Category Archives: Economics

Who Says It’s Inelastic?

Has our oil consumption dropped to 2002 levels? We’ll see what effect it has on the economy. It has to be hurting tourism.

[Late morning update]

Paul Dietz mentions Bob Zubrin’s flex-fuel crusade in comments. It looks like both candidates may be on board with a mandate for this:

The really good news is that both Senators John McCain and Barak Obama have declared their support for the Open Fuel Standard that must be adopted to ensure that each of the roughly 17 million cars we buy in this country every year are Flexible Fuel Vehicles.

Thanks, Florida!

Florida just bought 300 square miles of cane fields in the everglades to return them to wetlands. They paid $1.75 billion. That buys out US Sugar that was responsible for 10% of the US sugar lobby. In April, in response to one of Rand’s posts, I wrote that we needed to find a way to buy out big sugar. For 6 MT times $0.10 implicit subsidy/lb, that’s $1.2 billion/year. US Sugar’s share of that is $120 million per year. So $1.75B is a pretty good price for their concession.

Sweet deal, Rand! Thanks for taking one for the team as a Floridian to lower sugar prices nationwide.

When The Power Went Out

…at Lileks’ place:

It happened when it usually happens, too – every gets home, flips on the air conditioner and turns on the TV, and the brittle infrastructure, held together at the moment with masking tape and some alligator clips, spazzes out completely. This will continue – there’s a controversy going on here about some new power lines and generating plants. A judge blocked the latter, because the utility hadn’t invested enough in wind power, as per the law. That’s the sort of sentence that makes your heart very heavy: a judge ruled that they can’t build the power plant. I’m all for trying everything – wind, solar, nuclear, geothermal, switchgrass, algae, hydrogen, steroidally enhanced gerbils running in cages attached to generators, steam, hydro, shale, and installing small pedals in movie theaters people can push to power the projector, but DO SOMETHING. NOW.

The world has gone nuts. People complain about high energy costs, and the Democrats’ response is to fight every sensible attempt to increase supply, and tell us that the price isn’t high enough. And so far, they seem to be paying no penalty at the polls for it. It would help, at least a little, if we didn’t have a faux Democrat (at least when it comes to economics) at the top of the Republican ticket.

Obama’s Ethanol

If ethanol is so great, why doesn’t he support its importation from Brazil? Surely it’s not because he’s in the pocket of ADM?

ADM is based in Illinois, the second-largest corn-producing state. Not long after arriving in the U.S. Senate, Obama flew twice on corporate jets owned by the nation’s largest ethanol producer. Imagine if McCain flew on the corporate jets of Exxon Mobil.

Corn-based ethanol gets a 51-cents-a-gallon tax subsidy that will cost taxpayers $4.5 billion this year. McCain opposes ethanol subsidies while Obama supports them. McCain opposed them even though Iowa is the first caucus state. Obama, touted by Caroline Kennedy as another JFK, was no profile in courage in Iowa.

…Last year, as President Bush was about to sign an energy cooperation agreement with Brazil, Obama said the move would hurt “our country’s drive toward energy independence.”

Really? The only thing it might hurt is Obama’s drive to the White House.

Must be that new politics. You know, “change”?

And it’s also amusing to note that the Democrats don’t want to wait for drilling to pay off, but they’re perfectly happy to wait for switch grass.

[Mid-morning update]

Further thoughts:

If it’s intended to cut the nation’s energy bill, Obama’s ethanol policy makes no sense, if it’s intended to secure the nation’s energy supplies, Obama’s ethanol policy makes no sense, if it’s designed to improve the nation’s relationship with a major Latin American trading partner, Obama’s ethanol policy makes no sense, but, if, on the other hand, it’s just another example of good old porkbarrel politics, Obama’s ethanol policy makes a great deal of sense.

Obama’s Ethanol

If ethanol is so great, why doesn’t he support its importation from Brazil? Surely it’s not because he’s in the pocket of ADM?

ADM is based in Illinois, the second-largest corn-producing state. Not long after arriving in the U.S. Senate, Obama flew twice on corporate jets owned by the nation’s largest ethanol producer. Imagine if McCain flew on the corporate jets of Exxon Mobil.

Corn-based ethanol gets a 51-cents-a-gallon tax subsidy that will cost taxpayers $4.5 billion this year. McCain opposes ethanol subsidies while Obama supports them. McCain opposed them even though Iowa is the first caucus state. Obama, touted by Caroline Kennedy as another JFK, was no profile in courage in Iowa.

…Last year, as President Bush was about to sign an energy cooperation agreement with Brazil, Obama said the move would hurt “our country’s drive toward energy independence.”

Really? The only thing it might hurt is Obama’s drive to the White House.

Must be that new politics. You know, “change”?

And it’s also amusing to note that the Democrats don’t want to wait for drilling to pay off, but they’re perfectly happy to wait for switch grass.

[Mid-morning update]

Further thoughts:

If it’s intended to cut the nation’s energy bill, Obama’s ethanol policy makes no sense, if it’s intended to secure the nation’s energy supplies, Obama’s ethanol policy makes no sense, if it’s designed to improve the nation’s relationship with a major Latin American trading partner, Obama’s ethanol policy makes no sense, but, if, on the other hand, it’s just another example of good old porkbarrel politics, Obama’s ethanol policy makes a great deal of sense.

Which Is A Greater Environmental Risk?

Off-shore drilling, or oil tankers? Of course, many “environmentalists” would like to ban both. And have us go back to chopping wood, and forty acres and a mule. As long as we aren’t too cruel to the mule.

But it’s pretty clear to me that off-shore drilling with modern technology is much lower risk, in terms of oil spills, than having foreign-flagged tankers operating in our waters. This kind of false sense of safety, and misplaced priority is common. For instance, some people avoid flying, because they fear it, and drive instead, vastly increasing their risk of being killed on the trip. I don’t know whether people who oppose oil drilling are being similarly irrational, or if they simply recognize it as an easier target than ending oil imports, so they grab whatever low-hanging fruit they can to minimize our oil consumption (and drive up the price, which is perhaps part of the goal).

Also, as noted here, banning drilling off US shores doesn’t eliminate the risk of spills from drilling. It just moves it to other (and perhaps even more environmentally sensitive) places.

The Rough Road To Space

I have a new piece up over at Pajamas Media on space transportation and the Interstate Highway System.

Hey, it was Mike Griffin who made the analogy, not me.

I should also note that while the title is mine, the subheadline is theirs.

[Late afternoon update]

Only Mark Whittington would have the native talent to so misread this piece as to think that I was “expressing astonishment.” Of course, it’s not the first time that he’s fantasized about my views.

[Another update]

Now Mark is fantasizing that I actually want, or expect NASA to build the Interstate to space.

Well, it’s totally in character for him.

I sure wish he’d learn to read for comprehension.