Tag: energy

A Virginia Republican leader and member of the McCain Virginia leadership team recently wrote an ugly OPED seeking to link every shallow form of ignorant bias in the direction of hating Barack Obama and, well, black Americans.

listing for your consideration the platform of Barack Hussein Obama as best as I can figure it out after ventining all the hot air, straining out the honey and removing the smelly substance similiar to what the old bull left behind.

This OPED, which should never have been published, is filled with invective and disgust (and disgusting material). When it comes to religion, for example, the distilled platform is supposedly:

Freedom of Religion: Mandatory Black Liberation Theology courses taught in all churches — raise taxes to pay for this mandate. Put Reverand Jeremiah Wright in charge. Condemnation of homosexuality from the pulpit will become a Class 1 felony.

It is hard to figure out what is most outrageous of all this. That a newspaper would choose to publish it or that, in fact, the reality that some people will actually believe some of it.

During the Vice Presidential debate, Sarah “Energy Expert” Palin continued to demonstrate either her fundamental ignorance about energy realities or her fervent desire to mislead as many American voters as possible with half-truths and un-truths.  We’ll put aside the whole question of Sarah’s dealings with oil companies and the national gas pipeline and the problems of clean-coal discussion at the debate, but lets take a few moments to discuss the implications of Sarah’s various words about “energy independence”.   Remember, Sarah reminded us that energy is her subject:

“governor of an energy-producing state, and kind of undo in my own area of expertise, and that’s energy.”

Okay, what did Miss Energy Expert say about energy issues?

Last Thursday, both Barack Obama and campaign-suspended John McCain spoke at a session of the Clinton Global Initiative annual meeting.  Some have already called John McCain’s comments “the height of hypocrisy.”  Reading McCain’s speech and considering John McCain’s spinning out of control flip-flopping on energy and global warming issues over the past year, it is hard to disagree with this evaluation.

The Senate held a Bipartisan Energy Summit today with some of the nation’s top experts (from MIT, Google, CSIS, CERI, and Shell’s CEO). (Although, regrettably, the nation’s top energy expert, Sarah Palin, was unable to attend and bring her deep knowledge and wisdom to the table for conversation.)  And, this hearing was reasonably (even very) well attended.  Senators Dorgan, Bay, Landrieu, Domenici, Bingaman, Pryor, , Conrad, Dewine, Salazar, …. It is a very rare Hill hearing that has so many of the principals at the table.  The room was, in addition, standing room only with literally hundreds of people in the room and several tables full of journalists (and bloggers). And, to be honest, people actually seemed to be paying attention to questions, to speakers, with Blackberries dominating the attention of just a few of members and not that many in the audience.  An indication of the political (and, hopefully, substantive) interest and importance of the issues at hand.

One specific exchange, after the fold, merits attention.

Tom Friedman is on a roll. He has, clearly, decided that the United States faces a pivot point. Either we will figure out smart energy policies and prosper, or we will fry.  As he looks to the election campaign, he has decided that the choice are clear. We might (MIGHT) prosper with Obama-Biden. However, WE WILL FRY with McCain-Palin.

And, here is a TV interview worth watching, absorbing, and sharing as Friedman lays McCain’s failures and failed concepts out on the table.

   What are the benefits?  Kotchen and Burger estimated that the oil had a value of $374 billion (writing in July 2007, they assumed a long-term price of $53/barrel), but that it would cost $123 billion to extract and market.  The net return of $254 billion is divided consists of industry rents of $90 billion, Alaska tax revenues of $37 billion, and Federal tax revenues of $124 billion.

Under the authors’ understanding of incidence, consumers wouldn’t benefit much at all because oil prices would not fall noticeably.  Still, drilling makes economic sense if the loss of environmental amenities is valued at less than $1,141 a person (per American, not per Alaskan) and that was with a price of oil roughly half of today’s price.

At today’s price of oil, a rough estimate of the benefit — not counting environmental costs — is over $600 billion.  So the whole issue seems much more important than I had thought just one hour ago.  Some approximation of taxes and transfers and auctions are available, so these gains can be redistributed to some extent if you wish.

That’s economics professor Tyler Cowen at his blog, Marginal Revolution.

The point that Cowen brings up is a profound one.  The common argument against expanding oil drilling both off-shore and in ANWR has been twofold: the amount of oil is not significant enough to alter the world price (which will always be true), and the value of the oil does not significantly outpace the amount of environmental damage that would be caused.

But when the price of oil changes, the value of the oil does as well.  Indeed, if the price of oil continues to rise in the long term, the value of the oil will be significantly more than the value of the environmental damage (to the extent that any value can be placed on that – but, it is easily imaginable that at future oil price X, the profits will be significant enough that huge sums from it could be used to finance environmental cleanup in many places).

Therefore, I predict that at some point, the value of the oil in ANWR will be large enough that it is politically irrational not to exploit it.  The oil in ANWR will become a sort of national trust fund, where at a certain expected value, the government is certain to exploit it.  I see no way of avoiding this, or by which this is not the rational course of action.