Unclean Politics Means Unclean Energy

by Don Boudreaux on July 5, 2007

in Energy, Environment, Politics

In today’s Washington Times, my friend and co-blogger at Market Correction, Andy Morriss, nicely exposes the foolishness of the misnamed “Clean Energy Act of 2007″ (which the U.S. Senate recently approved).  Here are Andy’s final few paragraphs:

There is a way to improve energy security: unleash entrepreneurs. Refiners have been solving America”s energy problems since the start of the 20th century. When the U.S. faced a major gasoline shortage in 1910, entrepreneurs revolutionized refining technology and doubled gasoline yields. For the last 30 years, they”ve been boosting output from refineries, making it possible for our total capacity to rise even as older, less efficient refineries were closed.

In short, American refiners have regularly increased the quantity and quality of gasoline from each barrel of crude, and done it without Congress” advice.If we want to increase our energy security, we”ll stop changing the rules every time a politician needs an issue for his next campaign ad. Refineries, pipelines, and oil fields are all multibillion-dollar investments that take years to earn a return. The constant shifting of government rules undermines the certainty investors need before making such a large-scale capital commitment.

If we want to make America more secure, decrease gasoline prices, have cleaner fuels, and increase the reliability of supplies, we need to get the government out of the way of the entrepreneurs who can deliver those things.

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Muirgo July 5, 2007 at 1:13 pm

From what I understand the clean energy act simply gets rid of all the subsidies given to the oil industry putting it on a more equal competitive basis with renewals. IMO the cost of gas is controled not by the market but by the worst collusion possible between government and corporations involving massive subsidies and even placing the issue as number one above all else in foreign policy. The oil industry is IMO an example of a means of production controled by the state that has little to do with free markets.

America past peak oil production in the 1970's and no amount of subsidization of the industry will change that.

And certainly economist who like to argue their profession has arrived at consensus on how the economy works based on their models are left in the akward postition of having to hand wave away the scientific consensus on climate change and their models that suggest the "free market" and oil geniouses have no way to correct for such externalities.

Chris July 5, 2007 at 1:47 pm

To Muirgo:

What makes you think that Dr. Boudreaux and the majority of people visting this site agree that oil companies should be getting subsidies? You've been on here long enough to know that's not true, so why bother including it as part of your arguement supporting the energy bill? Why not address the points that the article says are the problems of the energy bill (energy independence/security and price gouging)? Did you fail to address these points because the author is 100% correct?

P.S. The word "simply" does not belong in any sentence describing any sort of legislation written by congress.

Muirgeo July 5, 2007 at 2:56 pm

Chris the bill basically gets rid of subsidies for oil. That's something I assume a liberal economist supports.

I find the claim,
"Political talk about "energy security" is Washington code for consumers paying higher prices for more expensive domestically produced fuels."
dubious when the externalities we pay for supporting the oil industry are not considered.

Now certainly the bill does support redirecting the savings towards renewables which I fully support for the same reason I spported the Manhatten Project, The Apollo Project and the governments developement of the Internet….that being I believe the free market does not stand alone. I write to you in good part on this computor, this internet having prevailed the cold war as much an product of those government programs as of anmything the market came to bear.

spencer July 5, 2007 at 3:50 pm

You said:
In short, American refiners have regularly increased the quantity and quality of gasoline from each barrel of crude,

where can I find any evidence to support this supposed fact?

In other words when did the number of gallons of gasoline in a barrel of oil change?.

Chris July 5, 2007 at 4:03 pm

Spencer –

Crude oil is a mixture of a variety of petrochemicals. The change has come from the development of enzymes that are able to convert heavier petrochemicals into gasoline. In effect, it means that you may trade-off heating oil, asphalt or kerosene for gasoline.

HowStuffWorks.com has an excellent article on refining. The original article is alluding to the "Chemical Processing" that occurs.

(I am not the same Chris as the one who posted above, but I think I was here first.)

Concered Reader July 5, 2007 at 4:09 pm

No offence, but you, muirgeo, have single-handedly diluted the quality of comments on this otherwise excellent blog as readers have been forced to humour your trite and poorly formulated (and spelled) comments. Frankly, the lack of research or thought put into your comments makes my brain hurt. There are other blogs where your drivel is gladly accepted, please comment there.

methinks July 5, 2007 at 4:48 pm

A fine article and on target. The "Clean Air Act". What a fine piece of political claptrap that little piece of by-partisan bullshit is! It's like watching the Soviet central planners in action.

Funny how the tariffs on Brazilian sugar ethanol remain in place so that we can spin our wheels tossing resources down the corn ethanol. Nothing like a central planner allocating resources! It would take Stephen King to write something more frightening.

The Albatross July 5, 2007 at 5:18 pm

Muirgeo,
As I beleive I have laid out before, the so-called "subsidies" given to big oil are tax breaks for domestic drilling. It is not like there are government checks arriving at corporate HQs. Just because Uncle Sam decides to steal less from someone does not make it a "subsidy." The general consensus among thoughtful people who know and study the industry is that Uncle Sam gets much more out of the oil industry than he puts in (whatever it is that he puts in).
Your point about collusion is unfortunately dead wrong. We know from game theory and experimental economics that collusive agreements among even a very small number of people (like two) are: (1) nealry impossible to set up in the first place, and (2) practically impossible to maintain. Sure, I am sure they can happen but only in the sense that nothing is impossible. Your conviction that there is a conspiracy afoot is sadly all too commmon. People seem to use it as a heuristic when the complexities of the market confuse them. Anyway, that's the economics behind collusion–that is if you are still here to learn stuff.

ben July 5, 2007 at 5:38 pm

I write to you in good part on this computor, this internet having prevailed the cold war as much an product of those government programs as of anmything the market came to bear.

Huh?

Concered (Concerned?) Reader: good call.

Muirgeo July 5, 2007 at 5:53 pm

Hmm A president who's father is a member of the Carlyle group, a president who's father gave him oil companies to run while he grew up and the family has close ties to the Saudi Royal family, A Vice president bouncing between government and the private sector of the oil industry and a secretary of State previously a CEO at Chevron with an oil tanker named after her.

A President who's initial plan on entering office was to figure a way to invade Iraq. An energy policy done under the veil of secrecy. One thing known to come out of the initial disclosure was a map of Iraq with the main key features to be the locations of the prime oil reserves in Iraq, A president who's pre-invasion message to the people of Iraq is to paraphrase, " your fate will depend on your actions, do not destroy oil wells". A post invasion plan that allowed rampant looting of the entire country with the exception of massive forces to protect the ministry of oil buildings.

And currently the war drags on while these corporate raiders and our government continue to look for the final step to allow withdrawal of our troops…that being "negotiated" contracts for the Iraqi peoples oil sending almost all of the revenue to multinational corporation with little left over for the Iraqi's. All wall squashing an attempted labor movement among st the Iraqi oil workers.

No you are right their is no conspiracy. It's in fact all out in the open. Call yourself a supporter of free markets and myself a conspiracy nut. But IMO I'm far more a supporter of free markets then a dunderhead such as yourself.

"We know from game theory and experimental economics that collusive agreements among even a very small number of people (like two) are: (1) nealry impossible to set up in the first place, and (2) practically impossible to maintain."

And yet it happens under your very nose!

Concerned Reader July 5, 2007 at 6:10 pm

I suppose it is only fitting that if I criticise another's spelling, I am fated to misspell something in that critique. Alas.

Muirgeo July 5, 2007 at 6:21 pm

Concered Reader,

They use force to make you read and reply to my comments? Surely you're a supporter of both the free-market economies and a free markets of ideas? But some how I wonder about you on both counts. Presuming the oil industry is a result of a free market economy and suggesting how ever subtly that maybe I be banned. And free market people I thought always put quantity above all else. 250+ post on an anecdote. I think I deserve some credit for stimulating "the market". Sorry for your "brain hurt" but I bet its as much about content as it is about my poor quality.

Brad July 5, 2007 at 6:25 pm

Muirgeo still has yet to name a specific "subsidy". Really, this isn't fun anymore. I was hoping we could get to the question of how material said subsidies are sometime before we actually run out of oil. That gives him a few hundred years, but I wouldn't bet on him…

The Albatross July 5, 2007 at 6:58 pm

All I do is point out that Uncle Sam gets more from big oil than big oil gets from Uncle Sam and that it is difficult for producers to collude on price, and I get the full DailyKos treatment? All that is missing is the part about the world being ruled by the Pentavirate, who as we all know consists of the Queen, the Vatican, the Getty's, the Rothchilds, and Colonel Sanders. The facts remain:
1. The "subsidies" targeted in the bill are merely tax breaks for domestic production–as in no where near Iraq.
2. Big oil is more often the target of government action and predation than it is the beneficiary of its largess.
3. Conventional economics tells us that it would be very, very difficult for the big oil companies to conspire and fix prices.

All relatively known and uncontroversial to people who know the industry and economics, and definately not deserving of me being called a "dunderhead". Guess you are more interested in "teaching us a thing or two" about our own business, than seriosly learning anything about the oil industry or economics.

Scott Clark July 5, 2007 at 7:26 pm

The Albatross:

Mention the Pentavirate again, and you'll find your access to delicious fried chicken SERIOUSLY diminished.

You've been warned.

Muirgeo, IMO you can post where ever you can find willing hosts.

methinks July 5, 2007 at 8:36 pm

The conspiracy I'm really interested in is the one that graduated Muirgeo from medical school.

This knot of confusion has told us that he/she is a doctor.

ben July 5, 2007 at 11:32 pm

I was thinking exactly the same thing, methinks! Great call.

ben July 5, 2007 at 11:34 pm

And free market people I thought always put quantity above all else.

Actually they put individual freedom above all else, I think.

skh.pcola July 6, 2007 at 3:27 am

If I were of a mind to respond to Muirego's lunacy (which I'm not, since I'm over her trolling), I would point out that so-called "peak oil" didn't occur in the '70s, and hasn't happened yet. If the envirowieners would pipe down and quit acting like infants with poopy diapers, we could get on with the process of finding more petroleum reserves. Further, I personally think that the theory of abiotic oil has merit, for reasons that don't fit this thread. We aren't even close to running out of oil…or near monomaniacal moonbats who salivate at the thought of ejaculating whatever socialist meme is in vogue at the moment. Hell, some of those idiots still cling to memes from decades ago. I think you know what I mean.

And "consensus" among economists is rare. There are very few abstractions on which there is agreement. You can find "educated" economists like Krugman who rarely opine on anything and describe the scene playing out in front of thier eyeballs. I've read articles of his that deny the basics of Demand and Supply. It is laughable for a "physician" to generalize all economists into one lump.

Gadzooks. Sam can get upset because of incivility by the readers here, but how about recognition of the fact that Muirego is incorrigibly ignorant and a troll? S/he/it (an apt description) is only here to agitate.

muirgeo July 6, 2007 at 7:02 am
Methinks July 6, 2007 at 8:12 am

skh,

The United States hit peak oil production in 1972 (see: Hubbert's Peak). Since then, oil production has been declining. However, you're right that we're not ever going to run out of oil. You can go to your back yard, dig up some dirt and extract hydrocarbons from it.

We run out of oil at a given price, and even then the cost of finding and lifting it can be reduced by advances in technology which can make previously uneconomic oil economic at the same price. You don't even need to consider abiotic oil to consider that we have as many hydrocarbons in the ground as there is ground. Tar sands are economic at current prices but weren't even close at $20/bbl. There's more oil in the shale of the Rocky Mountains than there is in Saudi Arabia – but it costs $40/bbl to lift (10 years ago – it may cost less now), so it wasn't economic until recently.

Most of the "research" and scare books I've seen are written by people who may be scientists but have no knowledge of oil economics. In fact, they seem to be completely ignorant of the basic facts of the industry. They assert that because we have a limited amount in reserves now and we are not finding it as fast that we must be running out. They completely ignore price and technology!

The Albatross July 6, 2007 at 10:21 am

Methinks,

Just thought I would update you–the viability of shale oil is down to $26/bbl as of a year ago. As Andy alluded to in his article the shale oil projects have no trouble innovating. They are more concerned about the government changing the rules of the game–like with The Clean Energy Act of 2007. Also, since nearly all of the shale is on public land, then that creates even more problems and uncertainty. If people are going to flip out about drilling in a "wildlife reserve" that makes the Ice Planet Hoth look like the Garden of Eden, then they are hardly going to take shale oil projects in Colorado and Wyoming sitting down. Anyway, the innovation in shale proves Andy's point, but the question remains, will we let them?

blue collar troll July 6, 2007 at 11:49 am

Hmmm,
Crude oil at 72.67 a barrel as I type this. Where are those free market miracles from the tar sands or oil shales? I can remember discussions of these resources back in the 60's and 70's. Must be those nasty gobermint regulations.

Methinks July 6, 2007 at 11:50 am

Thank you, Albatross. That's an amazing! I think you also described very well the reason that most American petroleum companies are looking abroad for E&P opportunities.

Sam Grove July 6, 2007 at 12:02 pm

Well, my experience of muirgeo's participation in the forum is that it has actually gone donwhill.

I still don't think incivility is a useful response as it has failed to get muirgeo to go away…perhaps the most desired outcome.

However, let us give no troll the satisfaction of rising to whatever bait they may dangle around here.

Reaction usually results in reaction.

Muirgeo, like so many people, suffers from a mind-jam packed with collective paradigm as evidenced by statements indicating supreme faith in "democracy", the "will of the people".

IOW, muirgeo gives all the appearance of having been successfully indoctrinated by the political-corporate sponsored educational system. That's what can happen to your brain on collective education. Mythology becomes fact.

When you get down to it, muirgeo is a prime example of partisan political alignment. This often results in bi-lateral thinking, where the worlds is defined by the us v. them dynamic.

Let's face it, such individuals, unless they experience a radicalizing emotional experience, are immune to information that does not support their ideological position.

The problem for proponents of tranformational ideas, is to find those who have not got so caught up in the partisan politic that they have developed this ideological immunity. IOW, fertile ground.

blue collar troll July 6, 2007 at 12:27 pm

"Let's face it, such individuals, unless they experience a radicalizing emotional experience, are immune to information that does not support their ideological position."

Now there's a winning platform-must be The Tooth Fairy Theory it only works if you believe. Call it faith based economics. Facts on the ground have no meaning.

The Albatross July 6, 2007 at 12:50 pm

"Where are those free market miracles from the tar sands or oil shales? I can remember discussions of these resources back in the 60's and 70's. Must be those nasty gobermint regulations."

The oil sands work in Canada is proceeding with output expected to rise from 1 million bb/d to 5 million bb/d. This would have happened earlier but there were concerns that Canada's signature to the Kyoto Protocol would scupper the whole project. The other major heavy oil/tar project was in Venezuala which has unfortunately encounter severe government predation, which has also cost that country about 1m bb/d in ordinary crude production (at least last time I checked). The preliminary shale oil projects are tied up in the leasing process as they are on government land (again last time I checked-might have changed). Those are the facts on the ground and when you combine them with the fact that both coasts and huge tracts of Alaska are off limits to drilling I think we can agree that there "be gobermint regulations aplenty."

muirgeo July 6, 2007 at 12:51 pm

blue collar,

Excellent! You beat me to it. Lets put "faith in democracy" and "will of the people" to a vote against methinks support for corporate rule. Then all can understand methinks distrust of democracy.

Two words!

Sam Grove July 6, 2007 at 1:25 pm

See, the bi-polar outlook cannot recognize 3+ options. If you are not left or right, in their view, you're nowhere.

It's either democracy or corporate rule. No other possiblity can exist for them. Unthinkable; literally. It's amazing how well our educational system works at intellectual disablement.

The Dirty Mac July 6, 2007 at 1:26 pm

Muirgeo convinced me to send more money to the Ron Paul campaign. Nice work.

muirgeo July 6, 2007 at 1:40 pm

I'll take Ron Paul over any of the other Republicans. Especially the scary 3 that think the Earth is 6,000 years old. YIKES!

BTY; 15 of my 20 years of eduction were Catholic. Those nuns were brutal!

blue collar troll July 6, 2007 at 1:59 pm

"Let's face it, such individuals, unless they experience a radicalizing emotional experience, are immune to information that does not support their ideological position."

Now there's a winning platform-must be The Tooth Fairy Theory it only works if you believe. Call it faith based economics. Facts on the ground have no meaning.

blue collar troll July 6, 2007 at 2:11 pm

apologizes firefox reposted as i was leaving.

Sam Grove July 6, 2007 at 3:31 pm

Facts on the ground have no meaning.

AKA, politics as usual.

Sam Grove July 6, 2007 at 3:59 pm

Here's how you get the government to serve "the people", that mythical, monolithic block of everyone who has the same values and priorities:

The poltical process caters to monetary influence and votes.

In order to have the government serve the people, that mythical group mentioned above, everyone has to be made equal so that their values and priorities are the same. That way there are no special interests to seek special favors from government.

As it has been demostrated that government is unable to make everyone wealthy, it must therefore make everyone poor, in order to achieve poltical nirvana, the place where everyone has identical political values.

Unfortunately, while there are many who aren't too interested in being rich, very few desire to be poor.

I don't know where to go from there. There doesn't seem to be any way around that fact that different individuals have different values and priorities and if the political process become THE means to achieve goals, then it seems to me that society under political government must be rife with political process. The main advantage of democracy then is this conflict doesn't have to be menifested in great violence…unless there is conflict between governments.

I don't know how the political faithful can resolve these problems unless one side of the great divide manages to somehow get rid of the other side. Then all will be well.

BTW, one thing those partisans from the left/right arena don't get about libertarians, is that many of our rank are refugees from the left/right teams.
Once transitioned fully from left/right/uncertain domain, libertarians should no longer be troubled by the sentiments that cause members of one side to hate the other.

Sam Grove July 6, 2007 at 4:01 pm

rife with political process

meant to say 'rife with political conflict'.

Chris July 6, 2007 at 4:03 pm

Albatros –

You forgot to mention that "mining" the tar sands only makes economic sense when the market price of oil is as high as it is now because of the difficulty in refining.

Muirgeo –

What exactly is wrong with the Carlyle group? They invest in a wide variety of businesses, some of which are engaged in bringing alternate energy to market.

The Albatross July 6, 2007 at 4:42 pm

Chris,
True enough, but I wanted to be brief. Furthermore, I think the biggest part of the story here is that it is innovation in these areas that have made these resources viable–oil prices can and do collapse. When I was studying oil sands for a project about ten years ago, the conventional wisdom was that oil had to be above $40 for the projects to be viable, what was $40 (1997 $) is now $28 (2007 $). The same is true of shale (2.6 trillion barrels worth in the USA), where we have gone from $40 viability to $26. Again I echo the point of Andy's article–we will have nothing to worry about as long as we allow people the freedom to innovate and more importantly reap the rewards of their innovation.

muirgeo July 6, 2007 at 6:03 pm

Muirgeo –

What exactly is wrong with the Carlyle group? They invest in a wide variety of businesses, some of which are engaged in bringing alternate energy to market.

Posted by: Chris

$54 billion of investment (nothing particularly wrong with that). About 1000 main investors (a little concerning/ huge concentration of wealth). Conflicts of interest. (key politicians and investors mixing/ extremely concerning). Political arbitrage ( power meets wealth/ poor kids fight the rich mans war/ guns, weapons, oil ad money are exchanged and even their media outlets do well hyping, propagandizing and reporting on the wars they start).

"Carlyle partners, who include Baker and the firm's chairman, Frank Carlucci – Ronald Reagan's defence secretary and a former deputy director of the CIA – own stakes that would be worth $180m each if each partner owned an equal slice. As in many areas of its work, though, Carlyle is not obliged to reveal the details, and chooses not to."

http://www.guardian.co.uk/wtccrash/story/0,1300,583869,00.html

If you're comfortable with all that Chris go ahead and make a funny comment on what a troll I am, how I'm paranoid and then something about how great free markets are.

spencer July 6, 2007 at 8:17 pm

No Cris you do not understand.

There are 42 gallons in a barrel of crude.

Out of that 42 gallons you can produce x gallons of gallons of gasoline, y galoines of heating oil, z gallons of diessel , w gallons of aviation fuel, q gallons of other thing lubricants, etc. But x+y+z+q = 42. If you produce more of x you have to produce ,less of something else. It is a matter of chemistry, influenced by prices. If you start withe west texas intermediate, or Venezuelan heavy crude, or north sea oil or
saudia arabian heavy sulpher c

spencer July 6, 2007 at 8:44 pm

Saudia Arabian heavy sulfurous crude you will prefer a different combination. In a free market the combination will change depending on prices. But the Communist in the old USSR were faced with the same chemistry and produced a combination of x+y+z+q=42. Sometimes it was different from what a free market would have produced and sometimes it was the same. But it did not have to be a capitalist system to distill one barrel of oil into 42 gallons of various petroleum products.

The way Boudreaux wrote it up he implied that because it was a capitalist market they were able to get more then 42 gallons of product — a mixture of gas, diesel, heating oil, etc, –out of a barrel of crude oil. That is what I wanted evidence of and if you notice he did not try to defend his statement.
Hell, the Nazis in Germany actually were able to add coal to crude oil and get more gasoline and/or aviation fuel then the US did. Moreover, given the demand and the prices in their system it was exactly what the market said they should have done.

That is why I commented. It was a typical poor analysis by Boudreaux that said because something happened it was because of the capitalist system and completely ignored the fact that the achievement had little or nothing to do with capitalism. Non-capitalist systems achieve the same results. If you listened to Boudreaux the only reason the sun rises each morning is because of capitalism. But we know that the sun rises each morning on non-capitalist systems just as it does on the US.

That does not imply that non-capitalist systems are better then capitalist systems.
But it does not mean that capitalist systems are not always perfect as Boudreaux tries to claim.

Sam Grove July 6, 2007 at 9:25 pm

capitalist systems are not always perfect as Boudreaux tries to claim

Straw Man.

Perfect is not an appropriate adjective to use with market, free market, underground market, capitalism, etc. I have never gotten the impression that Coudreaux was attempting to cast market processes or capitalist systems as 'perfect'. So you've built a straw man, in your own mind, no doubt, purely for the pleasure of knocking it down. In regards to markets, I have no idea what the adjective 'perfect' could possibly mean. Perhaps you can tell us.

Don's claim is that market processes are dynamic and that freer markets strongly tend to produce better results (more wealth for more people) than less free markets, because the dyanmism is less constrained.

And the excerpts above is not about comparing U.S markets to soviet, NAZIS, or other non-free markets, but about U.S. markets with and without "incentive management" by politicians.

That incentives exist in less free markets as well as freer markets is undeniable, as humans under any system desire to survive.

The Albatross July 6, 2007 at 9:42 pm

Ok where to begin. First of all Muirgeo if you ever want to be taken seriously by anyone do not cite the Guardian. British newspapers are British newspapers–well known for their idiocy and partisanship. The Guardian is no more reliable than the Sun (a rightwing newspaper owned by Newscorp)(actually the Sun has a better record for accuracy and that is truly scary–hell at least we get the page three girls from the Sun whose fake bits are more real than anything you will see in the Guardian). I was born in the UK and spend much time there, so anyone citing the Guardian is prone to finger pointing and laughter–it is a little like quoting the National Equirer or News of the World as the basis of your facts. I once had to tell this to a student–he took a second look and agreed very quickly (he got an A anyway, because he had made a good initial argument). I know you will not believe me but even my left wing, socialist British born mother will acknowledge that the Guardian is an absolute turd full of Bolshy nonsense and better known for its spelling mistakes and fourth grade reading level in Britain.
Second of all, the Carlyle Group at $54 billion–that is it? You had me scared for a minute, I thought we might be dealing with some trillion dollar deal. $54 billion is nothing in a $12 trillion dollar economy. So the Caryle Group is a problem, but your enlightened friends (and they will eventually gain control) in government can be trusted with roughly $3 trillion? Not to mention their ability to indict, subpoena, and otherwise audit all those Americans who disagree with them (unlike the Caryle Group, which has no police or subpeona powers). Not to say that government run by Conservatives would be any better, but I think the power of the federal government (whoever controls) somehow overshadows that of the Carlyle Group–even if they were to pair with the evil Colonel Sanders and his beady little eyes and his delicious chicken that we all crave night and day.

Spencer,
You are correct there are only 42 gallons in a barrel of oil, but you get different outputs from different types of crude. Heavy crude tends to produce more diesel, asphalt, and petroleum coke. However, over time we have learned that through the process of cracking, which envolves the reaction with crude with different enzymes in a catayst cracker (or cat cracker as we used to say when I used to fix them as a teenager). Ergo, as you improve the process you can improve your yields of different petroleum products. Want more gasoline–then crack more of those heavy hydrocarbon molecules into something simpler. Sure you give up more of the heavy stuff–diesel, pet coke, asphalt, etc.–but you can produce more light stuff–gasoline, kerosene (jet fuel), pentanes (plastics). Anyway, you are right, but so was Andy when he brought up the fact that entrepreneurs had managed to get more gasoline from a barrel of oil. Although the number of US refineries has declined (along with their bb/d capacity), US gasoline output has still risen. The reason was outlined in Andy's article–we figured out how to get more gas from a barrel of oil (and less of other less valuable stuff). As I said, I think you are right, but then again so was Chris.

The Albatross July 6, 2007 at 10:27 pm

Sorry, I should mention the new shale oil exploration projects involve placing large heated coils in the ground which heat the rock–unlike the previous shale projects that involved mining and processing the rock in a plant. So in this system (unlike those tried in the 70s) up comes the bubbling crude, which also happens to seperate the kerosene (jet fuel) on the way up. Understandably with 2.6 trillion barrels down there the Airforce is very interested–I think we need not worry too much about national security.

skh.pcola July 7, 2007 at 12:53 am

I'll limit my comment to the fact that, after cracking, refiners derive *more* than 42 gallons of petroleum products from a 42-gallon barrel of oil. IIRC, there is ~21-22 gallons of gasoline after refining from each 42-gallon barrel. So, about half of a barrel of oil eventually ends up as gasoline. I'd go find the IEA webpage on it, but facts don't seem to work very well with the commie trolls here.

Methinks, you said (I think…apologies if not) that you worked in the petro industry for a while. I read your response vis-a-vis "peak oil." I think that you are incorrect. See:

http://www.csmonitor.com/2004/0129/p14s01-wogi.html

Also, environmentalists (an oxymoron, since the term includes "mental," which they ain't), have hamstrung exploration, production, and refining for at least 30 years. There's no way to really know what our proven reserves could be without going out and trying to find them. No other country has had the obstacles that the US has had. And, taking into consideration the size and scope of our geographic span, it is nigh impossible to draw conclusions about "peak oil."

Concerning abiotic oil, I think that the concept has merits on the facts of the location of oil itself. The oil being discovered is too deep, under miles of water in some places, and covered by rock that wouldn't have had time to form since the dinosaurs and flora died and formed "fossil fuels." I think the notion is absurd.

I do agree that we will never run out of oil, just as we never ran out of whale oil. It will become too expensive, at the margins, to extract the remaining [whatever] billions of barrels, and alternatives will be developed. I understand that on a basic economic level. I simply disagree that there is any concern that we will exhaust the supply anytime soon. If not for OPEC, who operates via a cartel that would be illegal if based here in the US, the price of oil would be half the price it is now. Oil is the second most plentiful liquid on earth, behind H2O.

I tipped too many tonight and have to rack out. Salud, and a hearty "Good night!" to all.

The Albatross July 7, 2007 at 1:20 am

Skh–thanks for the drunken sanity–21-22 gallons per barrels sounds about right–depending on the crude and the capital in place. You bring up a good point: whatever happened to those whale oil shortages and coal famines predicted a century ago? Well, John D, Rockerfeller saved the Wales and Viagra saved the Rhino–maybe big oil and big pharma aren't so bad after all–unless you hate wales and rhinos.

muirgeo July 7, 2007 at 2:26 am

Albatoss,

First you spent a long paragraph discussing the poor quality of the Guardian and not ONE word as to the actual accuracy of the facts included in my Guardian quote. ( attack the messenger ignore the message).
Next you explain how people in the government control 3 trillion dollars suggesting they are the ones to be concerned with. Now go back and read the factual Guardian quote I gave and realize those people from the government are the same people on the board of Carlyle.
That's how it works in the real world Albatross. Now you're going to try and discredit me because of a source I used while denying or downplaying the interconnections of wealth and power in the world I'd suggest it's not me that has an issue with credibility.
The facts of power, money, government and corruption of policy and the markets by their intermarriage are unmistakable in my opinion. That should be an easy thing to agree on. That capitalism is the best economic system and requires a government to function should also be unarguable.
The questions needing to be answered are how best to set up society while preserving as much liberty and freedom for all and maximizing the mutual benefits to the individuals of the society. If you are willing to deny the problems that arise for society, for government and for the economy by mixing of wealth and power and governance then there is little to talk about. If such is your belief, that society has no rules and any thing goes then you have no right to complain of people voting for regulations and putting in corrupt politicians to impose the rights of the many on the few. If you give a green light for those with money to corrupt politicians you can't legitimately complain about democracy corrupting politicians because you are asking for a society that basically allows anything. In a dog eat dog world corrupting with numbers or dollars doesn't matter. But I believe neither should be allowed.

ben July 7, 2007 at 2:48 am

Spencer

But it does not mean that capitalist systems are not always perfect as Boudreaux tries to claim.

Either show a quote from Boudreaux to that effect, or retract and apologise.

Hans Luftner July 7, 2007 at 5:30 am

muirgeo:
"That capitalism is the best economic system and requires a government to function should also be unarguable. "

It's very arguable. You close your mind to the mere suggestion that anyone can even make the argument that the state is unnecessary for markets to fuction properly. You don't have to agree with it, but if you considered it openmindedly it would go a long way towards understanding where some of us are coming from.

"Lets put "faith in democracy" and "will of the people" to a vote against methinks support for corporate rule. Then all can understand methinks distrust of democracy."

Not only do I doubt very much that methinks supports corporate rule, but voting for or against democracy presupposes a democratic process. If democracy is is poor system of determining right or wrong, then voting for it would prove nothing at all, particularly when the alternative you put forth is a very weasely strawman.

You repeatedly mischaracterize others' arguments. I think it's because you are unable to think clearly. You're so emotionally invested in what you already believe that you don't even know what you're arguing against.

I gotta admit, though, that the irony of you supplying a link to a Wikipedia artical on Cognitive Dissonance was just laugh out loud funny.

Seriously, though, if you lay off the false dichotomies & respond to what others actually write, you might find that many of us really are open to new ideas. I see these blog comments as an opportunity to cooperate in uncovering the truth, but sometimes lately it just seems like you want to fight, & if you pick a fight, you'll get a fight, typically. Then no one learns anything.

Sorry if this seemed preachy.

muirgeo July 7, 2007 at 10:04 am

Hans,

I'm reading , The Road to Serfdom, now and hopefully it will clarify your position. Can you at least understand that my position is not uncommon if not unreasonable? I think that the majority of people living in the developed world would have their heads spin if they were told government is not needed for capitalism to work. It simply sounds like anarchy. "Show me where" I think would be most responses.
The thing supporting my position is IMO the total lack of any system as you propose having ever existed or currently existing in any stable long term period. Sure Hans I may be missing the big picture and you may be totally right but 30+ mixed economy styled democracies argue against it.
Finally Hans I think your side of the debate is often guilty of false dicotomies. I've said over and over that I'm for regulated capitalism and that in general less regulation is better then more. What we need is good regulation. And I proposed my ideas which are based on use of a democratic form of government, a constitutional republic. But the mere suggestion of any utility of government or oversight gets you branded a socialist or a communist. Do you think that's reasonable coming from your side? Do you think the US of A is a socialist country? France? Sweden? I don't at all. And by any definition of the term they certainly are not. But likewise they are NOT free markets in the strictest sense so I do also have trouble with people like yourself pointing out the success of our countries and the success of the wests mixed economies as examples of the success your "ideology" because they are NOT the free markets you proclaim we need. That doesn't make your wrong but it does suggest you need to provide evidence for your claim.

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