Unclear On The Concept
Someone needs to explain to Barack Obama what a ‘gimmick’ is:
Offshore drilling continues to be a major sticking point between Barack Obama and John McCain, and the two candidates are still jabbing at each other’s position for the second week. Obama, who has argued that drilling will not immediately lower gas prices, is expected today to condemn McCain’s recent comments about the “psychological” benefits of offshore drilling.
At a campaign stop in Fresno yesterday, McCain said, “I don’t see an immediate relief, but I do see that exploitation of existing reserves that may exist, and in view of many experts that do exist off our coasts, is also a way that we need to provide relief. Even though it may take some years, the fact that we are exploiting those reserves would have psychological impact that I think is beneficial.”
Obama, who wants to keep a moratorium on offshore drilling, will argue that McCain is offering a “gimmick” similar to the gas tax holiday proposal. Obama opposes the gas tax holiday that McCain supports, arguing the Arizona senator’s proposal could cripple highway funding while offering minimal relief at the gas pump.
Obama will discuss his energy plan, which includes the promotion of “green jobs,” at Springs Preserve in Las Vegas later today. The Springs Preserve is an historical site which showcases energy efficient buildings.
Now, the gas tax holiday is indeed a gimmick, and a very bad idea to boot – Obama is right there. But offshore drilling is not a gimmick, it’s an integral part of a smart energy security policy moving forward – no one is childish enough to think that removing the ban will cause the magic gas-price fairy to appear and bring back $1 a gallon and free ice cream sundaes, but we have to be smart about our resources.
But Obama’s strategy is to promote ‘green jobs’, along with a second rebate check? Jeez, talk about a gimmick. Show me a ‘green job’ creation program that will provide ANY relief at the pump, long or short term…this is about political patronage, and Obama’s close ties to ethanol insiders and supporters…but it’s not an energy policy, not by a long shot.
To be clear: we are moving, sooner or later, into the post-oil era…but a smart national energy policy will have many components. Yes, we need to pursue alternative energy (preferably through the market and not giant government giveaways), but we also need to promote the creation of more nuclear reactors, pronto, and we need to face facts and lift the bans on offshore and ANWR drilling…it’s not an either-or, it’s an ‘all of the above’…but I’ll take that rebate check, anyway, if Washington wants to send it…
You concede that off-shore drilling won’t bring back $1 gas, but that’s a strawman. What will it provide? What are the tangible benefits we can expect from it? If they are negligible and too far in the future to matter, then it’s certainly a gimmick. I don’t oppose off-shore drilling, but I think Obama’s disdain for the idea isn’t any more absurd than the idea that it really deeply matters for our energy policy.
It’s part of a long-term strategy…as we have discussed elsewhere, the economics of the market are now such that it makes sense. We have billions of barrels of reserves that we know of, plus untold billions more that we will discover. It’s not something you do for today, it’s something you do for tomorrow…
Only if you ignore the indirect (environmental costs). If you include those, then currently offshore drilling still doesn’t make sense.
I don’t doubt that it will eventually make sense, but its relevance to this year’s election cycle is the totally phony claim that it will lead to lower oil prices. Take that away, and I don’t think John McCain would be harping on the subject.
As to long-term strategies, I’ll post this link again. That’s what a long-term (by happy coincidence, decade-long, which is how long it will take to bring these offshore reserves online) strategy looks like.
That still doesn’t answer the question of what the tangible benefits are. Dean Baker’s calculations say about 8 cents a gallon in ten years (I can’t embed a link for some reason, sorry):
http://www.prospect.org/csnc/blogs/beat_the_press_archive?month=06&year=2008&base_name=oil_vs_the_environment_what_is
Is 8 cents a gallon worth it? What are the environmental costs?
Please read this and the article it links to, on the near term benefits of opening up offshore drilling.
Offshore Oil In One Year
Also, since it’s undoubtedly true that some of the reason for the high price of oil is due to speculation (how much depends on who you listen to), opening up new oil wells or even working to open them up will cause at least some of the speculators to get out. This will nearly immediately lower the price of oil and gas. If Congress opened up offshore drilling today, it would not be surprising to see gasoline below $3.50 nationwide by election day. It would not be out of the question for it to be below $3 by the end of the year (although that would be surprising).
Oh, Ryan will be happy to know that in my latest odds, Obama finally makes it above 50% on getting elected. McCain has still not been able to energize his base, and has not capitalized at all on Obama’s inexperience and gaffes. I now put Obama at 3/5 and wouldn’t be surprised to see that number even go up again soon.
McCain needs to really put the screws to Obama on energy. Iraq is “out of sight, out of mind” so it doesn’t matter that Obama’s completely wrong there. The economy is always a Democratic ticket winner, so McCain can’t win there as long as the economy still seems to be lurching towards a recession. For some reason, people are really excited about the government that pays $250 for a toilet seat running their healthcare, so Obama continues to have a winner there too, so McCain’s only winner right now is the price of gas. That may be enough, but only if he talks about nothing else for a while and really becomes the “energy independence” candidate. Right now he’s only halfway there, at best.
I’m ahead of the curve on Energy Independence. It was my #1 issue in 2000 (although neither candidate discussed it) and my #2 issue in 2004. It’s back to #1 in 2008. I believe we should do quite a few things here, most of which will tick off liberals, but some will tick off conservatives (and to be fair, conservatives should be ticked off by some of the things I propose, because the ideas aren’t at all conservative–except in the final result, energy independence).
I believe we should look at ALL of the following:
Off-shore Drilling
Drilling in ANWR
Shale Oil
Clean Coal
Nuclear Power
Hydroelectric power
Wind Power (yes, I know the big problem with it–it’s not stable)
Solar Power
Geothermal Energy (when was the last time anyone talked about that?)
NGV’s (natural gas vehicles)
Ethanol (I’m not opposed to ethanol use as long as we do it right and don’t triple the price of corn and other farm good in the process)
Raising CAFE standards
Subsidies and tax credits to companies and individuals that take advantage of these technologies or work to promote them
As I said, there’s enough there for you to find something to be upset about no matter who you are, but I’m working with the end in mind, energy independence, and not worrying about upsetting the Big Three in Detroit or the hurting the Kennedy’s view in Nantucket. I’m also not blind to the fact that working on some of these things may be detrimental in the short term to the American economy. The long term gains are worth it, IMHO.
And, we may look at some of these things and find out that they just clearly can’t work, and will never be efficient enough to cover the costs. That’s fine. We don’t have to DO all of these things, I just want them all on the table. Right now pretty much none of them are on the table.
Ok, the first link didn’t work for some reason.
http://www.thenextright.com/josephcollins/offshore-oil-in-one-year
Mark: You say “It’s part of a long-term strategy…”. Ok, well, what is the rest of the strategy then? If you made a pareto chart of the 30 things that would most benefit our long term energy policy “offshore drilling” isn’t even close to making the list.
“green jobs” has nothing to do with the “price at the pump”. It’s about eliminating the pump altogether. Or at least eliminating the gasoline and replacing it with some other substance that isn’t made from crude oil.
Looking at the Chris’ list, what do oil, coal, natural gas, ethanol, and nuclear power all have in common? They are all consumables that you can’t just “make” without worrying about the repurcussions involved. “clean coal”. That’s a good one. Regardless, it’s a finite resource. Wind, water, the sun, heat from the earth. Those are all “free”. We just have to find ways to harness their power more efficiently. That is what “green jobs” are all about. I’m not particularly adverse to using nuclear power, especially if this actually works. It’s just, storing the waste is not a small problem for the future. I suppose we could always shoot it out into outer space, using more nuclear power to fuel the object that is carrying it. Everything else, though, involves a commodity. There is nothing wrong, per se, with countries using commodities to power them, it’s just that shortages are inevitable and the markets can be manipulated. It can also cause other things…what are they called? Oh yeah, wars.
mikebdot, you are absolutely correct about the consumable resources. I don’t think that many of those are an effective long-term solution to energy independence, but to discount them totally for those reasons is, in a word, foolish. We can’t flip the switch today and go completely to sources of energy that are “infinite” in nature, as much as I (or you) might like us to. The switch we can flip today is on our dependence on foreign oil. And then, maybe we wouldn’t have to have one of those, what did you call ‘em? Oh yeah, wars for oil.
We are potentially the most oil-rich nation on the planet, and yet we import 2/3 of our oil. That’s beyond stupid, it’s mindless.
Get me to energy independence ASAP while working on clean and “free” sources of energy. The problem with America isn’t that we don’t use enough solar power. It’s that we don’t have ANY coherent energy plan. That’s why every single one of those items were on my list.
Oh, I left out EV (electric vehicles), Hybrids, and HPV (hydrogen powered vehicles). All of those should’ve been on the list as well.
How do you think that reserves, which won’t come online for a decade, will affect the price of a 6-month futures contract for oil? Commodities traders are not that stupid.
I totally that having a plan would be a huge improvement. I’ll point to this link again:
http://www.youtube.com/watch?v=NfGEbTcNuzA
(using a hyperlink will trip Mark’s spam filter, so you’ll have to cut ‘n paste). That’s what having a plan looks like.
Chris: Agreed. Short-term vs. long-term policies are good to differentiate. So, really, “offshore drilling” is more of a temporary solution. And just because we have the oil doesn’t mean we wouldn’t be involved in wars because we produce some of it. In fact, a rationale for war would be easy to manufacture in either case.
I can see the mode of thinking that we don’t want the government involved in making the “energy plan for the future” as that has the opportunity to seriously screw things up, but if you give money or opportunity to big oil anyway, it’s no different than the current status quo. I will say, though, I am more than happy to give the government free reign over regulating or spurring the creation/management of the following items:
health care
energy independence strategy
water (local governments are obviously the ones involved there)
housing (and lending to acquire said housing – great job they did there, eh? hooray for “free markets”!)
food
education
Those have all become basic necessities. I have no problems letting the government get involved to a certain extent. I do not understand the libertarian notion that the government should not be involved in helping to provide basic necessitities to survive. Or avoid war.
The problem becomes voting people into office that aren’t stupid. When most politicians are former lawyers that makes it slim pickens…
That indeed is a catch 22.
Jacques, first of all, I dispute the claim that it’s 10 years. Lots of people seem to be claiming that without any real evidence to support it. The first link I put in claims that it could be as little as 1 year, but is almost definitely no more than 6. Now, there’s no evidence behind that link either other than it apparently comes from “someone in a position to know”.
Secondly, I said it would nearly immediately start lowering the prices. It might be 6 months, or a year before that happens. However, if we do open up more areas for domestic drilling, then we can afford to look at tapping the Strategic Petroleum Reserves as well. Which would scare the pants off the speculators.
Thirdly, I like the video…so far. I’m listening to it now as I type this. I think he’s overly optimistic, but it’s his job to be. I’m not sure I believe his timelines work for the U.S. without more cost than I’m willing to pay, so again, I’d say that we need to work towards something like this while we’re using the resources we have availble now. We can’t even get cable TV to a good portion of the west or DSL to even a significant percentage of Americans, and we’ve been talking about digital TV for more than 20 years, so I would hesitate to accept his infrastructure timeline.
mikebdot, you’re correct, someone may decide to go to war with us over our oil. But someone might decide to go to war with us for countless reasons. They may be upset with us because we (as Christians) invaded and looted their country 700 years ago. If we create the technology to have relatively limitless and clean energy, someone may decide to go to war with us over the technology. And if someone’s going to go to war with us over oil they’ll do that whether we drill it out ourselves or not. Actually, if we drill it ourselves, that leaves less left for someone to go to war over.
If I stay up all night, I can probably come up with a 100 reasons why people might go to war with us, so I think that argument is specious.
And I’m not willing to give the Federal government much in the way of control/regulation over any of those things. BTW, the free markets didn’t cause our “mortgage crisis”, the government did, which is why we should be leery of further involvement. They demanded mortgage brokers offer mortgages to people who were high risk. And now we’re paying the price for that.
I say “much control” because I’m obviously in favor of the government coming up with a plan for energy independence, even if it inconveniences Big Oil and Big Business. And I see a need for the FDA, but that’s mostly just a regulatory body. Actually, I can handle limited regulations in all of those areas, ensuring standards for health care, education, housing, etc. But just guidelines and regulations. Not management and control. That’s the path of destruction. I think I’m closer to the libertarian standpoint than you, but I definitely lean towards a ‘small l’ libertarian, rather than a ‘Big L’ one.
It seems that all of us agree that we need to have some sort of coherent plan. Right now I’m not seeing that from either the McCain camp or the Obama camp, although it appears to me that McCain is at least starting down that path. I would also say that we need to put all the options on the table and not discount them outright. Remember that I said that if we realize that any of the options are untenable then we should throw them out, but they options need to be at least on the table. I’m not sure whether Jacques and mikebdot agree with me on that, but it’s absolutely certain that Obama does not.
And, finally, I agree with mikebdot about politicians. Sadly.
Chris: To be clear, I don’t think the government should “manage” any of those items wholesale, just that it behooves the government to have dedicated people at the federal level to listen to the concerns from those areas and dole out cash money from mine and your pocket as they see fit. In regards to energy policy the government should take a more active role trying to push the issue, asking various outfits “what technologies need to be developed in order to make solar power more efficient?” Research dollars turn into real technology.
My only beef is, we don’t need to keep the intellectual property for certain technologies. We need to work on a global initiative to move away from consumables with regards to necessities. Granted “necessity” is being used loosely with regards to energy usage, but it is indeed a necessity in industrialized nations.
Some things should plain and simply not be allowed to be pantented. This is my concern with big pharma. Most people don’t agree with that notion though. So be it. Certain things should be open-sourced, especially certain IP that can truly benefit mankind, like, say a cheap renewable energy source, as you suggest.
That’s the number everyone (even those in the oil industry, who ought to know) uses. If it’s wrong, I’d rather hear it from an Exxon-Mobil exec, rather than some nameless “person in the know” on the internets.
As I said in the previous thread, I don’t favour a ban on offshore drilling. I’d rather see a mechanism (like the environmental escrow fund I suggested there) which would make the oil companies face the full (direct plus indirect, environmental) costs of developing those reserves. And then they can decide whether the price of oil has risen to the point where bringing those reserves into production becomes feasible.
That would almost certainly be bad public policy.
One of the key planks in the Israeli program, to convert to all-electric vehicles by 2018, is a change in tax policy. Of the two, I am pretty sure an Obama Administration is far more likely to be receptive to making such changes here. I can’t imagine a McCain Administration enacting such a thing.
Jacques, to answer a criticism from way back in this thread, I don’t know why lowering current gas prices is the only reason off-shore drilling should enter into this year’s presidential race. Framing a long-term energy security policy is a presidential-type prerogative, is it not?…
“Should” versus “is”.
I absolutely agree that articulating a long-term energy policy is something that a Presidential candidate “should” do.
But what I hear from the McCain campaign is couched in terms of lowering the price of gasoline in the short term. And not just with respect to offshore drilling. Remember his Gas Tax Holiday proposal — which I think we both agree is a royally stupid idea. He is still attacking Obama for not supporting that.
Yeah, no argument there – that’s (the gas tax holiday, that is) both a gimmick and a really, really bad idea…
Jacques, you’re correct about the changes in the tax policy, but that’s one of the things in the Israeli approach that scared the pants off me, so I won’t be upset if McCain doesn’t support it.
Of the two, McCain is the one supporting the “prize” for the better battery, and is the only one that has come out vocally in support for all-electric vehicles. That may surprise you, but it shouldn’t, given that Obama comes from Illinois.
Do a search on Obama and “electric vehicles”. I doubt you’ll find any statements from his and his camp that don’t talk about “hybrids”. They have to keep all those ethanol promoting groups from his home state happy.
But you’re correct on the gimmick-ness of the gas-tax holiday. Mark has it exactly right. Gimmick and bad idea.
I’d say the same about Obama’s rebate though. Gimmick, and worse idea.
I don’t agree with you on whether it’s a bad idea to tap the SPR, but I’m willing to concede I may be wrong there. Anyway, I did say that doing other things first, would allow us to consider that.
Finally, the thing I hate about Obama’s talk about “green jobs” is that it’s far too nebulous. I guess I’m just too rooted in mathematics, but I like hard numbers. How many “green jobs”? What types? How much is this going to cost? What exactly is it going to do for us and how soon? No answers from the Obama camp.
Now, when people talk about 140 billion barrels of oil in the U.S., that’s a number I can understand and can deal with. Even if you talk about 10 years (show me where someone from Exxon has said that), it has the benefit of being specific and measurable. The House Whip has put together (admittedly partisan) numbers on the advantages of drilling. Where are the numbers on “green jobs”?
BTW, it’s not that I’m opposed to having a “green jobs” program. Once again, I’ll point to my statements that I don’t want to leave anything off the table. I just want to know what exactly are his goals and plans for such a program, and I want the goals to be real goals, i.e. Specific, Measurable, Attainable, Realistic, and Timely.
Why does it “scare the pants off [you]“?
It provides a powerful incentive to be an early adopter (rather than waiting around till everyone else buys in). That’s exactly what’s needed, to make a radical shift, like this one, on a timescale measured in years, rather than decades.
It’s very clear that the reason they were able to raise $500 million in venture capital ($200 million in the seed round!) was that they had a clear commitment from the government, backing their effort.
Assuming the rest of the plan (the infrastructure, the subscription model, the auto and battery technologies, …) were applicable to the US, what public policy would you enact to incentivize early adoption, and to demonstrate the necessary commitment on the part of the government?
Exactly the same pie-in-the-sky rhetoric we’ve been hearing for years from President Bush. Except that, in the latter case, it’s hydrogen-powered cars which, someday in the far distant future, will be the panacea.
There’s no plan (or any actual intention) to get from here to there. Just a piddling amount of R&D money (in McCain’s case, via that absurd “prize”), and a convenient fig leaf for not having an actual implementable plan to do anything (even something modest, like raising CAFE Standards — which McCain opposes).