The Oil Debate Continues

Since I wrote my essay on why politicians should resist manipulating the price of gasoline, pretty much every op-ed article of the last week has focused on the topic. I'm glad I have such influence on the national debate.

The most amusing claim I've heard this week is that President Obama has intentionally decieved the public as to how much oil the US has, creating a "myth of scarcity." The chart above has often accompanied these arguments.

I am especially amused by the claim that we have 2,303 billion barrels in "undiscovered resources." Wow! Curiously, I woke up this morning and realized I must be a millionaire, since I have 999,999 dollars in undiscovered cash. I plan to alert my banker at once.

I have no doubt, by the way, that we do have a good deal of undiscovered oil, but I'm amused by the specificity of the number provided. It's not just 2,000 billion barrels, or 2,300 billion, it's 2,303 billion.

What the people who make arguments from this chart don't make note of is that, if oil prices fell, most of the oil shown above wouldn't be recovered. We've drilled most of the easy oil that just bubbled up from the ground when we punched a hole, and the oil that remains requires more elaborate technology to extract, and is only viable if the price of oil remains where it's at today.

One irony that environmentalists don't appreciate is that, as the price of oil rises, it will lead to more production, not less. If oil hit 200 dollars a barrel, all of of that "technically recoverable" oil will suddenly be genuine black gold, and will be extracted. Even at the higher prices, demand is only going to keep rising as the rest of the world chases a western standard of living.

So, here's my prediction: If Obama is reelected, gas prices will rise. If the next president is Ron Paul, gas prices will rise. There may be short term down swings, but, in the long run, we should all start planning for much higher prices.

A few random political thoughts

Random opinion #1

Has there ever been a lamer attempt at creating a scandal than the attempt at outrage by some right-wingers over a 1991 video showing a young Obama praising Harvard professor Derrick Bell, even going so far as to hug him? The standard line of argument is that this proves how truly radical Obama is, and is evidence of his secret agenda to tear down America.

The scandal so far appears to be a dud. First, maybe .0001 percent of the US population could have told you who Bell was before this video appeared. From a practical matter, he's just not famous enough to be fuel for scandal. Second, who cares if Bell held the most radical views you can imagine? Suppose he advocated mandatory abortions and 100% taxation. He's a professor. Outrageous philosophical and political beliefs are pretty standard issue among their ilk. The trade off for letting them think whatever the heck they want to think is that everyone else in the world gets to ignore their ideas. But, their students can still like them. I loved arguing with my professors in college, who often had very different ideas about how the world truly worked than I did. How much they genuinely believed thier opinions, and how much they adopted extreme ideas as a way of challenging me to think I can't say. But, if I were to introduce one at a ralley, I'd certainly be generous with praise. My best friend ever identitified himself as a communist. I call myself a libertarian. We agreed on nothing. But I would gladly tell the world he was an intelligent, thoughtful person who should be listened to, and he would have done the same for me. If you only are friends with people who agree with you on everything, you have my sincere pity.

Finally, while I dislike labeling all attacks against Obama as being rooted in racism, I get the icky feeling from this scandal that the right wingers are trying to prove that Obama is a scary black man who hates white people. I've seen the term "racialist" in about half the essays I've read on this subject. Bell apparently argued that the US constitution was an inherently racist document, and thought that the entire system of government would have to be overthrown if blacks were to get a fair shake in this world. I don't agree with this opinion, but its certainly not difficult to understand how a black person born and raised in the era of Jim Crow might have come to such opinions. If such opinions seem frightening to you, you need to get out more often.

Random Opinion #2:

Iran has been in the news a lot. Most of the Republican presidential candidates except Ron Paul have been advocating a willingness to go to war to stop Iran from having nuclear weapons.

I can't understand how anyone who looks at our experience in Iraq or Afghanistan thinks that launching another war is going to be a good option for us. Assuming that our intelligence on Iraq wasn't purposefully fraudulent, we know that a great deal of the things we thought we knew about the facts on the ground in that country turned out to be wrong. The places we thought were manufacting chemical weapons weren't. There were no stock piles of yellow cake uranium. Every claim of a weapon of mass distruction turned out to be false.

I will presume that we weren't trumping up or inventing this intelligence as an excuse to go to war. This just shows how exceptionally difficult it is for us to know what's really going on in a country. I will assume that the Iranians do have a nuclear program, since they openly say they do. But, can we really be certain we know which sites to bomb? How do we know we've got all the sites? If I were an Iranian general wanting to manufacture a bomb, and knew my enemy could look down on my country from space, I would think it would be a no brainer to build dummy facilities that looked menacing but were actually building nothing of significance, while hosting the genuine nuke facilities in the basement of an oil company.

Also, while making a nuclear bomb involves a lot of equipment, the reality is that the big obstacle isn't the equipment, it's the know how. As the engineers perfect each bit of equipment, don't you think the plans are backed up and secured to a ridiculous degree? We could destroy every bit of equipment they have, and a year from now it would all be rebuilt. Bombing wouldn't even destroy the nuclear fuel. It might scatter it and contaminate it, but you don't destroy elements with bombs. With a little clever engineering, most of the fuel could probably be recovered in the aftermath of an airstrike.

So, that leaves us two options. First, we don't rely on airstrikes alone. We invade the country and hunt down every last flash drive that might contain nuclear secrets, and vacuum up every last bit of soil that might contain nuclear fuel. This would be a massive invasion, at least as large as our war with Iraq. But, when we went to war with Iraq, our nation was in much better shape financially. Part of our multi-trillion dollar debt can be blamed on our unfunded wars. Can we really afford to throw on another two or three trillion? At what point would our economy collapse? Second, we rely only on airstrikes, but we don't target only nuclear sites. We cripple Iran's entire infrastructure and keep it down for decades. We bomb every elecrical grid, every water treatment plant, every bridge. Bring Iranian civilization to a halt, so that they can't build even a microwave oven, let alone a nuke. The downside here, aside from the fact that we would be mass murderers of millions of innocent men, women, and children, is that we would again be committing economic suicide. If we destroyed Iranian infrastructure, we would destroy their oil production. As refugees flowed into Iraq right next door, we'd probably send that country back into war, and the flow of oil there would dry up. Overnight, the price of gas could double. I know in my last essay, I said that politicians shouldn't be concerned with trying to control the price of gas, but resisting taking actions that would double the price of gasoline overnight is an area where I might make an exception.

Random Thought #3: Republicans are kind of doomed.

One argument against Obama was that he was inexperienced and had never accomplished anything during his few years in the senate. Sadly, I think that Republicans are now turning this into a requirement for all future nominees. The reality is, if you've been a governor or a senator or held any level of political office higher than Mayor of Wasilla, you've made votes and judgment calls that will outrage the conservative activists that decide the nominations. Before Rick Perry revealed himself as being too inarticulate to lead a Boy Scout troop, he was already losing support because he'd made anti-conservative choices on childhood vaccinations and tuition for illegal immigrants. Rick Santorum is being attacked for voting to raise the debt ceiling and for supporting pork projects in his home state. Romney is attacked because he passed a mandate that all citizens of Massachusetts were required to purchase health insurance--a position at the time regarded a very conservative, but that is now regarded as extremely liberal.

Ronald Reagan couldn't be nominated today. He'd raised taxes when governor, and before he got into politics he was head of a union! Socialist alert!

I understand the roots of Republican mistrust of compromise. But, governors have to make real world choices on how best to educate children, protect the environment, and balance budgets. Senators have to make votes that bring money back home to their states or they don't remain senators. If no elected official is going to be pure enough to earn the support of conservative activists, I hope that in the next round of elections we can just cut to the chase. The people with actual experience can stay home, and the base can nominate a talk show host. It almost happened this time with Herman Caine. Give it another four years.

It's not the government's job to determine the price of gas

My last post ridiculed Newt Gingrich's vision of making the moon the 51st state. Now, I'm going to ridicule him for recently saying that, if he were president, he'd make sure gasoline cost $2.50 a gallon.

But, I'm not really targeting Gingrich here. It's a fairly common charge in politics that expensive gasoline is the fault of the current president. Bush got blamed for high gas prices during his entire administration. He was in the "pockets of the oil companies." Obama is now being blamed, because his administration is "choking the oil industry with regulations."

It bugs me that republican's, who are supposed to be champions of the free market, feel like the federal government should be concerned with the market price of gasoline. It bothers me that democrats, who have been on the record proposing carbon taxes that would increase the price of gasoline, start proposing to tap the strategic oil reserves in hopes of driving prices down.

The reality is, while gas prices can be manipulated in hundreds of different ways in the short term, in the long term prices are determined by the balance of how much it costs to produce weighed against how much we are willing to pay for it.

We aren't unwilling slaves to the oil companies. We pay willingly for their product because we judge the benefits to outweigh the costs. If the costs go up, we do have plenty of tricks up our sleeves to reduce our spending on this or any other product. A coworker of mine has spend years commuting to work in an SUV. Recently, she's swapped this for a compact car. Higher prices can drive us to more fuel efficient vehicles and altered driving habits.

The energy shocks of the seventies produced cars that were radically more fuel efficient on average, and houses that were better insulated. Our appliances today are fine tuned to make the most efficient use of electricity, and the average cost is posted right on the front of each appliance when you buy it. Higher gas prices will produce similar change over time.

We as consumers have power over our purchases. That's the beauty of the free market.

When republicans hear democrats talk about setting prices for, say, health care, they cry "socialism!" If it's true for the cost of a doctor's visit, it's true for the cost of gasoline. Sorry, Newt.