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Tuesday, March 22, 20051111500300
Aaron on Everything
"I'm Quite Left...," by Aaron, tdaxp, 22 March 2005, http://tdaxp.blogspirit.com/archive/2005/03/18/rounds_south_dakota_s_abraham_lincoln.html.
Aaron provides us with an airchair view of the world. He's right on a lot of things, so as a true friend I will mention only those where he is misguided...
...I don't support handouts to the rich, like a tax cut that's done little to rejuvenate a slow economy...
I agree that Keynesian "stimulation" of the economy by providing tax cuts are unwise. Sadly, Keynes's "something for nothing" philosophy has resounated with Americans ever since FDR, so politicians of all parties use it as an excuse to increase spending and/or cut taxes.
Taxes should be set to create a stable, high-growth economy, not manipulated as a short-term fix for a slowing one.
...or the OK to drill for oil where it won't do anyone but the oil companies any good
ANWR has three main winners and two main losers
Winners
- Oil providers involved in it
- Oil consumers
- Oil-substitute consumers
Losers
- Oil providers not involved in it
- Oil-substitute providers
Oil providers involved in ANWR could only receive all of the social gains from it if they were a monopoly or perfect cartel.
Of course ANWR has the potential to change very-long-run calculations as well, but the future is too uncertain to dwell on those.
Even Mr. Savage will have a hard time refuting the fact that no oil will come from ANWR for many years, no matter how many resolutions are passed
Aaron knows my dim view of Mr. Savage. However, Aaron's premise is incorrect. If not changing oil calculations until the long term is a problem, then green strategies would not make sense either. After all, it will take years for hybrid cars to cut into oil consumption!
Prayer in schools? Sure, why not. As long as you'd be fine going to a Hindu country and praying their prayers in their schools
I am not speaking for Mr. Belew, and I'm against force prayers, but...
Hinduism can be just as effective a horizontal control mechanism as Christianity. Therefore, let Hindu communities lead public Hindu prayers in America!
(Not that there aren't much worse problems with the whole public education system in the first place...)
As a Christian, do you want their ideals forced on you just because you're the minority?
I would guess a good part of Belew's anti-liberal disposition comes from having government forcing liberal views on him for years. While Bush is slowly rolling those back, social engineering has been government policy for a long time.
The people who protested the Vietnam war weren't wrong. It was the wrong war at the wrong time. The fight against communism was just yesterday's religious jihad. There will always be war. Should women and children be murdered so we can raise our flag and be proud of our work? War is one thing. Rape and murder is another. Vietnam was the latter. Read a book
Vietnam was the right war at the right time. While it failed in its central goal, it was successful. The long-term consistent attack on Communist infrastructure robbed the movement of momentum elsewhere in South East Asia. At the same time, the obliteration of modern Vietnam showed all the the price of Communism was unacceptably high. Like the Cuban boycott, the Vietnam War was a success.
Communism was a system of mass slavery. There was no freedom of religion, no freedom of conscience, no freedom of speech, no freedom of work.
Saying there "will always be war" is either demonstrably wrong (it has been, well, ever since Pennsylvania and New York slugged it out) or a meaningless tautology (business as a form of war???).
The end years of the Global War on Communism coincided with the beginning of a Jihad. But there the similarities ended.
The Viet Cong used rape and murder to destroy South Vietnamese civil society. Fortunately, the VC were destroyed during the disasterous (for them) Tet Offensive.
When Warren Buffett, who should be giddy like a schoolgirl at Bush's tax cuts writes a letter to the Washington Post questioning the utility of them, don't you have to wonder?
Almost none of Mr. Buffet's income is earned income. He was barely effected by the income tax cuts.
It is easy being generous with other people's money.
Thanks for the comments.
08:05 Posted in Blogosphere, History, Oil, Public Finances | Permalink | Comments (4) | Email this | Tags: aaron
Comments
Hybrid cars will take a while to make a difference, but there's not a finite supply of them. We can keep making efficient cars until the Sun explodes. But knocking a 5% chunk of our consumption out of foreign hands for a few years? If there were no laws of conservation of matter, I'd say 5% were a big deal, let's find oil all over America, you know, if the oil just keep pumping.
The oil consumers in this case won't be helped, as all ANWR will do is make the refineries' transport costs cheaper. We just liberated an oil-rich country. Why haven't prices gone down? Last year, the oil companies showed record profits. What's the deal? The deal is that these corporations don't operate as efficiently as possible, and the laws of supply and demand don't affect them. We could hand-cart the oil to their front door out of the goodness of our hearts and the prices wouldn't change. What are people going to do, stop driving? Gotta work to eat, gotta drive to work. OPEC should be renamed OPEC&C, to include the Companies that engage in price-fixing and I'd almost say extortion at a time when our economy is shaky enough as is. I can afford $2.20 gas. A lot of people can't. Should they stay home from work? Or stop eating?
It truly is easy being generous with other people's money. With a twirl of a pen, Mr. Bush can give the oil companies a great deal more of ours at less cost to them.
Posted by: aaron | Tuesday, March 22, 2005
As Tom Friedman and others have written, America has a national security interests in reducing the flow of capital to failing states (Saudi Arabia, etc). Hybrid cars and expanded US drilling are both part of this.
The claim that ANWR only reduces transportation cost is strange. When new supply comes online, either price goes down or other supply is taken offline. Either outcome serves us.
Claiming corporations not acting as efficiently as possible is a straw man.
"What's the deal?" is not an explanation. If you're going to raise an issue, address it. How was 2004 different from 2003?
If laws of supply and demand do not affect oil companies, they must live in a magical fairy-land. The claim makes no sense.
If you have any evidence as to corporate price-fixing in league with OPEC, please share
Posted by: Dan | Tuesday, March 22, 2005
Other supply will be taken offline, i.e. Middle East supply. We'll get the oil from Alaska and pay less to transport it from there to refineries in the US than we do to transport it from the Middle East to the US.
The science of economics tells us that as it is less difficult or less expensive to obtain materials, finished product prices should drop. My cynical and unfounded claim is that regardless the price or difficulty of obtaining raw materials, the refineries are going to set a price and make it. I know that the market currently is dictating a high price for raw materials in this case. But not all their supply comes from the markets. "What's the deal?" wasn't meant as an explanation, it was meant as a question. Hence the punctuation. I answer my own question cynically in the next line, with a claim that I don't believe to be far off from the possible truth. Your explanations are welcome.
When I say they're not affected by supply and demand, I mean that we're beholden to them as a nation which relies on this critical product. We can't stop driving tomorrow. Therefore, the changes have to take place gradually, and meaningfully. ANWR isn't perpetual. Creating cars that use less gas or use another form of fuel are.
I don't think the refineries are in league with OPEC, but I don't think they hurt from their policies, either. Shouldn't their profits remain pretty steady, as when raw material price goes up, so would finished product price relatively? They get to have this OPEC boogeyman that I'm sure they don't chafe under. "Sorry, America, OPEC is really screwing us on costs, we'll have to raise prices to stay profitable." Profitable != record profitable. I know production capacity has increased, and that importation has slowed since the 80s. Shouldn't prices be going down then? What happened to the $1.00/gal. gas we had in the late 90s, when we weren't OKing Alaska drilling and we hadn't liberated an oil-rich country?
Posted by: aaron | Tuesday, March 22, 2005
If the Middle East decreases supply, this deceases the flow of capital to the Arab states. As these same Arab states support and fund terrorism, that would be a great victory.
Most Middle Eastern oil goes to East Asia, and most American oil comes from the Westerb hemisphere -- transportation costs, which are marginally anyway, are already taken into account.
You say, "I know production capacity has increased, and that importation has slowed since the 80s." Because of environmental restrictions, both nationally and in California, refinary capacity has stayed nearly constant in the face of rising demand. I have never heard that importation has gone down, and I'm confused what you mean by "slowed." Certainly refinary profits increase when refinary owners and environmentalists conspire to keep new entrants out of the market, but I'm not sure how much this affects "oil companies" (Royal Dutch Shell, Exxon-Mobile, etc).
I'm unclear what good it does "oil companies" to say "Sorry, America, OPEC is really screwing us on costs, we'll have to raise prices to stay profitable." Private corporations (unlike public utilities and quasi-public monopolies like Midco) don't ask permission to be profitable. They charge the most the market will bare. Likewise, consumers don't ask permission for low prices -- they spend the least the market will bare.
I do not know what you mean when you say "Not all supply comes from the markets."
I agree that fuel efficiency is the long-term solution. But why limit the nation to one front in the drive for low oil prices?
"We can't stop driving tomorrow" is a straw-man. High prices for a good discourage future use of that good and encourage use of substitutes. So if oil prices remain high, we should see in America more fuel efficient vehicles and more substitutes (hybrid vehicles, etc).
Saying oil companies "will set a price and make it" is nonsense. You seem to be saying that the oil market is very inelastic (not responsive to prices). In the short term, it may be. But as your complaint of the end of cheap gas showed, the short term ends quickly.
$1/gallon gas is a major cause of the current oil (as opposed to refinement) shortage. Low prices mean low profits, meaning investment is less profitable. The current high prices promise higher profits, meaning investments will be less profitable. (Of course, threats and complaints about "record profits" and "price fixing" increase rational risk, lowering disconted future profits, lowering future production, and increasing future prices. Similar thuggery by FDR and Nixon harmed the economy in the 1930s and 1970s, respectively.)
The best insight on the Ba'athi economist war against Iraq, and how it moves the price of oil, that I've seen is at Globa Guerillas (http://globalguerrillas.typepad.com/globalguerrillas/).
Posted by: Dan | Tuesday, March 22, 2005