The Gray Lady Deflates “Peak Oil” Fears

An excellent article by reporter Jad Mouawad in today’s New York Times knocks the stuffing out of those warning for the nth time that we’re about to run out of oil. What the doomsayers overlook is that existing fields typically deliver about 35% of their oil to the market. Until recently, the rest had been deemed unrecoverable for economic reasons.

But as technology improves and oil prices go up, what was once deemed unrecoverable becomes, well, recoverable. And that has a big impact on supply. Oil analyst Leonardo Maugeri has estimated that if recovery rates (which hovered around only 10% a few decades ago) were to move from 35% to 40%, that would be akin to adding a new Saudi Arabia to the global crude oil market. Maugeri’s recent essay in Newsweek covers a lot of the same ground.

Mouawad’s piece well demonstrates this dynamic at work in the Kern River oil field in Bakersfield, California. First discovered in 1899, the field has been producing for about a century and is still going strong despite numerous predictions over the years that the field was on its last legs.

I’ve said it before and I’ll say it again: the New York Times does a better job reporting business news, industrial trends, and microeconomic developments than any other newspaper — and perhaps magazine — in the world. Today’s piece is an excellent example of why serious people need to read that newspaper.

Paternalism Runs Out of Gas

I was filling up the minivan on Saturday when a woman at a nearby pump approached me and said, “Can you do me a favor? I don’t know how to pump my own gas.”

My first reaction was puzzlement. She was probably in her 30s, driving an SUV with what looked to be one or two kids inside. How could she be driving a car all these years and still not have figured out how to pump her own gas? Then she said something that instantly made it all clear.

“I’m from New Jersey.”

New Jersey, of course, is just about the only state left that requires that all gas stations within the state be full-service. Defenders of the ban on self-service pumps claim it is safer and more convenient for motorists and that it does not cause higher prices. None of those arguments hold water against the decades of successful experience with self-service pumps across the country. If a gas station attendant could pump your gas more safely and conveniently and at the same price, why do so few stations offer full-service anymore?

On top of its economic inefficiencies, the New Jersey ban on self-service is an insult to the good people of New Jersey. Their own state government is telling the world that its citizens are not smart enough or responsible enough to be trusted to handle a gasoline pump. When it comes to the routine task of filling up our vehicles, the paternalistic government of New Jersey treats its citizens as though they are children.

As I witnessed first-hand over the weekend, that paternalism can leave its citizens overly reliant on the kindness of strangers whenever they venture away from home.

Deamonte Didn’t Have to Die

The other day, I was at CNN’s Washington studio to comment on proposals to improve dental care for the poor following the tragic case of Deamonte Driver, 12, who died in Maryland this week for lack of routine dental care

My case was twofold.  First, having the government throw more money at the problem would just leave even more people with lously access to dental care.  That is true of government programs targeted solely at the poor (read: Medicaid), as well as universal programs such as the U.K.’s National Health Service, described by the New York Times as a “state-financed dental service, which, stretched beyond its limit, no longer serves everyone and no longer even pretends to try.”  Unfortunately, throwing money at the problem is exactly the solution proposed by U.S. Senators Ben Cardin (D-Md.) and Jeff Bingaman (D-N.M.), as well as Maryland Del. Nathaniel T. Oaks (D-Baltimore) and Sen. Thomas Middleton (D-Calvert County). 

Second, Deamonte might have gotten the care he needed if not for regulations that restrict access to basic dental care for poor families.  As the American Dental Hygienists’ Association notes:

In the greater Washington D.C. area, patients currently do not have direct access to dental hygienists because of restrictive public health policies. In many other states patients are allowed direct access to dental hygienists for preventive procedures, which has been an effective model in increasing access to care.

Those “public health” policies are regulations that define the scope of practice for dental hygienists and require them to work under the supervision of a dentist.  Requiring licensed hygienists to work out of a dentist’s office makes it impossible for them to strike out on their own, providing basic and preventive dental care that is affordable to low-income families. 

Were it not for those “public health” policies, intervention by a dental hygienist could have caught Deamonte’s problem well before it threatened his life.  Even if the hygienist could not have extracted the abscessed tooth, at a minimum she could have bought Deamonte’s family more time to fix the problem.

Something unrelated also happened while I was at CNN, about which I blogged elsewhere.

The Federal Communications Commission Versus the First Amendment

Newspapers and movie studios have reasonably good protections from government intervention and censorship. But as Steve Chapman explains, the Federal Communications Commission successfully has limited the First Amendment rights of television networks:

The First Amendment’s guarantee of freedom of speech has complex implications, but it clearly means two things: The government cannot tell you what to say, and it cannot tell you what not to say. That is your own business, and if you conduct it in a way the government dislikes, the government can take a flying leap. Unless by “government” you mean the Federal Communications Commission. It operates on the assumption that in its special realm, the First Amendment is a nonbinding resolution.

In addition to the constitutional argument, he makes two excellent points. First, improving television quality (as defined by politicians) is not the business of government. Second, parents should decide what their kids see, not bureaucrats:

…parents who want to shield their kids from bad language on TV already have ample means to do so – via channel blocking and V-chips that can be used to filter out programs with content they regard as inappropriate. The FCC says these methods are ineffective because parents don’t use them. More likely, parents don’t bother because they don’t think the problem is serious enough to justify the effort to shield kids from words they’ve already heard on YouTube. To insert the federal government is not a way to strengthen the authority of parents but to circumvent it. …The idea that we need the FCC to assure educational opportunities for children is nonsense on stilts. In the first place, there are plenty of channels, from PBS to the Discovery Channel, that offer nothing but educational programming. …In the second place, any parents truly interested in exposing their children to intellectual stimulation are more likely to shut the TV off than turn it on. Even if more educational programming would be a good thing, what business is that of the government? More G-rated films would be a good thing, too, but we don’t force movie studios to produce them. …Today, most viewers no longer distinguish between cable and broadcast programs. So having different rules for each makes about as much sense as having different regulations for odd- and even-numbered channels.

Further Evidence of Federal Silliness

As an irony junkie, I enjoy watching federal officials argue that they should be able to run the country’s educational system at the same time they flunk the basics.  For example, the Clinton Administration once posted this map on the White House website:

 

There are a number of interesting things about this map.

  • Apparently, Owensboro, Kentucky, isn’t in Kentucky anymore.  In fact, it looks like Kentucky isn’t in Kentucky anymore.  It has moved to Tennessee. 
  • Illinois has annexed the entire western portion of Kentucky, completely cutting off everything south and west of Union county, and with it Kentucky’s access to the Mississippi River.
  • It seems that Kentuckians were so infuriated by the loss of western Kentucky — and their state’s very name — that they invaded their neighbors to the east, capturing the city of Roanoke, Virginia.
  • Both Minnesota and Iowa have led incursions into South Dakota, conquering and dividing up that state’s southeastern corner.  South Dakota’s largest city, Sioux Falls, has fallen into the hands of wild-eyed Minnesotans.  Everything south of Sioux Falls is living under brutal Iowan occupation. 

So the other day, while in a lobby shared by CNN and the U.S. Department of Education (ED), a poster on the ED side bearing the following logo caught my eye:

U.S. Department of Education and Federal Student Aid logo (Start here. Go further.)

The proper usage of further and farther is the subject of some dispute.  Authorities have traditionally instructed that farther is used when discussing distance (Maine is farther from DC than New York) while further expresses a difference of degree (he further refined his craft).  Some argue that the distinction has been effectively erased by usage.  But I figured that since the ED’s new slogan was based on the common expression “you’ll go far,” there was a good chance that I had struck gold.

Yet the fun had really just begun.  When I pulled out my mobile phone to snap a photo, a very large man jumped up from behind the security desk and interposed himself between me and my prize.  He told me to put the camera away.  Irony or no irony.  Why?  Federal building.  Therefore, no taking pictures.   Of a poster.  In the lobby.  Of a building that doesn’t house, and isn’t near, anything even mildly important.  (Okay, that’s not fair.  If anything happened to those offices, who would all those former college attendees blow off?)

By the time I was done at CNN, an even larger man (the first man’s supervisor) wanted to have a word with me.  I wonder if their demeanors would have been different had the CNN reporter and cameraman not happened to follow me downstairs.

When Common Sense Just Isn’t Enough

The National Association of Manufacturers has been in Washington long enough to know that sometimes, if you make that last appeal, that last argument, compliment the right person, then things might just go your way. 

In an unusual (to me, at least) letter expressing opposition to an utterly inane amendment sponsored by Sen. Charles Schumer that would required ALL inbound cargo at U.S. ports to be screened (an impossibility without bringing international trade to a halt), NAM’s Jay Timmons urges the Senate to oppose the amendment. In the letter, Timmons describes the impracticability of the idea and describes how such measures would actually make the ports less secure.

But, to be sure, to cover his bases, and to appeal to that special sense of honor and duty reserved only for politicians, Timmons concludes with this gem:

The NAM’s Key Vote Advisory Committee has indicated that votes on the Schumer amendment will be considered for designation as Key Manufacturing Votes in the NAM voting record for the 110th Congress.  Eligibility for the NAM Award for Manufacturing Legislative Excellence will be based on a member’s record on Key Manufacturing Votes.

That could be the clincher!

Cost Overruns, Again

The Washington Post reported yesterday that the cost of new combat ships from Lockheed Martin and General Dynamics will likely be at least $350 million each, instead of the originally budgeted $220 million.

That 59 percent cost increase is routine for big federal procurements. The table below summarizes official government estimates of costs for various defense, energy, and transportation projects.

No doubt, what goes on with these projects is a “nudge nudge, wink wink” between federal officials and major contractors. The game involves key players on both sides low-balling initial costs in order to get project approval, and then having an informal agreement to let costs float up over time.

In this case, one cause of the combat ship cost increase, noted the Post, was that ”the Navy said its original cost estimate did not factor in some management costs.” How convenient!

A Sampling of Federal Cost Overruns
(Defense items in constant dollars; other figures in current dollars)
Project Estimated Cost and Date of Estimate
Original Latest or Actual
Transportation    
Boston “Big Dig” $2.6b (1985) $14.6b (2005)
Virginia Springfield interchange $241m (1994) $676m (2003)
Kennedy Center parking lot $28m (1998) $88m (2003)
Air traffic control modernization $8.9b (1998-2004) $14.6b (2005)
Denver International Airport $1.7b (1989) $4.8b (1995)
Seattle light rail system $1.7b (1996) $2.6b (2000)
     
Energy  
Yucca mountain radioactive waste $6.3b (1992) $8.4b (2001)
Hanford nuclear fuels site $715m (1995) $1.6b (2001)
Idaho Falls nuclear fuels site $124m (1998) $273m (2001)
National ignition laser facility $2.1b (1995) $3.3b (2001)
Weldon Springs remedial action $358m (1989) $905m (2001)
     
Defense (per unit in 2003 dollars)  
Global Hawk surveillance plane $86m (2001) $123m (2004)
F/A-22 Raptor fighter $117m (1992) $254m (2002)
V-22 Osprey aircraft $36m (1987) $93m (2001)
RAH-66 Comanche helicopter $33m (2000) $53m (2002)
CH-47F cargo helicopter $9m (1998) $18m (2002)
SBIRS satellite system $825m (1998) $1.6b (2002)
Patriot advanced missile $5m (1995) $10m (2002)
EX-171 guided munition $45,000 (1997) $150,000 (2002)
     
Other  
Capitol Hill visitor center $374m (2002) $559m (2004)
Kennedy Center opera house $18.3m (1995) $22.2m (2003)
Kennedy Center concert hall $15.1m (1995) $21.3m (1997)
Washington D.C. baseball stadium $435m (2004) $611m (2007)
International space station $17b (1995) $30b (2002)
FBI Trilogy computer system $477m (2000) $600m (2004)
Pentagon secret spy satellite $5b (n/a) $9.5b (2004)
Pentagon laser anti-missile system $1b (1996) $2b (2004)
Sources: Compilation by Chris Edwards based on GAO reports and Washington Post stories. Figures in $millions (m) or $billions (b).