Topic: Energy and Environment

Pet Rocks, Leisure Suits, and Oil Companies

The often sensible business columnist at the Washington Post, Steven Pearlstein, has a really bad idea today: “Put the government into the oil business.” He wants to create a federal oil company that would be required to “operate at only a modest profit, while doing everything in its power to expand supply, smooth prices and expose collusive behavior.”

I can only wonder if the maid cleaned his desk and accidentally left a 1970s folder on top. Back in the ’70s Democrats kept talking about creating a national oil company to “use as a yardstick” to measure the performance of the oil companies. One wag noted at the time that Gulf Oil was going to buy Ringling Brothers and Barnum & Bailey Circus to use as a yardstick by which to measure the federal government.

Gas prices go up and down, as Jerry Taylor and Peter Van Doren have discussed. If prices are being held above market levels by some sort of collusion, then you wouldn’t need a tax-funded government company to offer lower prices; profit-seeking entrepreneurs could do it. Let’s leave the 70s be, and watch for high prices to stimulate conservation, exploration, and alternative sources of energy.

Ad Hominem Absurdum

A little story popped up in the press today that offers what my wife and I, in the context of our responsibilities toward our 4 year-old son, often refer to as “a teaching moment.” That opportunity is afforded by an accusation out of Greenpeace this morning that Cato, along with 40 other policy organizations, are wholly-owned subsidiaries of Exxon-Mobil and thus should not be trusted.

The contention that Exxon-Mobil funding colors Cato’s analysis (with contributions, by the way, that accounted for less than 1/10th of 1% of our budget in 2006) is compelling only if Greenpeace has some sort of “motive detection device” that can be produced for public inspection. For instance, I say I’m motivated by genuine skepticism that industrial greenhouse gas emissions will usher in the Book of Revelations. They say I’m motivated by greed. We can settle this argument to the satisfaction of some third-party observer … how exactly? Even administering me with liberal doses of sodium pentathol is unlikely to settle this little spat about the nature of my character.

The truth is that my colleagues at Cato and I are skeptical about the end-of-the-world scenarios bandied about by zealots like Greenpeace, we anchor that skepticism in the peer-reviewed scientific literature, and that skepticism naturally attracts funding from those parties who like what they hear. Arguing that causality actually works the other way is not only an unproved and unprovable assertion (let’s call it “faith-based argumentation”), it is impossible to square with all the work we’ve published arguing against many of the things the oil industry is known to support.

For instance, we have vigorously argued against President Bush’s national energy strategy and the resulting Energy Policy Act of 2005, called for the dismantlement of the Strategic Petroleum Reserve, railed against federal oil and gas subsidies, argued for the elimination of the Clean Air Act rules that allow older refineries to escape tough anti-pollution standards, suggested giving the Arctic National Wildlife Refuge to the Greens to do with as they wish, argued against allowing cost-benefit analysis to dictate environmental standards, and defended the government’s right to renegotiate drilling leases in the Gulf of Mexico that provided highly favorable contractual terms to some oil companies.

Regardless, Greenpeace’s assertions — even if true — are founded upon a classic logical fallacy. For those who never took a course in logic, it’s called ad hominem. Despite what the body politic might otherwise believe, the merit of an argument has nothing to do with the motives of the person making that argument.

For instance, if the Institute for Policy Studies argues that minimum wage laws have little net effect on unemployment and produce citations in the literature to back that up, the reply that “IPS is staffed by a bunch of socialists who simply want to bring down capitalism and should thus not be listened too” persuades only those people who are too intellectually lazy or mentally impaired to think straight. Similarly, if Cato argues that it’s very hard to justify tight greenhouse gas emissions controls using strict cost-benefit analysis — and provides academic citations to back that up — the charge that “Cato is paid by Exxon-Mobil to take that position and thus shouldn’t be listened too” is likewise a variation of the argument made famous by Joe McCarthy. “He’s evil — and thus a liar.”

And in that vein, notice the thinly veiled smear entailed in Greenpeace’s constant use of the phrase “climate denial” and its related cousins. In this context, it’s obviously meant to echo the ugly “climate denial is like Holocaust denial” charge rampant at some high-decibel quarters on the Left. Greenpeace’s strategy here is to leave no insult or character smear off the table in its drive to censor the policy debate.

That Greenpeace resorts to such a tactics does not surprise. Those with good arguments pound the arguments; those with poor arguments pound the table. God forbid Greenpeace grant that people of good will might actually disagree with them. And God forbid that we ask people to judge an argument by the facts rather than some schoolyard game of “you stink.”

Tony Blair on Global Warming

This morning on NPR’s Morning Edition, we were treated to an interview with outgoing British Prime Minister Tony Blair. The conversation touched on a number of rather predictable subjects, but the discussion of global warming is worth noting. Here, we find Tony Blair at his best — and worst.

Tony the Sensible: Even if Great Britain were to shut down its economy and zero-out all greenhouse gas emissions, growth of those emissions in China would wipe out Britain’s greenhouse gas reductions within about two years. So without an international agreement binding all global actors of note, nothing that any OECD government might do will have much effect on future temperatures.

Tony the Lunatic: The world’s inability to execute a global agreement to seriously reduce greenhouse gas emissions is fueling Islamic terrorism.

Huh? I didn’t know that al Qaeda, Hezbollah, or Hamas has linked up with Greenpeace. Must have missed that in those periodic tirades coming out of Pakistani caves.

I can see it now:

Abdul: “We must strike out at the Crusader/Zionist oppressors and impose the word of Allah and the Koran on the nonbelievers and the Arabic lackeys of the Christian imperialists.”

Muhammad: “Wait Abdul! The Kyoto Protocol has been ratified by a new American admistration and China and India are likely to cut back on their coal consumption as a consequence! I no longer have the heart for jihad. Let us open a falafel business instead.”

Public Opinion?

This week I’m getting emailed press releases telling me that “94% of international teens want the US to address global warming more aggressively. “If you read waaaay down in the email, you discover that it was an online survey of 250 teens who – it appears – mostly attend U.S. schools. So maybe the striking headline is just a teensy bit of a stretch.

But if it were a scientifically valid survey of actual teenagers around the actual world, one might still say: So 94 percent of teenagers in other countries – that is, respondents who don’t pay taxes and haven’t studied either climatology or economics and aren’t looking for a job – and if they did pay taxes or look for a job, wouldn’t do so in the United States – think that the United States should hobble its economy in the name of something that vaguely sounds scary. And we should care because…?

Uncle Sam: Electrician

My new Cato policy analysis goes into great detail about how the federal government uses your tax money to subsidize businesses.  In fiscal 2006, the “corporate welfare state” cost $92 billion, all of which funded programs that provide unique benefits to particular companies or industries.

One of these programs is the Rural Utilities Service (RUS).  A relic of the New Deal, the goal of the program was to electrify the countryside.  Now that reading by candlelight in the boonies is a thing of the long forgotten past, the RUS has morphed into a fountain of cash for rural electricity co-ops. 

As a story on the front page of this morning’s Washington Post highlights, it’s always easier to create a program than to kill it:

The key to the longevity of the Agriculture Department’s programs for rural utilities has been the [electricity co-ops’] powerful political voice. More than 30,000 members gave an average of $41 last year to the co-op association for political contributions. Given their geographic scope, the co-ops can mobilize letter-writing campaigns across a vast number of states and congressional districts.

To learn more about the corporate welfare budget generally, tune in to my live interview on Bloomberg Radio’s “On the Economy” today at 6:30 pm Eastern.  A podcast about the corporate welfare state will be featured on the Cato website on Tuesday.   

Wisconsin Gas Station’s Prices Are Too Low!

At least, as Dan noted below, that’s the verdict of state regulators, who recently threatened to sue a BP station owner unless he discontinues giving a 2 cent per gallon discount to senior citizens and a 3 cent per gallon discount to boosters of local youth sports programs.

According to Wisconsin regulators, the discounts represent “unfair competition” against other gas stations, and that — get this — imperils consumers. A 1939 Badger State law requires retailers to sell motor fuels at no less than a 9.2 percent markup over the wholesale price.

Wisconsin is not the only state with such a law — a dozen others (Alabama, Colorado, Florida, Louisiana, Maryland, Massachusetts, Missouri, New Jersey, North Carolina, South Carolina, Tennessee, and Utah) have similar provisions to protect gas station owners from the horrors of price competition.

You would think that, amidst the Sturm and Drang of the past few years’ high fuel prices, the public would force lawmakers to throw out this welfare for gas station owners. Alas, no.

Hat tip: Tim Rowland

Auerswald on “The Irrelevance of the Middle East”

Philip E. Auerswald of the George Mason University’s Center and Science and Technology Policy has an interesting piece in the current issue of The American Interest (sub. req’d). In it, Auerswald argues that

the long-term importance of the Middle East is roughly proportionate to the share of the world population for which the region accounts–less than 5 percent. The time is long overdue for policymakers and analysts alike to put the many urgent issues that confront the people of the Middle East in the context of dramatic and unprecedented global transformations in process today. …Any country that persists in focusing intently on peripheral concerns risks ultimately becoming peripheral itself. Even a massive power like the United States is not immune to such a fate.

Shorter version of the Auerswald argument here, and go here for Eugene Gholz and Daryl Press’s excellent Policy Analysis for Cato of the many problems of “energy alarmism.”