Tag Archives: government

Some Thoughts on Energy Policy

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The administration’s rap is that we only have 2% of the world’s oil reserves, and there’s that fossil fuel pollution problem, so we have to push green energy sources (which President Obama masquerades as an “all of the above” energy policy).

The good folks at the Institute for Energy Research have a different take on the matter.

The figure below is a graph showing American population growth, energy use, economic performance, and pollution (emissions) rate since 1970 (the vertical dotted line is simply a break in the time scale from 20-year increments to 2-year increments).  It’s interesting to note that energy consumption per capita has been remarkably constant over these last 40 years.  Meanwhile, our GDP has gone up sharply, so that our energy use per unit of GDP—per unit of economic performance—has gone down sharply as we produce and use our energy more efficiently.  Also over that same time frame, our pollution rate—per capita and per unit of GDP—has gone…down.

Now, what about those miniscule reserves?

The reality is that we have more combined oil, coal, and natural gas resources than any other country on the planet. We have enough energy resources to provide reliable and affordable energy for decades, even centuries to come. The only real question is whether we will have access to our abundant energy resources, not whether sufficient resources exist. … According to the Congressional Research Service, we have the most fossil fuel resources of any country on Earth, but most of these resources are off-limits due to federal policies.

Indeed,

  • The United States is home to the richest oil shale deposits in the world—estimates are there are about 1 trillion barrels of recoverable oil in U.S. oil shale deposits, nearly four times that of Saudi Arabia’s proved oil reserves.
  • The United States has 261 billion tons of coal in its proved coal reserves. These are the world’s largest coal reserves and over 27 percent of the world’s proved coal reserves.
  • The United States has 486 billion tons of coal in its demonstrated reserve base [measured quantity of [coal] which, based on the geological and engineering data supporting proved energy reserves, can be recovered with presently available technology at an economically viable cost], enough domestic coal to use for the next 485 years at current rates of consumption. These estimates do not include Alaska’s coal resources, which according to government estimates, are larger than those in the lower 48 states.
  • The federal government leases less than 3 percent of federal lands for oil and natural gas production—2.2 percent of federal offshore areas and less than 5.4 percent of federal onshore lands.

This graph shows one impact of government intervention in energy production.

Notice the price drops when government intervention is reduced.  On top of this, the Federal government leases less than 3% of its lands for oil and natural gas production—2.2% of Federal offshore areas and less than 5.4% of federal onshore lands.  Finally,

Total federal subsidies in fiscal year 2007 were $24.34 per megawatt hour for solar-generated electricity and $23.37 per megawatt hour for wind, compared with $1.59 for nuclear, $0.67 for hydroelectric power, $0.44 for conventional coal, and $0.25 for natural gas and petroleum liquids. In fiscal year 2010, the subsidies were even higher. For solar power, they were $775.64 per megawatt hour, for wind $56.29, for nuclear $3.14, for hydroelectric power $0.82, for coal $0.64 and for natural gas and petroleum liquids $0.64.

My energy policy? Pretty much akin to “Drill, Baby, Drill.”  And export the excess.  Push for more nuclear power plants.  Three Mile Island demonstrated that our safety systems work, even in extremis.  Encourage wind and solar farms, but not with those—or any—subsidies (eliminate those trifling subsidies for the other energy sources, too).  The free market will decide the economic viability of our sources of energy, and the free market is the only mechanism qualified to determine what is economically sound among the several energy sources.

 

h/t Power Line

This is Promising

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Fox News reported over the weekend some excellent news concerning the Mojave Desert Memorial Cross, also known as the WWI Mojave Desert War Memorial.

A veterans group can restore a memorial cross in the Mojave Desert under a court settlement that ends a decade-old legal battle….

The [National Park Service] will give up the acre of land [the hilltop area known as Sunrise Rock on which the cross had stood for decades before thieves stole it after losing a court battle to have it removed legally] in exchange for five acres of donated property elsewhere in the 1.6 million acre preserve….

Justice Anthony Kennedy, siding with the 5-4 majority, wrote that the cross evokes more than religion.  “It evokes thousands of small crosses in foreign fields marking the graves of Americans who fell in battles, battles whose tragedies are compounded if the fallen are forgotten[.]”

As part of the settlement,

[o]nce the swap is complete, the park service will fence the site, leaving entrances for visitors, and post signs noting that it is private land. A plaque will be placed on the rock noting that it is a memorial for US war veterans.

No small amount of credit goes to Liberty Institute, who fought the legal fight for so long, and to Henry Sandoz, who worked so hard and so long maintaining the cross—keeping a promise he’d made those decades ago to his dying friend, Riley Bembry, who had erected the original cross in 1934—and producing the replacement that will go up when this all comes to fruition.

It’s not time to celebrate, yet; the land swap isn’t completed, the cross hasn’t been emplaced, and in the event, we still need to be alert for a repetition of the theft that prolonged this case.

Big Government and Economic Recovery

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Via UCLA comes an analysis of the Great Depression and the failures of Big Government policies in alleviating what began as a sharp recession.  Harold L. Cole and Lee E. Ohanian, after studying Franklin Roosevelt’s performance, have reached a conclusion about the New Deal.

Why the Great Depression lasted so long has always been a great mystery, and because we never really knew the reason, we have always worried whether we would have another 10- to 15-year economic slump.  We found that a relapse isn’t likely unless lawmakers gum up a recovery with ill-conceived stimulus policies.

These two lay the responsibility for the failure, in particular, on the anti-competition and pro-labor measures FDR signed into law in 1933.  Even though much of that first New Deal round was found unconstitutional, that outcome took a couple of years to reach, during which the damage was being done, and it was replaced by similar New Deal laws that a later, more submissive Supreme Court upheld.

Cole added

President Roosevelt believed that excessive competition was responsible for the Depression by reducing prices and wages, and by extension reducing employment and demand for goods and services.  So he came up with a recovery package that would be unimaginable today, allowing businesses in every industry to collude without the threat of antitrust prosecution and workers to demand salaries about 25 percent above where they ought to have been, given market forces. The economy was poised for a beautiful recovery, but that recovery was stalled by these misguided policies.

The Cole and Ohanian study went on:

Using data collected in 1929 by the Conference Board and the Bureau of Labor Statistics, Cole and Ohanian were able to establish average wages and prices across a range of industries just prior to the Depression.  By adjusting for annual increases in productivity, they were able to use the 1929 benchmark to figure out what prices and wages would have been during every year of the Depression had Roosevelt’s policies not gone into effect.  They then compared those figures with actual prices and wages as reflected in the Conference Board data.

In the three years following the implementation of Roosevelt’s policies, wages in 11 key industries averaged 25 percent higher than they otherwise would have done, the economists calculate.  But unemployment was also 25 percent higher than it should have been, given gains in productivity.

Meanwhile, prices across 19 industries averaged 23 percent above where they should have been, given the state of the economy.  With goods and services that much harder for consumers to afford, demand stalled and the gross national product floundered at 27 percent below where it otherwise might have been.

And with those carefully elevated prices—deliberately elevated through mandated price floors and, with agriculture, government-controlled production rates—food was so expensive that FDR forced food stamps—and the taxes to support them—through the Congress.

Ohanian added this, too:

High wages and high prices in an economic slump run contrary to everything we know about market forces in economic downturns.  As we’ve seen in the past several years, salaries and prices fall when unemployment is high.  By artificially inflating both, the New Deal policies short-circuited the market’s self-correcting forces.

Does any of this sound familiar?  Under the present administration, with its Patient Protection and Affordable Care Act, its Dodd-Frank Act, its wholly unaccountable Consumer Financial Protection Bureau, it’s really not so unimaginable.  Under the present administration, that singles out private citizens and publicly castigates them for political donations to the wrong candidates, with its picking and choosing individual business—and whole industry—winners and losers, it’s entirely understandable.

Cole concludes,

The fact that the Depression dragged on for years convinced generations of economists and policy-makers that capitalism could not be trusted to recover from depressions and that significant government intervention was required to achieve good outcomes.  Ironically, our work shows that the recovery would have been very rapid had the government not intervened.

RTWT.

 

With a h/t to GayPatriot, who actually were writing about a different matter.

The Latest “Recovery” Numbers

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First, some numbers via The Wall Street Journal:

  • Commerce Department: 2.2% growth for the first quarter of 2012.
    • down from 3% at the end of last year.
    • close to the 1.7% that all of 2011 had.
  • Recession-created pent up demand for cars and trucks accounted for half of that increase in GDP—1.1%.
    • “Real” growth in GDP, then, was 1.1%.
  • Businesses building up inventories accounted for another 0.6 percentage points of GDP growth.
    • Now we’re down to 0.5% “real” growth.
  • Businesses, over the last six months, have added inventory by more than $120 billion.
    • foretells lower business spending in the nearby future as that expanded inventory needs to be sold off.

As backdrop for all that, our GDP grew on the year by $600 billion, but Federal debt climbed by $1.3 trillion—more than twice GDP growth—in the same period.

Now, about President Obama’s enormous tax increase scheduled to take effect next January.  A worker’s Social Security tax bill will go up by nearly 50% as the payroll tax holiday expires, and his income tax bill will go up drastically: a lower income worker will see his first marginal tax go from 10% to 15% as Obama simply erases that 10% bracket, while a high-income worker will see his top marginal rate run up from 35% to 39.6%.

And this doesn’t include Obama’s tax increases on capital gains and dividends—levied on those rich investors like retired grandma for whom dividend income plays such a major role, and on those middle class investors—the ones whose 401(k)s or whose company-provided pensions invest for dividend and cap gain income.

Imagine the impact on GDP—and on the practical economy in which we must live—of these tax explosions.

Obama Got One Right

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President Obama is in hot water over a decision by his Health and Human Services Secretary, Kathleen Sebelius, to limit access to Plan B/Morning After pills to prescription only for girls 17 years old and younger.  Women 18 and older still can get the pill over the counter.

President Obama is right on this one.  Yes, he’s reputed to be “the most pro-abortion in the history of the United States.”  So what?  Those who use this to decry Obama’s hypocrisy are ignoring an important aspect of this issue.

While there is a legitimate question concerning the adequacy of the science and whether this pill is safe for “young teens,” there’s a larger matter involved.  Sex and pregnancy are serious matters, even for adults.  These girls, who are 17 and younger, are both legally and emotionally children.  It’s true enough that “18” is an arbitrarily drawn line for defining legal majority.  However, it’s also true that children lack the maturity to make reasoned judgments about the risks they run when they engage in various behaviors, including sex.

Whether or not this is the motivation for Obama’s decision, requiring the prescription for minor children is a pathway to getting/keeping parents involved, and parents need to be involved where their children are concerned.  Certainly, some children mature faster than others, some parents are bad parents, and many adults make bad decisions.  However, that last is irrelevant to this, and the maturation and examples of bad parenting are exceptions—they cannot justify a blanket rule granting all children access to this sort of medication without adult supervision—ideally, their parents’ supervision.