Tag Archives: economics

Cajoling Producers

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In a Friday Wall Street Journal op-ed centered on the high and rising cost of fuel and the deleterious effect that’s having on our businesses and our economy, Collin Eaton, David Harrison, and Doug Cameron had this remark:

The administration has also tried cajoling US oil companies into increasing production, but few have chosen to do so, instead sticking to leaner budgets urged by investors.

That’s laid off to the maxed out refineries in the US, so there’d be no place to ship increased production, anyway. That’s a player, certainly, but it’s a relatively minor one.

The far more important factor, and it plays to refiners, also is this. Drilling new wells and reopening closed wells each costs lots of money, and it takes years to recoup those costs. It’s the same for the pipelines and other transports used to get the oil and natural gas to refiners, and it’s the same for the refiners.

The Biden administration, though, cannot be trusted not to pull the rug out from under anyone in the oil and gas industry before those costs have been recouped.

There’s no reason, then, for refiners to (re)expand their capacity, even were there product ready for refinement. Biden and his Progressive-Democratic Party syndicate cronies are actively blocking the construction of additional pipelines with which to transport increased production. Biden and his Progressive-Democratic Party syndicate cronies are constantly promising to put the remaining hydrocarbon energy producers—oil and natural gas producers—out of business. This is a plain extension of what Biden’s favorite bud and predecessor ex-President Barack Obama promised to do to the coal producers and largely succeeded in doing.

A Critical Item

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President Joe Biden (D) wants half the new cars sold in the US to be electric, and he wants and 500,000 new charging stations for them, both by 2030. He considers reliable EV charging stations to be critical to getting us switched over to battery cars.

Charging stations are necessary (assuming the switchover itself is necessary; it’s not, but that’s a separate story), but they’re far from sufficient. The important thing here is reliable electricity running to each charging station—electricity from the grid. But that requires hydrocarbon-powered electricity generating plants, and it requires the electric grid, itself barely able to handle current loads—see the rolling blackouts that are routine in California and that have become a risk in Texas—to be upgraded to handle the vastly increased loads imposed by all those battery-powered vehicles, whether charged at the charging stations or in the home garage.

Also necessary, but not sufficient even in concert with the above, is an adequate definition of “fast charging.” If a battery-powered vehicle cannot be charged to the 400-mile range of a full gasoline tank in substantially the same 5 minutes it takes to “charge” that gasoline tank to an internal combustion engine-powered car to a 400-mile range, the battery-powered vehicle will remain impractical.

The true Critical Items, then, are at the origin and near-origin: deregulating domestic oil and natural gas production and deregulated electricity generation so there will be energy to put onto that upgraded grid.

“New Dems are ready to deliver”

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That’s what Congressman Scott Peters (D, CA) claims in his Thursday Fox News op-ed. But deliver on what? And deliver how?

Last year, our country was still recovering from the twin COVID-19 economic and public health crises.

Our economy had been recovering—burgeoning—from the Wuhan Virus’ (and Government’s reaction to it) impact on it since 2020 late summer, and we’d been recovering from the Wuhan Virus situation itself since roughly the same time frame as palliatives and treatment techniques were developed, and then as two vaccines aimed specifically at the virus were developed and approved for emergency use.

Last year—2021, the first year of the Progressive-Democratic Party’s control of both houses of Congress and of the White House—saw exploding regulation, overt shutdown of oil pipelines and of oil and natural gas drilling on Federal lands, and resulting historically high inflation, from which we’re still not even beginning to recover.

The Biden administration and Congress have taken steps to address inflation by improving our supply chains; releasing millions of barrels of oil from our strategic reserves; and rebuilding our roads, ports, and bridges.

In what way, exactly, have our supply chains been improved? We still have freight ships backed up at our ports, we’re still dependent on enemy nations like the People’s Republic of China for raw materials (rare earths and lithium, both raw and processed, to suggest just two), solar panels and panel components, a variety of types of computer chips, oil from OPEC (and potentially Iran and Venezuela), and on and on.

Releasing oil from our strategic reserves? That’s been tried three times now, by the Biden administration, and each has produced only a price drop of a couple of pennies that lasted only a couple of days—and what will Biden release when the reserves are expended? Furthermore, at what cost have these reserves been released? The Trump administration filled the reserves at the cost equivalent of $1.50-$2.00 per gallon of gasoline. Today’s cost is above $5.50/gallon (and rising). And Biden still refuses to allow oil (and natural gas) pipelines to be built and still is slow-walking leases (while canceling some) for oil and natural gas exploration and slow-walking permits actually to drill.

Rebuilding our roads…? How many projects have been started from that infrastructure bill enacted a year ago?

But we can’t stop here, and we won’t.

You need to, or you will be stopped. What you’re doing is destructive of our economy.

Government Industrial Policy

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This one EU-style. Which fits, since Europe has such long experience with the failure of economies, especially industry-driven, when dictated from the top. See, for instance, France, Germany, Italy of the last century, and France and Germany today.

One company’s (Apple, but the principle is much broader) phone charger, and the cell phones dependent on it, would become illegal throughout the EU if proposed legislation goes through. The legislation is

aiming to set a common charging standard for mobile phones and other portable electronic devices….

And

The planned legislation…is aimed at reducing electronic waste and improving consumer convenience.

Government is dictating to consumers how they will achieve the convenience Government says they want.

Never mind that if consumers want only a single charger across all battery-operated electronics (for instance), if they want a form of convenience (and not the form dictated to them by their Betters), a free market will let them drive their economies in that direction.

Sadly, the EU elitists in charge Know Better, and European citizens do not operate in a truly free market.

More Government Overreach

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And by the SEC, yet, which already has its extra-judicial structure of accuser, judge, punisher administrative law judge system in the Federal courts over the legitimacy of such an arrangement.

Now it’s the SEC-proposed rule that would require private enterprises—which by definition are outside the purview of the Securities and Exchange Commission—to open their books to public scrutiny and SEC approval.

Worse, a broad range of elites are supporting this naked overreach:

University endowments, insurance funds, and retirement funds serving teachers and firefighters are urging the Securities and Exchange Commission to move forward with a proposed rule that would ensure private-fund investors receive annual audits and quarterly statements.

Such a move would destroy the private nature and purpose of private enterprises—i.e., enterprises that are wholly owned by a small group of entity operators and which do not sell ownership shares on the open market or permit the owners’ own equity portions to be traded about on open markets.

But the rule-supporting elites give their game away:

Many pension plans are having a hard time meeting their payout obligations to members, the result of decades of underfunding, benefit overpromises, and unrealistic demands from unions.

So they want to get into private entities, even though those entities do not want the elites’ involvement—it’s part of why they’re, you know, private. But in order to do so, those private companies must open their books to the SEC—and the public.

It’s a bad rule, and it should be withdrawn by a serious SEC or blocked outright by Congress. This is a free market matter: if an investor doesn’t like the information he gets—doesn’t get—when he looks into a company with a view to investing, he’s free to not invest.

Full stop.