a President forcing a company to give their product away at a steep discount.

A taste of the comments.

    I think this is brilliant- shows up Bush, provides real relief and I like a man who consorts with old-school Latin American Socialists.

How much of Chavez's actions are more a stick in the eye to Bush and Americans vs being humanitarian?

Posted by AlexC at 8:42 PM | Comments (5)
But jk thinks:

I think it is 100% stick in the eye.

Where I am differing from some conservative friends is in asking "Why Not?" Oil is a cartelized commodity. If this loser wants to sell some to my friend AlexC at a discount for PR purposes, it means cheaper oil for me and cheaper oil for my Philly friends.

The moonbat community is amused but is it truly harmful to the United States? I am still thinking -- I loved it when Rudy told the sheiks to stuff their contingent offer, but a little cheap oil? Drink up!

Posted by: jk at January 31, 2006 10:01 AM
But johngalt thinks:

I heard in an unrelated story on a business program that Venezuela's oil is "high sulfur." Where are the ACID RAIN! howls from the left?

Besides, when Venezuela sells oil at 40 points off they're probably still making a huge profit given their dirt-cheap production costs. Here's my question: "Why is the government of Venezuela gouging these poor, struggling comrades who are poorer than poor?" What a scoundrel!

Posted by: johngalt at January 31, 2006 3:11 PM
But mdmhvonpa thinks:

It's actually very comical if you think about it. His country's infrastructure is falling apart (See Zimby-land and SA over the water) and he is snuggling up with Iran. He is myoptic (Hate America) and this is primarily due to the tutiledge by Castro. When his neighbors get fed up with his sponsorship of insurgents or the Chinese get shorted due to unfavorable contract terminations he will find himself in a very dangerous place.

Posted by: mdmhvonpa at January 31, 2006 8:45 PM
But AlexC thinks:

Dealing with socialists and their ideas of "forced equality" whether they are Oriental or Latin American seems like asking for trouble.

Even if we're "ripping them off" on the open market.

Could be that whole 1930's Ukrainian Famine thing perculating inside of me.

Posted by: AlexC at January 31, 2006 10:06 PM
But jk thinks:

Surely you're not proposing that a Pulitzer Prize winning, NYTimes reporter was lying about the Ukraine?

Seriously, ac, you make a good point. Any extent that we are propping up and perpetuating his despotism is bad. His oil can be sold anywhere, but if the PR props up socialism and tyranny, it's not worth it.

Posted by: jk at February 1, 2006 10:39 AM

January 20, 2006

TAX CUTS FOR THE RICH!

Am I beating a dead (hybrid) horse? Perhaps but I am pretty grouchy with the Hybrid phenom.

Richard Burr at The Daily Standard, points out the insanity of tax cuts for the rich hybrid owners. This is germane in my house. I have been invited by some liberal relatives to a meeting with CO-1 Rep. Dianna DeGette to lobby for heightened fuel efficiency standards. Said relatives have a Honda Hybrid which I always thought was a status symbol for their friends. Burr agrees:

SO, HYBRIDS have become the environmental equivalent of driving an Escalade or Mustang. Who cares if they deliver on their promises as long as they make a social statement?

Taxpayers should. The federal government subsidizes hybrid fashion statements with tax breaks that benefit the rich. The average household income of a Civic hybrid owner ranges between $65,000 to $85,000 a year; it's more than $100,000 for the owner of an Accord. The median income of a Toyota Prius owner is $92,000; for a Highlander SUV owner $121,000; and for a luxury Lexus SUV owner it's over $200,000.

This year the government will offer tax credits for hybrid purchases ranging up to $3,400, with owners getting a dollar-for-dollar benefit on their tax forms. This beats last year's $2,000 tax deduction, which amounted up to a $700 benefit, depending on the driver's tax bracket.


So, like recycling, you have a liberal shibboleth that cannot compete in the marketplace (until we get $10 gas). But -- darn it -- it just feels so good we're going to adjust tax policy to make it happen.
HYBRIDS ARE ALSO failing to pay for themselves in gas savings. A study by the car-buying website Edmunds.com calculates gasoline would have to cost $5.60 a gallon over five years for a Ford Escape hybrid to break even with the costs of driving a non-hybrid vehicle. The break-even number was $9.60 a gallon for a Honda Civic hybrid.

Kinda makes me wonder whether it is a good idea to have the government tampering in the free market...

Posted by John Kranz at 1:16 PM | Comments (7)
But jk thinks:

We are many things at ThreeSources but I don't believe us to be hypocrites. I would gladly cut corporate welfare as well as these softer subsidies. I have long envisioned a bipartisan, dollar for dollar slashing of corporate and personal entitlements and tax breaks.

Besides which -- who cares where we find oil? It’s not like anybody would let us actually drill anywhere!

Posted by: jk at January 22, 2006 12:19 PM
But johngalt thinks:

Wow, a chance to beat two horses with one comment!

First, tax breaks for oil exploration should not be cut; tax breaks for everything else should be increased. The simplest approach is what used to be known in the GOP as "tax cuts." (A long time ago, in a galaxy far, far away.)

Second, why the hell are US markets forced to agonize over whether Iranian oil will soon be off the market when, save a few RINOs in congress, we'd be drilling in ANWR by now? How about some tax incentives for emergency drilling there instead?

Posted by: johngalt at January 22, 2006 10:45 PM
But AlexC thinks:

Johngalt is correct. A sure sign that a facet of our economy requires "corporate welfare" in the form of a tax break to operate or to make something economical is a sure sign that that industry or endevour is overtaxed.
Cut taxes and we wouldn't need "the handouts".

Posted by: AlexC at January 23, 2006 10:59 AM
But Silence Dogood thinks:

Johngalt's point is valid, if a little perversely stated. It goes along with further thought I had on this topic, how perverse is it that the government levies a large tax on gasoline at the pump, then gives it back to the oil companies in the form of tax breaks for exploration to help offset those costs that would otherwise be rolled into the price at the pump? So yes, let's cut out the middle man.

Posted by: Silence Dogood at January 23, 2006 11:10 AM
But jk thinks:

I might be misconstruing your comment, jg, but I oppose increasing "targeted" tax cuts. Much as I love cutting taxes, you have to cut marginal rates; the subsidies and targeted cuts represent state coercion and undue gub'mint influence in the market.

I'll also make a brave stand for gas taxes. They are avoidable (thanks M. Bastiat!) and as much as they can be related to actual road construction and maintenance, strike me as the most free market taxes out there (honorable mention to state lotteries for taking money from stupid poor people).

Posted by: jk at January 23, 2006 12:29 PM
But johngalt thinks:

I think you're misconstruing, JK. We're on the same page.

When I say, "tax breaks" should be increased I mean "targeted" only insofar as it applies to reducing the burden on tax PAYERS. ALL of them, equally (which, incidentally, requires a gargantuan amount of regression to level our current state of progressiveness. (A truly unfortunate word, in this instance.))

Posted by: johngalt at January 23, 2006 3:30 PM

January 19, 2006

Kyoto Bad

ThreeSources readers will be shocked, shocked, to learn that European nations are "all mouth and no trousers (as the brits say)" when it comes to treaties. In this instance, it is Kyoto.

President Bush garnered howls from the "International Community," environmentalists, and his domestic political enemies when he admitted that the US was not going to sign (the 0-95 vote in Al Gore's Senate was deemed inconclusive).

Yet the WSJ Ed Page reports that the US is doing much better than the signatory countries in reducing the rate of growth of CO2:

Let's go to the latest numbers from the European Environment Agency in Copenhagen. Most European countries have seen an increase in greenhouse gas emissions since signing Kyoto with great fanfare in 1997. No fewer than 13 out of the 15 original EU signatories are on track to miss their 2010 emissions targets -- by as much as 33 percentage points, in the case of Spain.

Or consider Denmark, home of the EU's environmental watchdog. Rather than reduce levels by 21% as the accord stipulates, Denmark has so far notched a 6.3% increase in emissions since 1990, the base year used in Kyoto. The likely gap between its Kyoto commitment and its emissions levels projected for 2010 is 25.2 percentage points.

The U.S. dropped its signature from Kyoto because arbitrary emissions targets are both pointless and economically damaging. No proof exists that lower emissions reduce global warming. The idea that human activity influences climate change one way or another is far from proven, given the overwhelming role nature itself plays in atmospheric changes. And if the warming trend of recent decades continues -- by no means a certainty -- it might well be a boon to humanity.


US emissions are up 15.8%, far less than the countries that are berating us -- although we've the highest economic growth. And that is the real problem:
The nonsense that passes for debate at U.N. gabfests isn't news. But it is newsworthy that Kyoto's arbitrary targets were mainly cant. Countries that reduce those emissions potentially damaging to health or property do so by investing in cleaner technology. That is possible because of policies that promote economic growth and business investment. Unhampered by Kyoto targets, America's economy is more nimble and better able to adapt to changing technology. We knew Kyoto was bad for the global economy. It turns out it's bad for the environment as well.

UPDATE: Here are links to the postings in mdmhvonpa's comments: Kyoto, American Style and Northeast US Kyoto Redux. The first has a table on all developed countries.

Posted by John Kranz at 11:26 AM | Comments (1)
But mdmhvonpa thinks:

Yep ... detials here: http://mdmhvonpa.blogspot.com/2005/12/kyoto-american-style.html
and more interesting stuff here http://mdmhvonpa.blogspot.com/2005/12/northeast-us-kyoto-redux.html

Posted by: mdmhvonpa at January 19, 2006 1:17 PM

November 10, 2005

Windfall Profits

Instapundit and Mickey Kaus have been hyping the pro-Growth Democrat movement. I would love to see it, but I still don't believe.

The New Republic is the responsible Democratic organ, right? Clay Risen could've posted this in The Nation:

But almost across the board, Republicans have refused to back any measure requiring firms to put their money to a more socially valuable use. For that, you have to turn to the Democrats, who in September rolled out a windfall profits tax, which they reintroduced this week amid the growing public fury. Proposed by Senators Byron Dorgan and Chris Dodd, the bill would tax half of all profits made above a $40-barrel baseline. Republicans and their allies immediately attacked the bill, and few observers have any illusion that it could pass. But it is one more