Good Economics on a Favorite Silly Idea

Vidyohs,

I share your love of salt but again it is not really a necessity. In the long run we're all dead. Likewise for oil, we survived for millennia considering it a nuisance. And by the way, I've never dug into the ground to find oil, or have I ever collected salt out of sea-water. Even though I intensely desire both salt and oil, I usually trade some of my hard-earn cash for them. So far society has always provided me with plenty salt and oil. I could of course decide that my dependence on society is unbearable, and therefore I could try to become more energy independent. I could buy a generator, produce energy out of my garbage, install solar panels etc...This would cost a lot of money that I couldn't spend on other things. Notice also, that this other technology would also be provided to me by the out-side world. So I would simply be shifting dependency. Now if you want me to really produce all the oil and salt that I want by myself, from scratch. I'd have to cut my consumption to infinitesimal levels.

vidyohs,

As I see it, we should only pursue energy independence if producing our own energy is the most economical way to meet our energy needs. But if producing our own energy were most economical, we'd already be doing that.

A goal of energy independence would thus imply we are willing to spend more for energy than we need to spend. Spending more for energy will not provide increased economic benefits to our nation. It's as simple as that to me.

Now, if you are arguing that we are already spending too much for oil because certain energy sources are off limits, that's fine. I am willing to join the fight to lift any restrictions on development of energy sources, in the U.S. or anywhere. But that's not at all the same thing as pursuing energy independence.

(Vidyohs - Good points).

Government owns about one-third of all land in this country. That takes a lot of property out of private hands for discovering resources.

If I grew bananas, I could do this on my own private property (unless government owned much of the temperate areas where bananas could grow). Owning my own property would allow me to weigh if the opportunity cost was lower and more profitable than importing bananas.

Unfortunately with oil government holds the reins to whether or not companies are able to drill on government owned property. So measuring opportunity costs can be more difficult.

Ahhh, here´s the beauty of private property rights.

This is only a pipe dream, but I say the government sells land to the highest bidder. If an environmental group wants to out bid an oil company, then they’re able to sit on the tundra if they so desire (I´m sure if the environmentalist bought property with rich oil reserves under it, they would drill immediately though). Or if an oil company or private citizen desires to purchase the property, let´em, and they can drill or do something else with it.

"V.I. Lenin found these people very convenient indeed. He called them "useful idiots". - Methinks

Hey, Methinks

Do you think if Lenin had lived another 80-odd years that he'd have referred to them as "useful muirdiots"?

Syphax,

RE: your post of Aug 14, 2008 3:18:11 AM. I agree with everything you wrote in that post.

"If we can gain energy independence through the market, by eliminating drilling restrictions(which I support), solar energy, nuclear power and whatever other sources than it's well worth it. If it works in a free market than its fine."

That paragraph states the point I was trying to make better than I did. Thankyou.

Ooooooooh kay. Don racked and I took the cue ball and broke but instead of getting a good old game of eight ball, everyone grabbed a cue and went after whatever ball they could hit.

Let's back up to Mr. Higgs' article. Thanks to LCJ, I realized that I need to clarify exactly what my objections are and in terms that can't be mistaken.

However, I stand by my break of the tight rack set up by Don:

"Don,


I guess I will be the odd man out again but I read the piece and I saw some great linguistic gymnastics, some dazzling shuffling, some skillful shucking and jiving, but Mr. Higgs wandered all over the map and didn't convince this country boy."

I am going to lay out what I understood from what I read and why I think it is shuckin' and jivin'.

I would like to add that I do not see any government mandate being the deciding factor in seeking or obtaining "energy independence", far from it. It is government interference that is preventing us from attaining that state and all that is needed is for government to get their asses out of the way and stop impeding our ability to obtain and use our own natural resources.

I have Mr. Higgs' article in front of me. I agree totatlly with his first paragraph, but it is a "throw-away" paragraph of linguistic gymnastics, words, rhetoric, and do nothing to advance his later attempt at a point. This first paragraph is entertaining fluff, no more no less.

But, his 2nd paragraph is really unconnected to his first paragraph, his shift is to "energy independence" not oil independence, and as LCJ showed me they are not the same. I made the mistake of not making myself clear on that issue. Oil is just part of the "energy" picture. We have several ways of operating machinary. internal combustion engines, electric motors, steam turbines, jet turbines, and simple water power.

So, when Mr. Higgs says, "Suppose a serious policy of 'energy independence' were actually implemented, rather than....." he is not talking oil, or even natural gas, alone. He is talking energy, which is a product of the use of the several things I mentioned in the last paragraph.

So, look at his 2nd paragraph where he addresses the folly of seeking "energy independence", and again I ask, how would we not be better off by having all of our "energy" production entirely within our possession and control? How in the name of God, "would we be vastly poorer because we would have to sacrifice a great deal more of the non-oil products we now produce and consume in order to acquire the petroleum products we demanded"? What are these non-oil products we now produce and consume that we would lose because of seeking "energy independence"?

I am sorry but I see that paragraph as being sensationalist hyperbole. Please tell me someone that if we went for energy independence how we would not be able to produce toasters, computer chips, tupperware, enfamile, flu vacine, autos, bicycles, shotguns, corn, wheat, tomatos, milk, butter, cheese, and etc. It is counter intuitive to me.

In my world, the efforts to drill, extract, pipe, refine, and retail oil and natural gas would put so much capital in circulation that instead of production of goods suffering, I see them as accelerating.

Think of the raw materials bought and sold in order to accomplish independence, think of the wages paid and spent. And, if we found them in short supply in domestic production.....hells bells, China will make stuff for us and we can buy it at Walmart.

Now, as we are now talking about "energy independence" not just oil independence; along with the efforts on the continental shelves, ANWR, coal, and oil shale in the mountain west, we would also be building nuclear power plants, more wind farms, solar collection, perhaps even tapping more subterranean hydrothermal sources; in other words expanding all of our capabilities to obtain and use natural resources to power internal combustion engines and electric motors.

How could that not spur our economy and domestic production of consumer goods?

Now, address Mr. Higgs' 3rd paragraph, and it is now redundant to point out that "energy independence" and toasters are not an either or reality. We can have both.

Lastly, what in seeking "energy independence" would mean that any other aspect of international trade would be sacrificed? Certainly capital would not become in such supply that we could no longer buy titanium, tin, lead painted toys, etc. from foreign sources. I just can't see where Mr. Higgs or anyone else can make a convincing cse on that. Energy independence does not mean isolationism or refusal of foreign trade.

And, to unit, I am sorry my friend, but my analogy about salt I thought would give you pause and convince you of the difference between luxury (bananas) and necessities (salt, oil). Salt is a basic of my diet, without sufficient intake I will die as will you. To our present economy and industry here in the USA oil is a necessity as it is a major source of energy, without oil a huge portion of our industrial production and distribution grinds to a halt.

Ok, gents & lady, flail away at me.

I got carried away myself with hyperbole in my rebuttal above and said without oil we would regress to the 18th century of water and steam power at best. LCJ, reminded me of electricity, which is produced by means other than burning oil, coal, or natural gas. Insufficient to our needs at this time, but generated none the less.

After equating oil to bananas, Mr. Higgs' article descends into irrelevant nonsense as it pertains to "energy independence" which was his thesis.

classic liberals here completely willing to bend over back wards to defend or deny the subsidies that oil companies receive (as well as Wall Street and the Financial industries) while complaining of subsidies for alternatives as FORCE against the minority clearly allows me to appropriately label many you corporatist and elitist and denial-ist.

There lies the fallacy in your argument. One regulation will lead to 1000 other regulation. It is like playing whack-a-mole with unintended consequences. 1 subsidy will lead to 1000 others. The problem with socialists is that they are not against subsidies in principle. They are for subsidies when it is for their pet projects. They think they know better than others how to spend other people's money. They never see subisidies as a systemic problem ( because they like some kinds of subsidies ), of government over reach.

As for the war, socialists don't have any disagreement with it in principle ( most card carrying members of the socialist caucus in Washington voted for the war ) they just have a problem with tactics and strategies.

Solutions to subsidies is not giving away more, but to get rid of them all.

Yes, I am against the war in Iraq in principle, because it is none of our business and also because i'm not a collectivist "do gooder" wanting to spread mob rule a.k.a democracy in Iraq.

It was Clinton administation who first stated that it was the goal of the U.S to seek regime change in Iraq. War was just a matter of time, regardless of who was in power.

It absolutely drives me up a wall because these multi-national corporations and their leaders have no desire for the libertarian principals you all espouse.

Exactly! Have you asked yourself Why? Because all their power comes from the government and the 35000 lobbyists in Washington. In a libertarian society a small coterie of elites cannot distribute the loot they extorted from the people through regulation and taxation. Only in a highly regulated socialist society, the people with money and influence over the regulators can live like parasites.

muirgeo: "It absolutely drives me up a wall because these multi-national corporations and their leaders have no desire for the libertarian principals you all espouse."

How do you know, muirgeo, what anyone else desires? How can you possibly know that?

By law and by contract, corporate leaders are required to act in the interests of the owners of corporations - the shareholders. If Congress is handing out subsidies right and left, those corporate leaders are legally obligated to pursue them. Corporate leaders may be true libertarians, but they have no choice other than acting in the interest of their shareholders and trying to get a piece of the pie for their firm.

Our elected Congress is supposed to act in the interest of the electorate. But Congress is instead accumulating power by handing out subsidies to some and taxing others. It is Congress that is at fault for the hellacious system we have. Not the corporations, Muirgeo, but Congress.

I know I am going to regret responding to you, but I do so anyway in hopes that someone else will become aware of the error in your comment.

Failure to extract additional tribute is not a subsidy.

For example, Muirgeo, I have never compelled you to surrender any of your property to me. This does not mean I have subsidized your entire life.

As for any actual subsidies, meaning actual transfer of government money or whatever to the oil companies or financial industries, I oppose that. Most of your detractors here also oppose it. You seem mentally unable to comprehend that.

& before you trot out another straw man: I agree that the war is wrong.

The same themes occur over and over.

I'm a socialist for wanting more democracy.

I'm a socialist for wanting more subsidies for alternative energy.


I'm detached from reality for suggesting a trillion dollar war is a subsidy I'm forced to pay for.

My words or views here have nothing to do with Marxism but what I see coming from the supposed classic liberals here completely willing to bend over back wards to defend or deny the subsidies that oil companies receive (as well as Wall Street and the Financial industries) while complaining of subsidies for alternatives as FORCE against the minority clearly allows me to appropriately label many you corporatist and elitist and denial-ist.

Your best defense is always personal attacks or labeling.

It absolutely drives me up a wall because these multi-national corporations and their leaders have no desire for the libertarian principals you all espouse. They IMO use you like they use guys, guns and abortion. Just one more voting block willing to defend them when they really have no interest in what you stand for.

Many Firms Didn't Pay Taxes


Most Corporations Skipped Payments From '98 to '05, GAO Says

http://www.washingtonpost.com/wp-dyn/content/article/2008/08/11/AR2008081102324.html

Crusader, I wish I could agree. However, in my experience, he can't cobble together a logical argument for absolutely anything. I've come to the conclusion that it's not that he can't admit that he's a Marxist crusader it's just that he doesn't realize he is one. V.I. Lenin found these people very convenient indeed. He called them "useful idiots".

"Makes no difference McCain/Obama. Two sides of the same collectivist coin."

Posted by: Crusader | Aug 13, 2008 4:42:01 PM

Obama hates nuclear. McCain supports. This is "no difference?"

Greg,

Muirgeo is waiting for you and me to fund his solar/wind project in his backyard!

Methinks - it's not that muirdiot is immune to logic so much as he's a pure statist who won't admit it. He says everything just short of "hang the last capitalist with his own rope".

Muirgeo,

"Did you watch the recent battle over the energy bill which would have ended the current $15 billion dollar subsidies to the oil industry just to continue present subsidies for solar and other renewables?"

I am no expert on the oil industry but I wonder what the net subsidies are after taxes. You are preaching to the choir here if you are arguing against government subsidies, but of course you are not. You just want the subsidy going to you and your pet interests.

"Can you imagine the price of oil if they had to get it on their own from THEIR own private property or from governments like Iraq or Iran that wanted to nationalize their oil industries."

You read this blog regularly and you still think that the price of oil is dependent on the cost to extract it?

"So please don't pretend that I'm anymore a socialist then those that run the oil companies."

So you admit you are a socialist but no more so than some others. Why so reluctant to embrace that label? Recognition of the problem is the first step to a cure.

While there is much to agree with in this article, the discussion of United States "imperialism" is just another form of "claptrap," which emanates regularly from the halls of academia.

For those who were not around the last time Muirdiot attacked, the above incoherent word vomit is the clearest thinking you're going to get from Muirdiot. This thing is immune to logic and is spouting exactly the same thing he wass spouting the same B.S. If you back him into a corner, he'll start repeating himself until you want to open a vein.

"No serious geologist believes this possible. The oil just isn't there."

Well ok. Then there won't be any environmental problem drilling for it if it's not there. And no environmental problem burning it in my car if it's not there. Then why the drilling restriction if it's not there? Seems to me, at least drilling holes in the ocean floor would help mitigate rising sea levels.

LCJ/ Greg

I would argue one big thing that is stopping me/us from energy independence is the fossil fuel industries grip on and control of our government.

Did you watch the recent battle over the energy bill which would have ended the current $15 billion dollar subsidies to the oil industry just to continue present subsidies for solar and other renewables? Are you watching the current bogus debate on "Drill here, drill now"? The oil companies are not bringing their product to the market in a competitive free market way. They are completely dependent on other peoples property and the government.

I'm confident that my vision IS going to happen but don't call me a hypocrite for pushing government advocacy and backing at least on par with what the fossil fuel industry receives.

Over the present situation and uneven playing field for renewables I'd rather have the system as you might prefer with no subsidies for either side as the current system that favors the monopolies already in charge. Do you all really think we have a "competitive" energy market?

Truly equalizing the playing field and ending all subsidies would be strongly opposed by those in the fossil fuel industry. Can you imagine the price of oil if they had to get it on their own from THEIR own private property or from governments like Iraq or Iran that wanted to nationalize their oil industries. And this would have been the case except for soldiers on the ground in the Middle East at a huge cost to American taxpayers.

So please don't pretend that I'm anymore a socialist then those that run the oil companies. If they can steal from the treasury, privatize their profits and socialize their cost and their externalizes then I'm all for the people of America trying to do the same. We The People, not We The Corporations.

Me personally? I'm close to buying an electric car and home solar panels. Close meaning I suspect I'll have them with in 10 years or less. Unfortunately the oil company is prevailing in the battle for subsidies and the current rebates for solar panels are fading away. My personal economy like most others is holding the line against massive losses incurred from fraud perpetuated on all of society from Wall Street, the banking industry and even the exploitations of companies like Enron. Personal investment dollars are scare and made more so because of a relative dependency on the oil companies products. But at least it's sweet to put only $45 bucks into my 45mpg turbo diesel beetle will watching the SUV drivers next to me cringe as the pump stops pumping at it's upper limit of $75 and needing to re-swipe their credit cards to add another $25 dollars to complete the fill up.

Muirgeo,

So what is stopping you? Solar panels, wind generators, and the rest are all available right now. Heck, I can remember plenty of articles 30 years ago in Mother Earth News describing how to achieve personal energy independence. I am sure there are a few hardy souls living in the woods right now who are energy independent.

To do it as you describe is still largely possible. All it would take is a significant part of your income and maybe all of your savings and a large loan. The movement could use a few early adopters to get things rolling. So what is stopping you?

Once you add it all up, perhaps the idea of opportunity cost would start to sink in. I suspect you are looking for someone else to do the heavy lifting.

muirgeo,

Okay, we're all watching you practice and proclaim your faith and you're not letting us down with your pious behavior.

In your visions [do they include sugar-plum fairies?], does government mandate the "real" alternatives that liberate us? Think about what you're saying here! Keep in mind that when government takes charge of something choices disappear...especially thing about this narrow-minded reliance on government imposition when you realize that sometimes the Right governs from time-to-time...unless, of course, you envision everybody as a Lefty. If that were the case, your nicely decorated solar-paneled house is no longer an item you can call your own; for it now belongs to and is 'issued' by society.

vidyohs and brotio,

I think the main point of the article is that energy independence for the sake of energy independence is not worth pursuing.

If we can gain energy independence through the market, by eliminating drilling restrictions(which I support), solar energy, nuclear power and whatever other sources than it's well worth it. If it works in a free market than its fine.

The problem comes when you misdirect resources by using government to, as I said, become independent just so we can be independent. The ridiculous ethanol program is a prime example of this. The US now, undeniably, produces more corn than we should and as a result we have less of other crops. Similar subsidies have similar effects.

The article's point however, is that there is nothing wrong with importing energy from elsewhere. If in the free market the US doesn't produce enough energy(and I suspect even without any restrictions we wouldn't produce all our energy) and needs to import it's okay.

An aside on good economics.

http://www.cbpp.org/3-27-08tax2.htm

Look to Figure 2 to see of John Maynard pin Milton to the mat.

Debunked. I think not.

"Suppose a serious policy of “energy independence” were actually implemented, rather than being merely spewed out along with the rest of the political hot air. Would we be better off? Absolutely not. We would be vastly poorer because we would have to sacrifice a great deal more of the non-oil products we now produce and consume in order to acquire the petroleum products we demanded."

The first part was presumptuous and the last part made no sense. My vision is one in which I have a house with solar panels that are highly efficient and available from many different manufactures. Likewise my house has option of wind energy generation or even that of a central fuel cell power plant. However... the energy is obtained with no effort on my part and with no dependence on large multinational corporations or their massive stealing of my income to fund wars for oil and directly subsidize oil companies in so many other ways.

Now instead my efficient free energy capturing devices store up the excess electricity in ESStor high voltage/storage capacitors that run my household grid as well as my auto. I have all the tools to produce INDEPENDENTLY my own energy and transportation needs.

Such is the future I envision. Not addicted to a multinational corporations product and it's dictates that set policy and tax me and charge me a good sum of my income with no real alternatives. The old way seems to produce dependence, slavery, or servitude to me. The new way is liberating and self sufficient. And they seem more likely to produce competitive market economies as opposed to monopolistic corporatistic ones.

I can only conclude the author of the article suffers from a dramatic lack of imagination and massive excess of complacency and all held together with an ingrained stubborn ideological stick-to-it-tiveness. Sad! We can and will do so much better.

Right, having oil is no better than not having oil. Economics in action!

There is no need for government to distort market either by central planning energy independence or by restricting access to domestic oil.

Government is the problem! - Oil Shock

We agree. So far, I agree with everything you wrote. So why did we have an "altercation" on the other oil thread? Did I misunderstand you?

Vidyohs,

And how do you come to the conclusion that capital would be "wasted" on energy independence? That seems a strange thing to say. Our corporations go out to areas known to have huge amounts of oil below, they construct drilling rigs, drill, produce, pipe it, refine it, and retail it; how do we decide that that entire scenario is a "waste".

It wouldn't be wasted as long as it is a profitable endeavour. Should NY City declare that it is one of the City's objective to achieve food independence? No If somebody came up with a profitable way to feed all the Manhattanites with locally grown food, should it be discouraged? No. Collectively trying to set a goal of "Energy Independence" or for that matter "Toy Independence" or "Underwear Independence" is not a worthwhile pursuit.

I agree with you on opening up all areas for drilling. But let market decide whether capital should go towards producing more energy or producing more bananas

Thanks for that informed comment Martin. To think that oil companies would waste all that money drilling dry holes on offshore platforms so wisely forbidden by legislation.

It's all been discovered. That's why US proven reserves have "declined" steadily since the Department of Energy was formed in 1976 (from 29.5 billion barrels to 21.7 billion barrels, inspite of the fact that the US produces 2.5 billion barrels per year (while consuming 3 times that). It's just all gone! If we needed water and you had your way you would say we can't siphon water from Lake Taho, but we can still drill for it in Death Valley.

I beg to differ Vidyohs. Have you read The Choice by Russ? If not, you should.

The way you see it we could become completely independent with regard to oil. That's an absolute. When you say "necessity" I understand that you couldn't tolerate one drop less. In reality, there are no absolutes. We can depend a little less on foreign oil or a little more. But complete independence is unrealistic. Please give one example of a product for which we (the US) are completely independent.

Do you realize that you are arguing for American (what ever that means) oil producers to have a monopoly of the oil distribution in this country? How do you propose to achieve this without gov't fiat?

so we as a nation, who use to produce/drill domestically for over 80% of the Oil we consume and now thanks to years of Govt. Interference only produce/drill for 25% of what we consume....should continue this trend?

It's just a mistake to suppose that gov't intervention is responsible for the declining share of U.S. oil consumption met by U.S. production. Gov't intervention prevents some production but not nearly enough to account for the decline.

The decline occurred because U.S. producers discovered most U.S. reserves decades ago and the production of those reserves has declined for decades. Yes, we could produce some oil from ANWR and off the Florida coast, but these reserves are small compared with the reserves we've already tapped. We'll never be "energy independent" simply by expanding domestic oil production. No serious geologist believes this possible. The oil just isn't there.

"If we had the ability to produce energy more cheaply here than a barrel of oil currently costs, we would already be doing it. The fact we aren't suggests that to produce our own energy we would have to give up more in terms of production of other things than we would gain in energy(opportunity cost)." - Syphax

Syphax, the main impediment to producing energy more cheaply here is government. Government forbids the extraction of oil in areas known to be rich in oil. Government places onerous restrictions on nuclear power and on coal. We have no idea whether it would be more efficient to develop more energy resources in the US because the Democrats don't want us using coal, oil or nuclear so they've erected huge barriers, and the market is distorted because of that.

Natural gas is a more viable alternative to ethanol as a motor fuel, but because of the severe restrictions on coal-fired electricity generation, gas is being used to generate electricity - a use for which gas is poorly suited compared to other fuels.

On a side note: I heard a MoveOn ad the other day deriding the Republican push to allow offshore drilling and they used the Leftist talking point about the 60-million acres that government already (graciously) allows oil companies to drill in. I liken this to needing water and being told, "Lake Tahoe is off limits, but feel free to look in Death Valley."

To this country boy "energy independence" means we would control the source of the oil, the extraction of the oil, the shipment of the oil, and the refining and retailing of the oil.

vidyohs, be the even man in, then. Look, if we could be energy independent (and we are with electricity, I believe, since it is not transported like liquid fuels), it would be ideal. However, we could not extract enough oil to satisfy domestic demand in the short or intermediate runs.

But the real key here is something that I don't think you've given thought to: that the "we" should not be government. That they "we" would be supposedly U.S. companies that drill and extract the black goald. And you know what, I do not wish for our govcernment to put controls in place that keep these private companies from selling to the highest bidder.

I would like to know just what non-oil products we would have to sacrifice because we no longer had to purchase oil from any foreighn source?

If "we" could just drill here, I wouldn't care where the oil was sourced from. Domestic oil extraction would lead to a percipitous drop in world oil prices. Whoever drilled and extracted owns the commidity and should sell to whoever the hell the wish. If it so happened that middle eastern countries dropped their Cartel price of oil, I could give a fig if the refinerers continued to source much of it from them.

Off-topic but you all owe this one a check out.

http://www.freemarketcure.com/

"We have a limited amount of resources(land, labor, capital) to produce goods and services, if we redirected these resources to produce all our energy domestically, we would have less resources to produce other goods.

Posted by: Syphax | Aug 13, 2008 7:13:18 PM"

Syphax,

We have 5% unemployment as a resource to draw on, plus 20 million illegal aliens and more if we need them. Even if those in that 5% aren't suitable to become active in drilling and producing oil, they surely could be adequate to refine and retail it. And as well, if they can't go out and drill or produce they could do the jobs being done now by those who could go out. I refuse to believe that in this country we don't have the manpower to become energy independent. What other resources are we talking about? Money? We have money. Money is what we can trade for steel, diamonds for drill bits, etc. The technology is so good that drilling doesn't require the thronging masses of men it once did. We certainly have the land, it's not like drilling would eliminate all unused land or eliminate land that is already being used, or prevent people from using the oceans.

Why do you assume that we would have to redirect all of our resources, or even a major portion thereof, to drill on the continental shelves, NAWR, and go for the oil in the shale in the mountain west? I think that Exxon could do some drilling while we still made computer chips, toasters, autos, etc.

Or are we equating energy independent with isolationism? I don't see them as one and the same.

Energy independence would keep captial in control of our own people and corporations (in general) domestically so to speak.

No sir, Syphax, the question is still unanswered in my opinion.

Oil Shock,

Did I say anything about Government mandated energy independence? No. The debate as framed by Mr. Higgs and Don, was whether energy independence would be a good thing, something to strive for. Their conclusion is that it would not be. Mine is the opposite.

And how do you come to the conclusion that capital would be "wasted" on energy independence? That seems a strange thing to say. Our corporations go out to areas known to have huge amounts of oil below, they construct drilling rigs, drill, produce, pipe it, refine it, and retail it; how do we decide that that entire scenario is a "waste". To me it seems like a damned intelligent way to approach it. Compare that with spending over double to get the same amount of oil from foreign sources; seems to me that this scenario is the one that restricts resources and capital domestically. But, hey, I am just a country boy trying to understand this backasswards stuff.

Unit,

I am sorry my friend but that made zero sense. I need salt, its price is irrelevant to that need. Our industry and our life styles as they is presently configured, and configured so for the long predicable future, needs the energy we get from oil, its price is irrelevant to that need.

Vidyohs,

oil is not a necessity. The current relatively high prices have already curbed consumption around the world, US and China included.

My question would simply go back to the one I just asked, how does haveing energy independence set up an opportunity cost scenario in relation to any other product?

Opportunity costs come from the capital and resources diverted to a government mandated "energy independence". This capital if not wasted on energy independence would be available to the entrepreneurs to pursue other productive and profitable ventures.

Rememeber it was Milton Friedman who said that "if federal government were in charge of the Sahara desert, in 5 years there will be a shortage of sand". In this particular case, you can replace "sand" with "energy". Government is wasteful.

"What the government spends more, the public spends less. Public works are not accomplished by the miraculous power of a magic wand. They are paid for by funds taken away from the citizens." -- Ludwig von Mises

vidyohs,

"I would like to know just what non-oil products we would have to sacrifice because we no longer had to purchase oil from any foreighn source?

If indeed we had energy independence how would that effect our ability to buy bananas, toffee, coffee pots, autos, or etc.?"

We have a limited amount of resources(land, labor, capital) to produce goods and services, if we redirected these resources to produce all our energy domestically, we would have less resources to produce other goods.

If we had the ability to produce energy more cheaply here than a barrel of oil currently costs, we would already be doing it. The fact we aren't suggests that to produce our own energy we would have to give up more in terms of production of other things than we would gain in energy(opportunity cost).

So in other words, we would indeed have less bananas, coffee, coffee pots, autos, airplanes and health care.

Professor Boudreaux,

Thank you for this link explaining the economic folly of trying to achieve energy independence. I especially appreciate the point that the U.S. has no need to police the Middle East in order to obtain access to petroleum. I've been making that argument for a couple of years, frequently in response to claims that U.S. military spending is a subsidy to automobile drivers.

Vidyohs,

Amen!!!

Don,

I guess I will be the odd man out again but I read the piece and I saw some great linguistic gymnastics, some dazzling shuffling, some skillful shucking and jiving, but Mr. Higgs wandered all over the map and didn't convince this country boy.

I am sorry but bananas are a luxury and oil is a necessity, and attempting to intellectually link, or equate them, them as Mr. Higgs did is shucking and jiving at its finest.

Regarding energy independence, Mr. Higgs asks, "Would we be better off?" then states, "Absolutely not. We would be vastly poorer because we would have to sacrifice a great deal more of the non-oil products we now produce and consume in order to acquire the petroleum products we demanded."

To this country boy "energy independence" means we would control the source of the oil, the extraction of the oil, the shipment of the oil, and the refining and retailing of the oil.

I would like to know just what non-oil products we would have to sacrifice because we no longer had to purchase oil from any foreighn source?

If indeed we had energy independence how would that effect our ability to buy bananas, toffee, coffee pots, autos, or etc.?

If indeed we had energy independence how would that effect our ability to grow bananas, or make coffee pots, toffee, autos, computer chips, TV sets, etc etc.?

His paragraph that begins with the words, "In a sense" has what to do with energy independence? My question would simply go back to the one I just asked, how does haveing energy independence set up an opportunity cost scenario in relation to any other product?

Again his paragraph about "banana independence" is shuckin' 'n jivin' and in now way equates to energy independence. Without bananas we would have to eat ice cream splits, that's the sum of the deficit. Without oil, our entire economy reverts back to the 18th century with water power and crude steam power at best.

From that point on his article descends into irrelevant topics in no way dealing with or explaining his previos statements.

Not the finest example you have ever posted.

"Energy Indpendence" and pointing out the libs stance is an effective political slogan to defeat the Dems/Socialist with, and help the economy by extension given their Energy policy ideas and how much influence over it they already have is bad enough.

plus, look at what is happening in the world. if Russia gets Georgia they get that Crucial Oil Pipeline and control half the Oil that goes to Europe!!! On top of that the mess in the Middle East with fruit cake regimes like Iran willing to shut down Oil exports out of the Strait of Hormuz, then Chavez in Venezula.

Foreign Policy(of the muscular, conservative sort) is directly connected to whatever sort of Economic Libertarianism we can acheive, and a very way of life and liberty at home.

yeah I understand the larger picture of it, economically and what the govt. is doing and shouldn't be.

Crusader, your right but its not McCain's fault per se or even Obama's to an extent. The reality is to get elected you have to get over 60 million votes, funding etc. This means you have to use such rhetoric and endorse certain policies. It sells, economic libertaraianism doesn't.

jp: The point is that energy independance is not desirable. Access to energy resources is. It doesn't matter if those resources come from the US or abroad. Whatever is more eocnomical. The problem is that government should not be making the decision either way.

The "reality" is that everything has to be pre-packaged into clever marketing slogans for the electorate. Makes no difference McCain/Obama. Two sides of the same collectivist coin.

well, lift the Oil bans and more US drilling and "Energy Indpendence" we will get closer to.

its also a political marketing slogan people can relate to, espeically with what Russia is doing right now and of course the Middle East/Iran and Chavez.

jp,

You didn't get the point of the article. There is no need for government to distort market either by central planning energy independence or by restricting access to domestic oil.

Government is the problem!

so we as a nation, who use to produce/drill domestically for over 80% of the Oil we consume and now thanks to years of Govt. Interference only produce/drill for 25% of what we consume....should continue this trend? Continue to put Oil rich area's off limits and continue to import the Blood Line of our economy which travels though Irrational, anti-American, forces around the globe? This conflict in Georgia is linked to Oil, of course the Middle East/Strait of Hormuz...Venezuala...???

and thinks to this imbalance, the Trade Defeciet has ballooned because the Price of Oil has tripled, by exetension has drove down the value of the Dollar.

Robert Higgs Rocks!

BTW, the "conservative" administration has run up 103 billion deficit for the month of July, 2008. That is 1.2 trillion annualized. Hayek must be rolling in his grave.