Quote Of The Day

“Politicians want lower gas and oil prices but don’t want more production to increase supply. They want oil “independence” but they’ve declared off limits most of the big sources of domestic oil that could replace foreign imports. They want Americans to use less oil to reduce greenhouse gases but they protest higher oil prices that reduce demand. They want more oil company investment but they want to confiscate the profits from that investment. And these folks want to be President?”– “Windfall Profits for Dummies“, WSJ

8 Responses to “Quote Of The Day”


  • The “windfall” tax idea is a bad one. The more correct one (both politically and economically) would be for the politicians to get behind the idea that oil company subsidies must end. It’s truly wrong to have a) high oil prices, b) high oil company profits, and c) record-breaking government subsidies to oil companies. It amazes me that one of the three candidates hasn’t made the issue of oil company subsidies a major piece of their campaign yet.

  • Is there any empirical evidence whatsoever that the US can be energy independent anytime soon by drilling more? My understanding is that if stopped imports and used only our own oil (and opened up everything to drilling), we’d completely use up every drop before 2020. Or is there speculation that by 2020 someone will have harnessed cold-fusion and hydrogen cells and our entire infrastructure will have been converted to the new fuel? Am I missing something here? I find this meme that Alaskan oil or some other new source is going to solve the problem extremely frustrating. I just don’t see how the numbers add up. I think that the issue is perhaps frustrating to Libertarians since the market, no matter how free it is, can’t provide an easy solution–markets can’t magically make oil deposits appear underground.

  • Karlo,

    You are correct. If drilling were allowed everywhere in the US, without regard to environmental impact, etc., we would still have a long-term problem. Oil is non-renewable and finite.

    I think those who advocate more drilling are typically those who have a vested interest, those whose primary energy concern is high prices, or those who unthinkingly parrot Rush Limbaugh.

    Meanwhile, people who are concerned primarily with long-term sustainability of energy sources, or with the respective environmental cost, or those who unthinkingly parrot Al Gore, are much less likely to see “more drilling” as a viable choice.

    As is often the case, I find myself somewhere in-between. Like most liberals, I would like to see more emphasis placed on the bigger long-term problem of finding alternative, non-polluting energy sources, rather than simply drilling more. But, like most conservatives, one of my preferred alternative energy sources would be nuclear power.

  • LaurenceB,

    Completely agree on the subsidies point. Corporate welfare needs to stop.

    Karlo,

    Who is arguing for energy independence? My arguments for opening up ANWAR and other areas within the USA are threefold:

    1. it would help alleviate some of the growing cost of gas

    2. it is economically beneficial – with record high gas prices, wouldn’t it be a good idea if more of the profits came to the United States, instead of say, the middle east?

    3. it certainly beats the alternatives – whatever shortcomings more drilling for oil has, it certainly is more promising than pushing for ‘alternative energy sources’. With billions already invested, we have yet to come to an ‘alternative energy source’ that all sides can agree on.

    LaurenceB,

    You forget – with rising gas prices, the government doesn’t need to fund alternative sources of energy research, there will already be a HUGE incentive in the private sector to do so. Besides, because of substitution, as long as prices continue to rise, there will always be an infinite source of energy…haven’t you heard of Julian Simon?

  • We could look at it from another standpoint. If no alternatives are going to be as cheap as oil (and I agree, the outlook is pretty grim), maybe we should wait even longer and then drill the oil when it’ll be worth even more. (I confess, I’m being a bit sarcastic at this point.) I assume that there will be an alternative fuel economy, although it’s likely to costs us more in terms of human labor and the expenditure of other limited resources (metals and so on). I’d like to see people cut back a bit on consumption so that the problem becomes a bit more manageable. There’s a huge difference between having 30 or 40 years to restructure an economy versus facing an immediate crisis. Unfortunately CEOs and politicians often have little incentive to take the long view (a weakness in the argument that market forces will solve everything.

  • Karlo,

    If no alternatives are going to be as cheap as oil (and I agree, the outlook is pretty grim), maybe we should wait even longer and then drill the oil when it’ll be worth even more.

    I don’t think this is a safe assumption. Some respectable economists I know(Arthur Laffer, for example) argue that at oils current price, its bound to lead to an energy breakthrough soon that will drastically reduce prices. In other words, best to capitalize on the gains now instead of risking much lower gains in the future (the whole ‘one in the hand is better than two in the bush’).

    I assume that there will be an alternative fuel economy, although it’s likely to costs us more in terms of human labor and the expenditure of other limited resources (metals and so on).

    Maybe…but I bet this will be more because of government regulations/restrictions than because of the market. For example, if the government forbids the use of oil and/or coal, and forces us to use a different, more ‘environmentally friendly’ source. Thereby artificially raising the costs.

    I’d like to see people cut back a bit on consumption so that the problem becomes a bit more manageable.

    See…I have no problem with this. I don’t mind politicians arguing that we need to consume less energy…what irritates me is when they do that on one television show and then on another complain about the high cost of gas, when its precisely the high cost of gas that would lead – better than any other method – to less consumption.

    I wish politicians would just choose – do they want less consumption and therefore support high(er) gas prices? Or do they want lower gas prices and therefore support higher consumption? Cuz you cant have both and the way politicians in Washington talk (especially the Democrats) they seem to think that they want both…and try to convince the public of the same.

    Which, in the end, leads to contradictory actions…the point of the Quote Of The Day above.

  • I agree. Higher prices would (perhaps, will) fix the problem–driving down consumption to the point where the current peak becomes a plateau that lasts for decades.

  • Professor Oilman

    The higher the oil price the better off we are. The oil demand will decrease diminshing demand upon the scarce resource – oil. The consumption will diminish creating the need for less, smarter driving habits, carpooling, etc. AND the roads will be less crowded creating safer and less dangerous driving saving lives and reducing the need for costly road repairs. America cannot lose.

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