Stupid

When you vote for president, you choose a package. Packages contain some things you like, some you don’t; some contents are bad, others good. We don’t have a cafeteria option. Political choices are always limited and zero sum at best. My preferred package – John McCain – has his downside too. He is still my choice, but the gas tax holiday he and Hillary advocate is just stupid and should be dropped.

I favor higher carbon based fuel prices as the best way to address both the problems of global warming and the dilemma of too many dictators and retrograde people making too much money on crude oil. I actually believe in a carbon tax to drive the price even higher. People respond well to price signals.

In 2006 the U.S. actually reduced its emissions of green house gas. This is the first time this ever happened in a time of robust economic growth. How did President Bush do this? He didn’t. It was the price of gasoline.

Gasoline demand this year so far is lower than expected. Small cars and hybrids are selling well, while the big SUVs are not selling at all. People are choosing to live closer to their jobs and taking public transportation. All the good things that we want to happen are happening because of prices.

Talk is cheap and as long as gas is cheap all we will get is talk. People cry that the high price of gas is making people change their behavior. GOOD. That is what MUST happen.

Price works. There can be no doubt. But the components of the price are important considerations. Most of the price of a gallon of gas is based on the price of crude oil.

If you bought gas at $3.89 in California last week, $2.83 was the cost of crude oil; Federal, state and local taxes took out another $.65; refining costs were $.31 and marketing, distribution and their profits were $.09. Oh yeah, the State of California charged a penny fee. You can see where the big money is and this is also the place where you can best attack the problem. BTW – oil company profits are only a couple of pennies in that $.31. If they make zero profit, you can probably shave only a nickel off the price of your gas.

If history is any guide, the price of crude will drop again in the next couple of years as more capacity driven by high prices comes on line. We should not let the price go down. That is the mistake we made in the 1990s. One big reason we have trouble with energy and so many SUVs on the road today is the cheap gas of 1998. The cheap carbon based fuels also drove alternative power producers out of business.

The answer is a carbon tax. We want cheap gas in the way a boozer wants whiskey, but it is not good for our long term health.

So John McCain and Hilary are wrong about a gas tax. Obama is on the way to being right, but perhaps for the wrong reason. None of them go as far as we need to go.

We need a good stiff carbon tax. The only way we can emit less carbon dioxide is to burn less carbon based fuel and price is the best incentive.

BTW - I hate the fact that I think this tax holiday thing will be popular. It will help Hilary and hurt Obama. I don't think it will affect McCain either way.

Posted by Jack at May 6, 2008 3:28 PM
Comments
Comment #252288

Gee Jack, what great logic. Using your scheme, we should tax the price of oil products beyond the reach of most Americans to appease the eino crowd and the fictitious mmgw alarmists. Is $10 per gallon enough or should we really stretch and go for $20. It’s kind of like the minimum wage crap. Let’s just raise that to $25 per hour and no one will be poor.

There is no oil shortage with more huge reserves being proven every year. We refuse to use more nuclear and coal power to appease the few while the many suffer.

You say the oil refineries are making a nickel a gallon profit and yet we have the Clinton and Obama crowd yelling about windfall profit taxes.

Millions face starvation in the world and yet the ethanol debacle continues. Let’s face it Jack, we’re screwed. When Obama or Clinton is done with their tinkering, we’ll be wiping our ass with a single sheet of TP, walking to the welfare office to pick up our meager monthly supply of rice and beans and listen to politicians on our radios (TV and computers use too much energy) telling us that we’ve never been better off.

OH, Wait, I won’t be here for that liberal party. As an old geezer I will have been persuaded to leave as I am a net energy loss and a conservative looser.

Posted by: Jim M at May 6, 2008 4:27 PM
Comment #252291

Jack wrote: “but the gas tax holiday he and Hillary advocate is just stupid and should be dropped.”

I couldn’t agree more. Damn glad to be in agreement with you again, Jack.

Posted by: David R. Remer at May 6, 2008 4:52 PM
Comment #252294

The gas companies make around 8 cents per gallon. Federal tax is like 18 cents per gallon.
I imagine that State tax is at least 8 cents per gallon too.

Who is making a winfall profit?

Posted by: BOHICA at May 6, 2008 6:23 PM
Comment #252295

Jim M,
There is a shortage of oil. The large fields are not being replaced quickly enough by new finds. Saudi Arabia has the capacity to produce 11.5 bbl, but they are only producing 8.5 bbl. There is some speculation fueling the current spike, but it’s being exacerbated by the falling dollar, which is the result of the debt wracked up by Bush and the Republicans, and interest rates being kept so low in order to stave off a financial collapse. In addition, demand for oil from China and India continues to grow.

A temporary gas tax holiday doesn’t make much sense (except for the purpose of political pandering), because the problem is long-term. It’s a matter of national security and economic health.

It’s called Peak Oil. We may have already passed the peak. It may be a little ways off yet. But there is a Peak, and it has very real consequences.

Wikipedia has a very good article on Peak Oil:

http://en.wikipedia.org/wiki/Peak_oil

Posted by: phx8 at May 6, 2008 6:42 PM
Comment #252298

Rock on you are on the money, don’t forget the bureau of land management is taking 25 Years to process geo thermal claims only to find the claimant is DEAD and then they don’t even follow up on the claim. SHAMEFUL

Posted by: twocool at May 6, 2008 8:07 PM
Comment #252299

Phx8:

Take a look at this:

http://www.bloomberg.com/apps/news?sid=aBUoYKhu7PWk&pid=20601086

Brazil has just discovered 33 billion barrels enough to fill every refinery on our eastern seaboard for 15 years.

Of course of a period of time new discoveries were not being made. Why look for something when it is cheap? If oil gets to $200/barrel, we will be finding it everywhere!!

This Brazil thing is great as it means less dependency on the middle east.

I personally am not convinced by the peak oil argument. I just read an article today on commodities including oil. In 1960 an average american spend 24% of their budget on food/oil, today that figure is 15%.

As oil goes up so goes invention. Fuel injection was one step, hybrid technology the next. As oil gets higher and higher so will efficiency.

At some point another fuel will take over. I think a more compelling argument than peak oil is national security and global warming. On the global warming front, wow was that a cold winter!! Some of the very recent stull published is much more moderate than the sky is falling material of a year or two ago.

Posted by: Craig Holmes at May 6, 2008 8:31 PM
Comment #252300

It’s called the Hubbert Peak, and it applied to us along time ago, and the Saudis now. They are pumping salt water into the wells to blast it out of the ground. Oil production in Africa and the Americas are already replacing it, but demand is going up as well.

Posted by: ohrealy at May 6, 2008 9:00 PM
Comment #252301

I agree that the tax freeze is a stupid idea for the same reasons that Obama do, it would give each tax payer about 20 bucks. But, then he goes and proposes his own plan, increase taxation on the rich, when it would amount to about the same amount of money for each taxpayer…

It is that sort of thing that makes me have my doubts about Obama.

Posted by: Rhinehold at May 6, 2008 9:17 PM
Comment #252302

And don’t forget the large deposit of oil found in North Dakota and Montana…

Quick question though, if there is so little oil in the Middle East now, why is Dubai City still being built? And how?

Posted by: Rhinehold at May 6, 2008 9:22 PM
Comment #252304

More than you ever wanted to know about Dubai in one place. I couldn’t get it as an html page: egov.dubai.ae/.pdf

Oil is not a big priority for them except for transporting it. They realise that part of the economy that will decrease into insignificance. Trade, travel, financial services and tourism are larger parts of the economy. They are trying to be the Singapore of the Middle East.

Posted by: ohrealy at May 6, 2008 10:44 PM
Comment #252305

Jim M

You are right that the idea that the energy companies are the big part of the price rise is just posturing. It is easier to blame them than to address the real problem.

Re global warming – I believe the preponderance of the evidence indicates that the globe is warming and that human activities are important contributors. I also see that much of our oil comes from places controlled by despots and unstable regimes. I have confidence that market incentives can influence consumption patterns. Therefore, I think a carbon tax that depresses demand for oil while making more attractive alternatives to oil – which are possible to produce in America.

I do not say this is a painless transition, but it is a transition we will have to make. I am not in favor of taxes in general, but I do not see an alternative to giving the big bucks to government. The difference is that if we let most of the price rise in gas be captured by those who own the crude, we are giving money to governments like those in Iran, Venezuela or Russia. Better to keep some of that money at home.

Re ethanol debacle - I have written about this. It is an example of failure of a government failure (actually governments around the world). The mistakes governments made re ethanol should be a good lesson in the limits of intrusive government. The carbon tax does not do this. It provides the one incentive and then allows people to use their intelligent and innovation to develop alternatives to oil.

BOHICA

Federal, state and local taxes amount to $.65. After the price of crude, which is by far the big chunk, taxes are the next biggest part of the price of a gallon of gas.

Phx8

There is no such thing as peak oil unless you specify the price and level of technology. We have already used up all the oil at $10 a barrel. We have long ago used up almost all the oil available with technologies used in the 1960s. We have plenty at $200 a barrel and new technologies will give us more. At some point oil becomes too expensive, it doesn’t run out. As the price rises, we adapt. We have done that. This year gasoline consumption will be lower than last year. In 2006 U.S. carbon emissions actually came down. Price is the single best tool we have to influence supply, demand and the development of alternatives. Price changes trump peak oil.

Rhinhold

I am actually more afraid that oil is indeed more plentiful than we think. There is lots of oil that can be extracted with better technologies. The problem is the environmental & political costs of getting it and consuming it.

Posted by: Jack at May 6, 2008 10:53 PM
Comment #252307

As ohrealy points out, Peak Oil is based upon the Hubbert Peak, which applies to any commodity. It is especially relevant today, with Peak Oil:

“Peak oil is the point in time when the maximum rate of global petroleum production is reached, after which the rate of production enters its terminal decline. If global consumption is not mitigated before the peak, an energy crisis may develop because the availability of conventional oil will drop and prices will rise… Hubbert first used the theory in 1956 to accurately predict that United States oil production would peak between 1965 and 1970. His model, now called Hubbert peak theory, has since been used to predict the peak petroleum production of many other countries, and has also proved useful in other limited-resource production-domains. According to the Hubbert model, the production rate of a limited resource will follow a roughly symmetrical bell-shaped curve based on the limits of exploitability and market pressures.”

Price changes do not “trump” Peak Oil. Prices merely represent the relative scarcity or abundance of the commodity. The market reacts to current and anticipated supply and demand.

Rhinehold,
Dubai City is not part of Saudi Arabia. Please look at the article I linked. Several countries have not reached Peak Oil. The Saudi peak was supposed to be some years off, but it appears they may already be there.

Craig,
Yes, a very large oil field has been discovered off the Brazilian Coast.

You write: “Brazil has just discovered 33 billion barrels enough to fill every refinery on our eastern seaboard for 15 years.”

The problem is that the US consumes, what, 25% of the world’s oil? The Brazilians are certainly not going to ship their entire oil production to the United States. Like most of South America, the Brazilians now have a leftist, democratic government. It is highly doubtful they will say ‘Uncle,’ knuckle under to US threats of military force or coup, and ship their natural resources to the US. Those days are over.

Posted by: phx8 at May 6, 2008 11:31 PM
Comment #252311

phx8…why didn’t you address oil in America? And I’m not only fine, but would be very excited if we found other energy options. Just saying it would be nice if I could trust my country enough to do both. And I’m not talking lip service. I mean drill here like crazy and at the same time innovate alternate energy options. Why is that a bad option?

Personally I think the middle east is screwing us. They know our dilemma and they are using it for a power grab.

Posted by: andy at May 7, 2008 12:27 AM
Comment #252315

Andy,
Oil exporation within the US? I think that’s fine, except that the easy oil is already out of the ground. There are large amounts of oil available, but those fields are more expensive to exploit and of lower quality. Higher prices makes extraction economically feasible as long as the prices stay high, which isn’t exactly a good thing. New technologies might make more fields accessible too, with less pollution, but it seems a little risky to count on innovation as a given.

It’s pushing on a string. At some point, the string might run out. We could wait for the free market to resolve this, but the free market provides an efficient solution which is not necessarily pro-Phx8 or pro-Andy or pro-America.

I am a big believer in our ability to innovate and create new technologies. But it seems irresponsible to use that as a justification for ignoring the problem. More drilling is a short-term solution, and that’s fine, but at some point fairly soon we’ll be faced with unacceptable choices. Do we drill ANWAR? The Florida coast? Yellowstone?
Is Peak Oil already here? Is it years away? Decades?


Posted by: phx8 at May 7, 2008 1:34 AM
Comment #252316

Phx8

Peak oil is still a meaningless concept for any practical purposes. If we reached peak oil 20 years ago or if we reach it next year, how does that change any behavior. It is not like we will be sitting around doing nothing while all this changes. We will be charging more for oil products. As that happens, alternatives become more attractive. At some point alternatives become much more attractive than oil and then we pay not much attention to oil.

Our energy is a mix. We choose the mix we think is optimal. As incentives change, so does the optimal mix. We make substitutes.

The whole idea of peak oil is like arguing how many angels can dance on the head of a pin. It just makes no practical difference. It is worse than useless, however, since it is used as some sort of mystic mantra.

In your answer to Andy you stumble on the truth, but you draw the wrong conclusion. As the prices rise, the market IS solving this problem. What government can and should do is help this process along with a carbon tax. The government’s other programs (synfuels and more recently ethanol) have shown the limits of government micromanagement capacity.

I think we are too fixated on particular energy sources. We say, “we will run out of cheap oil.” Yes. So what? We will develop alternatives and we ARE. That is the lesson of the last couple of years.

In 2006 we emitted LESS CO2 than we did in 2005. This never happened before. What Bush program accomplished what Clinton and the Europeans could not? This year we are on track to use less gasoline than we did last year. What Bush policy caused that? It is hard to sell SUVs and easy to sell fuel efficient car this year. In 1998 it was the opposite. What did Clinton/Gore do to encourge people to buy gas guzzlers?

Posted by: Jack at May 7, 2008 1:54 AM
Comment #252317
If history is any guide, the price of crude will drop again in the next couple of years as more capacity driven by high prices comes on line.

Jack, I don’t think this is necessarily the case. I discussed this previously, but to summarize, foreign governments have nationalized oil resources which restricts the ability of the market to increase the supply. Since we won’t authorize drilling in AK/FL/CA, the price will continue to rise. Goldman Sachs echoed this opinion. If Goldman Sachs’ prediction of $200/barrel oil comes true, I have difficulty seeing how a carbon tax is necessary.

Furthermore, recent events make it abundantly clear that alternative energy sources are not yet ready to take over. In the interim, we need to drill for oil in the U.S., and we can do it responsibly. Instead of repeating myself, I will simply quote what I stated here.

My point is there is reasonable way forward where the sacrifices of land owners can be minimized, environmental impacts can be minimized, oil companies can turn a profit, and the government can fund energy alternatives and environmental initiatives simultaneously. However, we remain in fear that the environmental abuses of the past will be repeated, but this cannot be the case under current environmental laws. If we force our government to set proper terms, we can have the oil and a clean environment too.

That said, I agree that a gas tax holiday is a stupid idea. Though, I think a carbon tax is worse.

phx8,

There is no shortage of oil. There is a shortage of oil production. Oil production could increase but OPEC and number of other nations have found it in their best interest to limit the supply growth. Thus, excess oil supplies have shrunk from several million barrels per day to almost zero. I respect the decision of these countries and their people because it is clearly benefiting them. However, it logically follows that this restriction will cause the oil supply to plateau before there is any real shortage. Again, this is why I advocate drilling in the U.S. and using the money from the revenue sharing agreements to fund alternative energy research. This will create a energy supply for now (oil) and later (oil alternatives) while also creating U.S. jobs.

I think that’s fine, except that the easy oil is already out of the ground. There are large amounts of oil available, but those fields are more expensive to exploit and of lower quality.

The Bakken field in Montana/North Dakota is easy by today’s standards and produces high quality oil. This field is projected to provide a nice little boost to U.S. production over the next decade. To give you credit, this is the exception nowadays.

Posted by: Mr. Haney at May 7, 2008 3:35 AM
Comment #252321

Right some people are actually excited about saving $20-$30. From the news, consumer spending is falling, and the government is in a panic.

Our government is doing everything they can to increase consumer confidence and increase consumer spending. They are not encouraging people to save money, and brace themselves for a recession.

They dont do this because it would slow our economy even more, as many jobs would be cut.

Jack,
Why do you think that anyone in America would want to spend more money on Gasoline? I hesitate to buy more goods as it is.

My point is it seems economists think that more spending is the only thing keeping our head above water. Even if spending more is the wrong thing and more people go into debt, it drives production.

It is my understanding that if foreign investors lose faith in the US and pull out investments or call in debts we are screwed. Am I wrong here?

Also please stop using the phrase “zero sum”.


Posted by: Jason Ziegler at May 7, 2008 9:32 AM
Comment #252322

Higher gas prices = Less consumer spending

Less consumer spending = Less production = Less jobs

Posted by: Jason Ziegler at May 7, 2008 9:34 AM
Comment #252337

Here’s an interesting rebuttal to the “Peak Oil” conversations above. Source: EcoWorld.

Fossil Fuel Reality

On April 22nd we had the pleasure of hearing a presentation by Ripu Malhotra, a researcher with the Stanford Research Institute, who was speaking at AlwaysOn’s “Nordic Green” conference. Mr. Malhotra has taken the unusual step of converting all forms of energy use into cubic mile of oil equivalents - a measure that is quite helpful if one is trying to really grasp the scope of fossil fuel compared to alternatives.

Using Malhotra’s figures, which he has garnered from the British Petroleum statistical database of global energy usage, among other sources, it is clear that today, at least, the world’s economy is utterly dependent on fossil fuel.
GLOBAL ENERGY PRODUCTION 2005
Global energy production expressed in “cubic miles of oil” (CMO),
billion barrels of oil, quadrillion BTUs, and gigawatt-years.

While there is impressive percentage growth in the solar category - including wind power in this analysis - and while these figures have already changed dramatically since 2005, it is clear that alternative energy still contributes well below 1% of total energy supply, whereas fossil fuel contributes well over 80% to global energy supply.

In terms of choosing between fossil fuel development and alternative energy development, another point which should be put to rest is the notion we are running out of fossil fuel. The next three charts show the potential reserves of the primary fossil fuels - oil, coal, and gas. In order to develop estimates for unconventional sources of these fuels, we have taken the midpoint between the high and low estimates.
OIL - TOTAL RESERVES
If oil provided 100% of global energy, and we used twice as
much as we do today (1,000 Quad BTUs per year), there
would be a 59 year supply of oil based on known reserves.

COAL - TOTAL RESERVES
If coal provided 100% of global energy, and we used twice as
as much as we do today (1,000 Quad BTUs per year), there
would be a 218 year supply of coal based on known reserves.

GAS - TOTAL RESERVES
If gas provided 100% of global energy, and we used twice as
much as we do today (1,000 Quad BTUs per year), there
would be a 45 year supply of gas based on known reserves.

So when you add it all up, at twice the current energy consumption overall, oil, gas and coal could potentially supply all the energy we need in the world for the next 300 years - not including gas hydrates.

Posted by: Jim M at May 7, 2008 12:06 PM
Comment #252341

Which makes more sense, increasing the price of gasoline(i.e. the cost of transporting everything, including people to work), or dramatically increasing CAFE standards so everyone gets more bang for their buck?

Can we stop blaming the Middle East for producing cheap oil, now that we are becoming more dependant on those darn Canadians? We’ve been more successful in hardening that border than the southern border. We’ve got to keep those northern illegals out of our country!

Posted by: ohrealy at May 7, 2008 12:53 PM
Comment #252350

Jim, the analysis you have provided from “Ecoworld” is ridiculous. By taking a single doubling effect you greatly reduce world oil consumption over the next century. The compounding that results from any rate of growth is insidious and persistent. If you take a rate of growth in world oil consumption of, say, 3.5% a years over the long term, that means that world oil consumption will double over the next twenty years, quadruple over the next forty and be eight times current rates of usage in sixty years! Eight times. That’s what compounding does to any commodity. At that rate of growth, (not a terribly high one given the emergence of the third world as energy consumers), the world, in the next twenty years will use as much oil as it has ever used in recorded history!!

Proven reserves are not the same as recoverable reserves. When a field is discovered the potential yield of the “proven” reserves is degraded by drilling methods, around fifteen percent in the first year and 5-6 percent each year after. That means that much of the reserves known to be there will never be recovered. This degradation means that in order to keep the proven world oil suppies constant, we would have to find 2.5 Iraqs each year!! Iraq has proven reserves of @ 112 billion barrels.

It’s true that there remains plenty in the way of carbon resources left in the world but because of the cost in energy to get it out of the ground it will remain there forever. What good does it do if you are using 1.1 units of energy to recover one unit of energy from the ground? Isn’t this the exact situation we face with ethynol?

I would recommend that you read ‘A Thousand Barrels a Second’ and also go online and get a written lecture by a Professor Albert Bartlett of the University of Colorado. He is a good source for understanding the mathematics of compounding.
In the meantime, stop spreading misinformation.

Posted by: charles ross at May 7, 2008 1:36 PM
Comment #252352

Jack, I agree about the gas tax. It is idiotic to suggest that suspending it will help anyone other than investors in the oil companies. I guess pandering is a permanent part of politics, from Roman pan et circum (bread and circuses) to the empty philosophy of promising tax-cuts-no-matter-what.

Posted by: mental wimp at May 7, 2008 1:38 PM
Comment #252353

I heard a commentary by a conservative economist on the radio the other day suggesting that the gas tax ought to be implemented to float with the price of gasoline to dampen fluctuations in price. As the wholesale cost decreases the tax would tend to support current prices at the pump and provide “rainy day” tax revenue to cut those taxes when wholesale prices rise to keep the pump price more level. If done right, this could provide more revenue than currently to support transportation infrastructure.

I like innovative thinking, whether from the right or the left, when it aims to solve difficult and long-standing dilemmas. I think we need more of it and less of the ideologically bound dogmatic pronunciation we have come to expect from politicians.

Posted by: mental wimp at May 7, 2008 1:42 PM
Comment #252356

Charles Ross, I understand compounding quite well as I see it every year in the growth of my investments. You assume, when using your dire predictions, that no new technology will come online in the forseeable future to augment current oil reserves and you single out oil, while ignoring coal and gas.

You are the one making the assumptions while not refuting the data on available resources.

Apparently I have more faith in the intelligence of this group that you do and see no reason to “stop spreading” (mis) information.

As a gloom and doomer Charles, I will assume you see nothing bright in the world’s energy future expect higher prices and more taxes and more unfounded feverish worry over mmgw.

Posted by: Jim M at May 7, 2008 2:10 PM
Comment #252365

No, Jim, you don’t understand compounding. If you did you would not use the ridiculous hypothesis posed above by “malhotra” as proof that we have a “300 year supply of energy”. There is ample information out there that more than proves that the world is running out of easily accessed carbon based energy. Just to take a couple of examples to illustrate: Mexico, our second largest energy supplier after Canada, is planning to suspend all oil exports by the year 2015 and reserve oil production for domestic use. Apparently, production out of their Cantrell oil field is collapsing. Iran, the fourth large exporter of oil in the world, is planning to cut its exports by half in 2012 and entirely by 2016. They may be building nukes for weapons production but they are definitely building power plants because with 55,000,000 people, they need the energy. Venezuela, since it nationalized their oil supplies, has made no new investment in technology that would either expand production or improve recovery techniques.
Don’t you find it curious that with oil surging well above 100 dollars a barrel that supply has remaing constant, @ 86-87 million barrels a day? Saudia Arabia has claimed it can pump about three million barrels a day more then its current production. Where is it?

Stop taking a position then searching the internet to find support for it. It results in not only you being misinformed but also misinforms your audience.
Find the Albert Bartlett lecture online. It is most interesting and directly addresses the misinformation being spread, as an example, by the source you are quoting above. I will do a little looking myself for the title of the lecture.

Posted by: charles ross at May 7, 2008 2:43 PM
Comment #252375

“Stop taking a position then searching the internet to find support for it. It results in not only you being misinformed but also misinforms your audience.”
Posted by: charles ross at May 7, 2008 02:43 PM

Sorry Charles, I am not taking orders today. What I will do however, if you wish, is provide even more sources verifying our fossil fuel reserves and some great sources debunking mmgw. And, may I suggest, you might consider expanding the papers you read on the net.

Posted by: Jim M at May 7, 2008 3:42 PM
Comment #252376

Who really pays corporate taxes?
Who will really pay for a windfall profit tax?
Who will really pay for a carbon tax?
Where will the tax revenues go?
Why is taxing always the solution?
Isn’t clear yet that the more money you give the federal government, the more money it spends, borrows, and creates out of thin air?
The federal government is already raking in about #2.7 Trillion (about 20% of GDP), so why do we want to give the already severely, over-bloated federal government more? ! ?
How about this novel idea?
What if the severely over-bloated federal government and state governments (already employing more people than all manufacturing jobs in the U.S.) used part of the federal government’s $2.7 Trillion annual revenues (e.g. perhaps part of the $28 Billion going annaully into the Dept. Of Energy, and/or some of these other numerous black holes) to partially fund a competition to develop alternative energy sources, instead of giving the oil companines subsidies to squelch all alternative energy research?

Posted by: d.a.n at May 7, 2008 3:47 PM
Comment #252377

Jason

Re zero sum – I have to use that term because there is no other. I don’t mean it as an insult or necessarily always bad. There are three types of situations. Negative sum, where the total benefit available to participants is actually LESS than they would get doig nothing. Zero sum, where nothing is gained or lost in total and positive sum, where the total benefit is larger than if everyone did nothing.

Virtually all voluntary transactions are positive sum. This is good.

Do you know of an alternative term to describe what I am trying to describe by zero sum?

Re foreign investors – actually you are wrong, at least for all practical purposes. The U.S. is still a very good investment. If a lot of foreign investors pull out, everybody loses money (sorry – a negative sum game). BUT as the prices fall, the U.S. again becomes a very good investment.

BTW – the U.S. is still the predominant economic power and that has not changed very much for more than 100 years.

The U.S. % of TOTAL world GDP was 32% in 1913; 26% in 1960; 22% in 1980; 27% i 2000 and 26% in 2007.

Re gas prices – It depends on where the money is going. We cannot lower the price or crude by having a tax holiday. In fact, it would probably increase demand and increase the price of crude. Most of this money goes to foreign suppliers.

Ohrealy

Increasing the price of gas makes more sense. CAFÉ standards have not had a long term effect, since it encourages more driving. CAFÉ standards also are not free. They drive up the price of cars thereby creating exactly the opposite incentive we want i.e. increase fixed cost (car) relative to variable cost (gas).

The higher gas prices today are having the effect of getting people to buy smaller cars and drive less. It works. I would prefer that the price reflect higher carbon taxes, not higher profits for Hugo Chavez or the Ayatollahs.

Charles

Peak oil is misinformation. It just is meaningless. Have we reached peak gold? Maybe. who cares? Have we reached peak diamonds, copper, iron etc? These things mean nothing. You can draw very nice charts but what do they mean? Nothing.

You cannot say we have 300 years worth of oil unless you specify price and technology. If we could force oil to be $10 a barrel and not change technologies, we might have 30 years of oil. If we made oil $1000 a barrel, we might have 3000 years. At some point we will not have cheap oil and we will use other things. Just like we may have reached peak whale oil sometime 150 years ago, it won’t matter.

You and Jim are arguing about something that does not matter. You both can be right, but it doesn’t matter.

Mental

To me the revenue from the tax is not the key issue. I care about the incentives it creates.

Posted by: Jack at May 7, 2008 3:49 PM
Comment #252380

Jack, you’re right, it doesn’t matter and I will cease my pen-pal relationship with Charles.

Posted by: Jim M at May 7, 2008 4:06 PM
Comment #252382

“Peak oil is misinformation” Wrong, it explains how the older oil fields provide diminishing returns at increased cost.

Posted by: ohrealy at May 7, 2008 4:11 PM
Comment #252387

“fund a competition to develop alternative energy sources, instead of giving the oil companines subsidies to squelch all alternative energy research”, brilliant again!

If the government is going to spend money, it should do it on things that would actually be useful to the economy as a whole, instead of hiring people to sit at desks and look at computer screens.

Posted by: ohrealy at May 7, 2008 4:46 PM
Comment #252419

phx8…I don’t care about higher gas prices if, and it’s a big if, I feel this great country is working towards a concrete solution. I’d actually feel somewhat patriotic and I’m a guy who drives 400-600 miles a week.

So with price out of the way, why not drill here but give incentives to come up with the next affordable energy option. I guess if you don’t trust Washington, as myself, it would be a hard option to swallow.

But politics aside, this situation should be easy for America. We cut off the middle-east, bite the bullet a little and emerge with the next generation’s energy. We should always win.

And on the environmentlist front. I will tell you I could care less about the environment. I feel it always fixes itself. But who cares. A true environmentalist should feel just as strongly about drilling on any plot of land on this planet. Lets drill here temporarily and come out on top, where we should be. We are good people…not perfect but pretty good.

Posted by: andy at May 7, 2008 11:06 PM
Comment #252428

Jack said: “As the prices rise, the market IS solving this problem.”

Yes, and killing the nation with GW Bushes help.

Are you aware that almost 40% of the oil leases on federal land issued since GW Bush took office have never seen a drill disturb top soil? Are you aware that oil companies are hording these leases, holding off on drilling them until the price becomes twice as profitable?

Are you aware that Bush has made a practice of avoiding filling the Petro reserve when prices are down, and filling it when prices are at new highs?

Are you aware that as Oil Companies have tripled their leases in 8 years to drill on federal land, that the price has gone up with their production, not down. Can you see oligopoly in these facts and data? Of course the root concept of oligopoly is monopoly, just participated in by more than on non-competitive player.

Don’t get me wrong, as painful as it is for my wife’s 90 mile round trip commute to work each day, I believe these oil and gas prices must go higher in order to incentivize America to wean itself off oil.

But, look, if oil companies are hoarding oil leases on federal land without drilling them, what sense does it make to grant a lease in ANWR? I will tell you. None at all. ANWR is an itch the oligopoly can’t scratch, and it is driving them crazy. But, drilling in ANWR would not produce a barrel of oil for 8 to 10 years, and by then, if we are not drastically reducing our demand for oil, we will be owned by OPEC anyway.

Your party is completely and totally on the wrong side of almost every part of this energy issue, from trading nuclear waste crises for CO2 warming crises, to trying supply more oil and gasoline windfalls through feeding the oil addicts instead of weaning the addicts off their fix through viable replacement alternatives, and without the monopolization and oligopolization of the industry, which strangles the consumer base of the economy, as is starting to happen now.

Fed is done easing. Primary reason is oil inflation which is rippling out throughout the entire economy inflating all prices of nearly all goods and many services. Oil. In a few years, nationalizing the oil industry is going to be a very hot and growingly appealing idea to save the economy.

Posted by: David R. Remer at May 8, 2008 3:24 AM
Comment #252430
Primary reason is oil inflation which is rippling out throughout the entire economy inflating all prices of nearly all goods and many services.
Yes, the faLling U.S. Dollar is part of it too.

Mar-2007 (15 months ago), oil was $60 per barrel.
Now it is double that at $120 per barrel.

And there are these 10 abuses resulting in these 17+ painful consequences.

Are you aware that Bush has made a practice of avoiding filling the Petro reserve when prices are down, and filling it when prices are at new highs?
Really? That’s the first time I’ve heard that, but it appears there may be some truth to it:
  • www.tristateobserver.com/modules.php?op=modload&name=News&file=article&sid=9910
  • www.heartland.org/Article.cfm?artId=16201
But, when prices have gone nowhere but mostly UP since year 1998, it’s hard to fill the reserves when prices are not at new highs: one-simple-idea.com/USD_Falling.htm#Oil
  • Posted by: d.a.n at May 8, 2008 9:31 AM
    Comment #252435

    Jack

    re Zero sum

    The reason I hate to see your phrase “Political choices are always limited and zero sum at best.”
    is it assumes some futility in our every effort.

    Do you think that we have not enjoyed any benefit from the US government or the consequence of it’s many choices? Or simply the results for humanity would be much greater, a positive sum game, if government had no part at all?

    Perhaps I just dont get what you are trying to say. It seems that in this case you are saying that the things the government does provide not more benefit than what you and I could do individually. So the whole is equal to the sum of its parts not greater? You seem to have more faith in the mob than I do Jack.

    Posted by: Jason Ziegler at May 8, 2008 10:05 AM
    Comment #252442

    Jason, I think Jack confuses government with corporations in trying to assess its performance. Some folks just can’t see past dollar signs as the measure of all things.

    You are absolutely correct, that much of what our government has provided the people for centuries has no direct dollar correlation. What was it worth to stop Hitler? One can quote the costs in dollars we spent on the war, but, that hardly approximates the real value of a world relatively free of Nazism and domination by a single dictatorship.

    What is the value of education of our children? Most of us parents would be incapable of teaching our children what they learn in public schools, despite the fact that their learning is not up to standards they should be. But, how do you place a dollar value on a life with vs a life without education, and the costs and benefits to society at large? One can attach a dollar figure to it, but, that dollar figure would not begin to do justice in measuring the benefits to posterity of Albert Schweitzer’s education, Martin Luther King’s or Medgar Ever’s education, or Bill Gate’s and Stephen Job’s education, or Susan B. Anthony or Soujourner Truth, Frank Lloyd Wright or Henry Ford.

    Posted by: David R. Remer at May 8, 2008 11:16 AM
    Comment #252445

    Without some government, there would be lawlessness, chaos, anarchy, or worse.

    That is partly why it is a bad idea to allow lawlessness to get out of control. Especially numerous Constitutional violations, and other abuses hammering the middle-income group.

    That may also help explain why homicides started rising since 1999, after falling for many years prior to 1999?

    Come to think of it, there are a number of trends that took a definite turn-for-the-bad since 1999. What could possibly be the reason? Just a coincidence?

    Posted by: d.a.n at May 8, 2008 11:46 AM
    Comment #252446

    There are very few people arguing for no government, not even the Libertarians are doing such a thing. Not that it prevents people without real alternatives not to say that their opponent is for the elimination of government, but that is not the reality…

    The few capital-anarchist individuals out there will always be there and ignoring them is most likely the best course of action.

    Posted by: Rhinehold at May 8, 2008 11:52 AM
    Comment #252450

    Ohreally

    I think you really hit the nail on the head with the call to increase CAFE standards.

    Jack said:

    Increasing the price of gas makes more sense. CAFÉ standards have not had a long term effect, since it encourages more driving. CAFÉ standards also are not free. They drive up the price of cars thereby creating exactly the opposite incentive we want i.e. increase fixed cost (car) relative to variable cost (gas).

    Jack, correct me if I am wrong, increasing the price of gas increases the price of everything in America. To me this seems like trying to pay off our debt by printing more money.

    By increasing standards we can use less oil, and improve the economy overall.

    Something I think free marketers get wrong is that, many times there is an “if it ain’t broke don’t fix it attitude in business”, where sometimes necessary changes aren’t made because there is no profit incentive. This is where government regulation comes in handy.

    “>US has the lowest standards for fuel economy 2004

    US auto makers can’t sell cars to China because we don’t pass their emmissions or fuel economy standards. That, to me, is sad. Volkswagon makes all the Taxis for Beijing. Could American auto makers not use a big international account like that? Why didn’t our free market lead us there? Why if the market is the panacea then is our economy in the toilet?

    Posted by: Jason Ziegler at May 8, 2008 1:01 PM
    Comment #252454

    Jason,

    What what a lot of statists miss as well is that if they monkey too much with the economy they end up doing more harm than good.

    This is a perfect example. In the 1970s, not only was gas expensive but scarce. Long lines at the pump, the likes of which I hope we never see again, where people would wait in line for hours just to buy expensive gas. (It spawned things like the movie Americathon and Mad Magazine’s long gas line comics).

    Japanese companies realized that their more efficient automobiles could meet the demand of buyers to get more miles to the gallon, so after they introducted them people started snatching them up. This was a free market solution to a real problem getting a real result.

    Unfortunately, people started complaining that ‘jobs were going overseas’ and demanded tarriffs and bailouts for the big three, instead of demanding that they play catch up instead! The government acquiesced so instead of a trend of demanding and getting more efficient automobiles, we went the protectionist route and artificially deflated that demand, keeping MPGs down and as a result, emissions up more than they could have been.

    All we can do now is look back and wonder ‘what could have been’ had we not been as interventionist as we were then…

    So, before you start to condemn the free market, make sure that the market is really a free one and that government isn’t the problem instead of the solution.

    Posted by: Rhinehold at May 8, 2008 1:44 PM
    Comment #252459

    Jim, don’t end our relationship, we were getting along so well! Just don’t tell me that “it’s me, not you”. That’s my line!!

    One lecture I found is: “arithmetic, population and energy by Albert Bartlett (Transcript)” You can Google it. It is not long and contains some very interesting info. He also does a one hour presentation that I see on c-span on occasion about the media and the energy crisis that addresses this misunderstanding people have of what compounding does to any quantity, whether it be energy supplies or your “investments”. If you saw that and then heard Ripu Malhotra’s argument, you would quickly realize how ridiculous the premise is that is derived from an impossible hypothetical: a one time doubling happening today and then never changing. It dramatically understates how much energy we will need in the next century.
    Jack, I understand your point about peak oil being a meaningless concept because of adjustments made to counter a decline in carbon production, BUT it may well be that the adjustments that would happen would be very painful. What would it do to the rural lifestyle if it cost $600.00 to fill up your F-150? Would rural property have any value at all? How do we grow food? How do we travel? Will our grandchildren ever fly on a plane? (Did you know that in all commercial aviation history that the industry is unprofitable? What does that suggest about the future of commercial air-travel?) What happens to hotel chains if people cannot afford to take their vacation in a car?
    Supply and demand are roughly in balance. We are rationing fuel right now through price. We are a .28 cent bullet away from having signs on our gas stations that say “Sorry, no gas today”. What if a hurricane comes ashore in the wrong place? Remember after Rita when w suggested that “maybe, we could cut back on our driving a bit”. (Paraphrased)?
    If the aftermath of peak oil is a long, slow curve downward then market forces, innovation, conservation, lifestyle changes could all make the changes less painful, but how realistic is that?

    Posted by: Charles ross at May 8, 2008 2:32 PM
    Comment #252462

    Rhinehold,

    Thank you for your response. I don’t want to condemn the free market. I do still think that raising the CAFE standards at least to the rest of the worlds levels makes sense. Perhaps that government bail out did cripple American auto makers and that is why we are not leaders in this area.

    I think you made a great point. Some call for a free market, but for it to be free, some big crashes will occur and it will be a very painful process.

    We can ask, what will be the repercussions of the bank bailout? What adverse affects can we look forward to?

    What would have happened if we didnt bail them out? Pain…What doesn’t kill you makes you stronger, eh?

    Posted by: Jason Ziegler at May 8, 2008 3:55 PM
    Comment #252466

    Rhinehold & Jason,
    The US government will always be ready and willing to bail out the auto industry, the airline industry, and several others. They can, and they should, and they always will, as a matter of national defense and security.

    The auto industry of Japan was an example of the Japanese government interfering very, very effectively. It is an argument for government intervention, not against it.

    The fact is, only government can act as a conscious entity for creating and implementing policy. Markets create efficient solutions. Efficiency may or may not be desirable, humane, and so on. That is why people interfere through the only agency large enough to effect change, namely government.

    Posted by: phx8 at May 8, 2008 4:28 PM
    Comment #252471
    That is why people interfere through the only agency large enough to effect change, namely government

    NO, it is not because government is ‘LARGE’ enough…

    It is because only government can use force.

    I know, you don’t WANT that to be the case, but it is.

    Posted by: Rhinehold at May 8, 2008 5:18 PM
    Comment #252485

    Jason Ziegler, it’s actually too late for CAFE standards to help us as much as they could have if we had kept them up, regardless of oil price fluctuations. It’s just a better long term way of decreasing demand rather than just raising the price. People live too far away from work to afford price increases.

    The airline industry is subsidiary to the aircraft manufacturing industry. It exists to buy the planes. What happens after that is only relevant to the manufacturers if they stop buying more planes.

    Posted by: ohrealy at May 8, 2008 6:51 PM
    Comment #252486

    Jason Ziegler, it’s actually too late for CAFE standards to help us as much as they could have if we had kept them up, regardless of oil price fluctuations. It’s just a better long term way of decreasing demand rather than just raising the price. People live too far away from work to afford price increases. Gradual price increases could also have helped a long time ago, but people have based their lifestyle on cheap gas.

    The airline industry is subsidiary to the aircraft manufacturing industry. It exists to buy the planes. What happens after that is only relevant to the manufacturers if they stop buying more planes.

    Posted by: ohrealy at May 8, 2008 6:53 PM
    Comment #252487

    I didn’t do that double posting. It’s a site malfunction.

    Posted by: ohrealy at May 8, 2008 6:54 PM
    Comment #252491

    ohrealy, have you looked at the commercial airplane orders just from Arab countries alone lately? Apparently they don’t know they are running out of oil as they somehow believe they will find the fuel to fly them… and find passengers who can afford to purchase seats.

    What if…(name your own nightmare)Mine is what if the Obamawan is elected.

    Posted by: Jim M at May 8, 2008 7:09 PM
    Comment #252501

    Jack,The diesel running on clean burning Bio-Diesel could have easily achieved the 40 mpg average Alas John dingle hi jacked the 40 mpg away.. And you don’t brew Bio-Diesel to make it. Ethanol and Methanol needs to be Brewed and that creates tons of water vapor and Co2 in the process, look for toyota the make the new prius with the diesel and many other auto makers are going to the diesel, And i think the gas tax holiday is a bad idea.

    Posted by: Rodney Brown at May 9, 2008 12:37 AM
    Comment #252503

    check out the 70 mpg VW,Polo. The next quantum leap in efficiency will come when Toyota …
    www.popularmechanics.com/blogs/automotive_news/4235586.html - 90k -

    Posted by: Rodney Brown at May 9, 2008 1:15 AM
    Comment #252504

    Try this! www.popularmechanics.com/blogs/automotive_news/4235586.html

    Posted by: Rodney Brown at May 9, 2008 1:23 AM
    Comment #252506

    Jason & David

    Zero sum is not always a bad result. Sometimes you want to redistribute something. Other times you might want to actually take something away.

    We need government to make choices and set priorities. BUT we need to limit its scope, since it is zero sum.

    I am sorry you don’t like the term or to see it applied to government, but it is accurate.

    Re gas prices - the reason I want higher gas prices is to change behaviors. When the prices go up, people use less or find alternatives. THIS is the goal. Indeed, if the price went up and nothing changed it would have no value. But it does change behavior. We saw that in the 1970s and we saw it this year.

    Posted by: Jack at May 9, 2008 4:40 AM
    Comment #252509

    Jack

    re zero sum
    Is this some Newtonian philosophy Jack? For every action there is an equal and opposite reaction?

    Example: I reach for the banana, but because i expend calories and use time, I have gained nothing? Maybe I would gain nothing, Jack, if I was a robot. But, I got the friggin banana, my effort was worthwhile.

    I think you are just saying the government makes bad decisions more often than helpful decisions, i think you are saying what you always say, less government power more business power.

    I will grant you this Jack the government is NOT a source of production. They aren’t spilling goods into the market. And yes they redistribute money. But they (should, and do) distribute money and resources in such a way to produce a POSITIVE NET GAIN for all Americans. Think security, order, facilities.


    the reason I want higher gas prices is to change behaviors. When the prices go up, people use less or find alternatives.

    Gas prices go up->shipping costs go up, production costs go up->price of goods increases->Does my boss gift me a raise because of it?

    Therefor, everything costs more but I have the same amount of money. What has happened Jack?

    Ok now I am supposed to ride a bike to work? Donald Trump isn’t going to take that flight? It seems only struggling lower income families will be hurt by that proposition.

    Posted by: Jason Ziegler at May 9, 2008 9:29 AM
    Comment #252579

    Jack said: “We need government to make choices and set priorities. BUT we need to limit its scope…”

    On that we agree. But, as to the rest: “since it is zero sum.”, that is little more than your perspective.

    “I am sorry you don’t like the term or to see it applied to government, but it is accurate. “

    No. You are not sorry, I don’t believe that at all. And no, I don’t believe it is accurate. As Adam Smith pointed out, the simple act of government administering justice for society at a cost to tax payers, is a very small cost indeed compared the absence of government in that role, which is anarchy, with an enormous social and economic cost, far beyond the cost of government itself. It is not zero sum. Not at all.

    I will reiterate, your comments have this tendency to view government in dollars and cents as if it were a corporation whose only agenda and end is dollars and cents. That is an incredibly false tendency on your comments part. Read some Adam Smith. It will do your comments perspective some good, especially Theory of Moral Sentiments in which Adam Smith states:

    As the violation of justice is what men will never submit to from one another, the public magistrate is under a necessity of employing the power of the commonwealth to enforce the practice of this virtue. Without this precaution, civil society would become a scene of bloodshed and disorder, every man revenging himself at his own hand whenever he fancied he was injured. To prevent the confusion which would attend upon every man’s doing justice to himself, the magistrate, in all governments that have acquired any considerable authority, undertakes to do justice to all, and promises to hear and to redress every complaint of injury.

    In all well-governed states too, not only judges are appointed for determining the controversies of individuals, but rules are prescribed for regulating the decisions of those judges; and these rules are, in general, intended to coincide with those of natural justice. It does not, indeed, always happen that they do so in every instance. Sometimes what is called the constitution of the state, that is, the interest of the government; sometimes the interest of particular orders of men who tyrannize the government, warp the positive laws of the country from what natural justice would prescribe.

    Some corporations and their lobbyists would easily fit his admonition in his last sentence, wherein, VIOXX makers or the Pinto built by Ford to burn its occupants alive, used lobbyists to warp the positive laws of our country to protect their commission of injustice upon the people and society at large. Under the Bush administration, the EPA became the handmaiden of the corporations causing massive harm to citizens with asthma and other allergies to water and air pollutants, now coming to light in Congressional hearings.

    There is nothing zero sum about this. When ANYONE, including you, attempt to equate government’s complicity in the exchange of human life or health lost as fair trade for profits won, justice is not served, and the society is given cause to manifestly distrust those empowered by their roles in government. Which manifested itself in the 2006 elections, and will again in November with a vengeance afforded the electorate against those who abuse the powers of their office against the electorate.

    It is not zero sum! Not by a long shot. Many who have won legal suit awards for the unjust loss of a loved one at the hands of a corporation, would give the award back in a heartbeat if they could have their child or spouse or sibling back. Not zero sum, at all.

    It will take an entire generation or two to rectify the harm done this country in 6 short years under Bush and a Republican Congress. That is not zero sum. Not by a long shot.

    Posted by: David R. Remer at May 10, 2008 3:50 AM
    Comment #252580

    Jason, gas prices should go up, must go up, as part of the need to rid ourselves of this gluttony in fossil fuels. That said, prices can go up gradually allowing the citizenry to adjust without much harm, or gas prices can go up precipitously causing great harm to a great many.

    The national petroleum reserve exists in part to ease the shocks of rapidly rising oil pricing. The Bush administration has absolutely no sense of justice or care about the shock to the people as evidenced by his refusal to release petroleum reserves to slow the price rise.

    In fact, he has done the exact opposite: filling reserve at higher prices bypassing opportunities to fill it at lower prices. Filling it during the summer instead of the Spring or Fall or winter. There is a perfectly rational explanation for this behavior. His support has come from the oil industry and failing to give them ANWR has prompted repaying them in other more profitable ways to the detriment of consumers and the economy. That explanation as yet has not been proved, but, it remains nonetheless, the only rational one I can think of.

    Posted by: David R. Remer at May 10, 2008 4:05 AM
    Comment #252586

    Jason

    One reason I admit I can be so flip re gas prices is that I DO ride a bike to work, when I am in the U.S. 17 miles one way and I am 53 years old this month. Biking, walking, taking public transport, buying smaller cars, car pooling and slugging are all among the options. You may not like them. That is why we need the carrot and stick of prices to get you off your … and onto the other forms of less carbon intensive transport.

    Re zero sum, I thought I explained it. I cannot do any better. Check into the concept in some sources on strategy. It is not an insulting concept or even a bad one. I want a confrontation between a criminal and the law to be a zero sum game and I want the criminal to lose. On the other hand, I prefer to let ordinary citizens enter into voluntary arrangement where they all get more of what they want then they put in.

    David

    I specifically do NOT view government in terms of dollars and cents. That is why we have a misunderstanding. Government should deal primarily in the sphere of goal setting, justice and security. Something like establish justice, insure domestic tranquility, provide for the common defense, promote the general welfare, and secure the blessings of liberty to us and our posterity. That does not mean picking winners and losers among its citizens, redistributing income, planning the economy or intruding very much in the lives of its citizens.

    The government can set the general framework. It should apply to all Americans. That limits what the government can do, since few solutions fit ALL Americans.

    American government cannot solve the problems of American society. We have other tools for that, including individual efforts, NGOs, church groups, civil society, firms and charities.

    These things are flexible because we don’t all want the same things. We might also change our minds. We make the decisions voluntarily and can change. The government must use the tools of coercion. Sometimes we want that, but not often.

    Posted by: Jack at May 10, 2008 8:56 AM
    Comment #252593

    Moving closer to work, closer to public transportation, or working closer to where you live can also be options for some people. There are plenty of jobs available in places that are more time-consuming or expensive to reach. Why reward the companies that have located in those places by increasing your own transportation expenses?

    Posted by: ohrealy at May 10, 2008 11:24 AM
    Comment #252618

    Jack said: “Something like establish justice, insure domestic tranquility, provide for the common defense, promote the general welfare, and secure the blessings of liberty to us and our posterity. That does not mean picking winners and losers among its citizens”

    Then how is this a zero sum exercise in your opinion? Sounds to me like to the extent those ends are achieved, it is a massive net plus for all. The fact that the nation is still whole with an immense middle class suggests to me that even the downsides and negatives for some have not yet zeroed out the positives for all.

    And yes, Jack, the Declaration ends DO mean picking winners and losers. Ask the Enron deposed heads. Ask, anyone in prison. Ask the Credit Card industry moguls who are going to appear before Congress for redress and force to return to just interaction with the public as competitors instead of a monopolistic oligopoly.

    My brother is employed and had 3000 credit card balance on 5 cards, the highest single card balance being 1500. He saved and plopped down a $500 extra principal payment on that card. And in response, that creditor reduced his limit by the same amount, raised his interest rate by 7% citing his payment record (all on time save on payment a couple days late in January) as the reason.

    With this fact set, the Credit Card company punished him as a customer for 1) reducing his liability outside the credit card companies expected schedule, 2) deprived the company of interest over the next 18 months on that $500 principle buydown, and raising his interest rate citing payment history, which spurred to of the other cards to also raise his interest rates or close the accounts.

    And Americans are forced to revolving credit card balances in ever greater numbers these days: “Consumer credit increased at an annual rate of 5-1/2 percent in the first quarter of 2008. In that quarter, revolving credit increased at an annual rate of 6-3/4 percent, and nonrevolving credit increased at an annual rate of 4-1/2 percent. In March, consumer credit increased at an annual rate of 7-1/4 percent.”
    —Federal Reserve

    Revolving consumer credit outstanding rose from 791.9 billion in 2003 to 944.1 in March of this year. Source: —Federal Reserve

    Personal bankruptcy filings are up about 40% from a year ago. Medical bills account for almost half of all bankruptcy filings.

    There are public and general welfare issues here, Jack. There is no liberty in poverty. The wealth gap is increasing, and the practices by some in the private sector are chief among the causes. Predatory lending, red tape even lawyers find daunting to wade through and understand, and wholesale usury by most of the non-bank Credit Card issuers can only be addressed by government regulation, Jack. Yes, Jack, the government DOES have a role in regulating who wins and loses when that relationship is unjust and one sided in favor of powerful and wealthy corporate interests who can bring billions to bear in influencing public psychology and behavior through the trillion dollar industry of marketing and advertising of need fulfillment.

    Posted by: David R. Remer at May 11, 2008 4:49 AM
    Comment #252620

    “And Americans are forced to revolving credit card balances in ever greater numbers these days:”

    That is total BS. I got in over my head with credit cards in 1972. I cut up the cards, struggled and paid off the accounts and haven’t had one since. Now I use an ATM/Debit card and only use my own money. No one is forced into credit card debt.

    Posted by: BOHICA at May 11, 2008 10:18 AM
    Comment #252725

    Bohica ignorantly volunteered: “No one is forced into credit card debt.”

    Nearly half of all bankruptcies are fostered by medical expenses, after credit cards were maxed out to pay for necessary medical expenses. Millions of Americans have lost their jobs in the last 7 years and a great number of them kept themselves going until another job could be found using credit cards. Millions of Americans now facing mortgage payment increases they cannot afford, are choosing walk away from their homes and mortgages and continue paying on time their credit cards. All these facts are readily available as current event news stories.

    Try elevating your comments from your limited anecdotal blinders and read up on what is really happening in the world. Real wages have been stagnant for years while inflation in basic necessities have made Americans poorer over those years. Spare us your “I am so good, and they are so lazy” anecdotes. The ignorance of fact and data in such comments is overwhelming.

    Posted by: David R. Remer at May 13, 2008 4:14 AM
    Comment #252727

    David,

    Talk about ignorance. Credit cards are a choice. I have gotten offers from banks for the last 36 years. I said no. You cannot get a credit card without willfully signing on the proverbial dotted line. I’m sure I’m not the only one without credit cards.

    It hasn’t been an easy road to live without plastic money. I’ve had the same medical expenses as most people maybe more than others with my wife being a diabetic and having heart and liver problems. There are other ways of financing these expenses.

    Just like with the mortgage problems we face as a nation, some of us could see the problems with Adjustable Rate Mortgages and Introductary rates on credit cards. Many of us actualy DO read the fine print before we sign agreements.

    If you are not strong enough to back away from those kinds of risk when you can’t afford it, don’t expect me to help.

    Posted by: BOHICA at May 13, 2008 6:03 AM
    Comment #252806

    Clinton takes Indiana by a ‘razor’ and Obama wins North Carolina by a huge margin. Nevertheless, Kentucky, Montana and West Virginia are still to come.

    The Democratic race for nomination is still very much alive – and most likely to be decided by superdelegates

    If you’re tired of waiting around for those super delegates to make a decision already, go to LobbyDelegates.com and push them to support Clinton or Obama

    If you haven’t done so yet, please write a message to each of your state’s superdelegates at http://www.lobbydelegates.com

    Obama Supporters:

    Sending a note to current Obama supporters lets them know it’s appreciated, sending a note to current Clinton supporters can hopefully sway them to change their vote to Obama, and sending a note to the uncommitted folks will hopefully sway them to vote for Obama. It’s that easy…

    Clinton Supporters too …. !

    It takes a moment, but what’s a few minutes now worth to get Clinton in office?! Those are really worth !

    Sending a note to current Clinton supporters lets them know it’s appreciated, sending a note to current Obama supporters can hopefully sway them to change their vote to Clinton, and sending a note to the uncommitted folks will hopefully sway them to vote for Clinton. It’s that easy…

    Posted by: Kathy at May 14, 2008 6:13 AM
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