Drill Here, Drill Now

March 4, 2011 Leave a Comment

This post was written by Edward Mahee. Writing under a pen name, Mr. Mahee is a legal expert and political analyst.

The recent turmoil in the Middle East has given rise to all manner of speculation concerning the future of that region.  With the revolutions in Tunisia and Egypt, as well as uprisings in Iran, Bahrain, Yemen and Jordan, and with rumblings in Saudi Arabia, the world watches with a mixture of awe, hope and apprehension.  But nowhere is there more immediate concern than in Libya, where Moammar Gaddafi is facing the prospect of the end of his four-decade dictatorship.

While much of the impact of these uprisings in the Middle East remains unclear, one effect is already being felt: In the last ten days, the price of oil has risen from $87/barrel to over $100/barrel.  With the price of crude oil likely to remain elevated for the foreseeable future, higher gasoline, energy, and transportation prices are taking hold. As the economy continues to struggle, even the most modest increase in the price of energy can have a huge impact, and risks driving the economy back into recession. 

Few people realize how dependent we are on oil and its distillates. Every person who drives to work, buys food at a super market, or ships anything, in one way or another pays for it through the price of oil.  Without oil, much economic activity would grind to a halt. 

It is therefore striking that Americans tolerate a system where so much of our livelihood is dependent on oil, when so much of that oil comes from places that are unfriendly to the United States and/or extremely unstable. While the majority of oil consumed by Americans comes from domestic sources, Canada, or Latin America, the interruption of the production of oil anywhere affects the price everywhere since oil is priced on commodity exchanges.  It is basic supply and demand. 

There are thus two ways to reduce oil’s price – increase supply or decrease demand.  Since the 1970s, when President Carter’s advice to the American people was to wear sweaters in response to an oil crisis, we have been encouraged to reduce our demand for energy. Fine. But to keep the economy moving, we need to move things, and to move things we need oil.  At some point, we can only reduce demand so much.

It’s time for the American people to seriously consider increasing the total supply of oil by easing restrictions on drilling, oil shale production and other methods of oil production and distillation.  This will bring jobs, secure our energy supply, and bring the price of oil down over time.  While some get upset over the prospect of increasing domestic oil production, we must face the facts: Short of a major technological breakthrough, American productivity will demand oil. Meaningfully curbing oil demand is difficult, if not impossible—we now must embrace the other side of the equation. As the debate is brought home to struggling Americans paying close to $4 per gallon and facing rising food prices, it is time we take a sober look at supply. 

-Edward Mahee for TruPolitics.net

Filed under Economy/Fiscal Issues, Environmentalism Tagged with , , , , , ,

The Emperor Has No Clothes

December 9, 2009 2 Comments

This article was featured in The Bulletin (Philadelphia-area newspaper) on 12/14/09. You can read the online version here or check out the print column each week.

In the popular 19th century tale “The Emperor’s New Clothes,” two weavers make an Emperor a suit they claim has magical powers. The suit, they say, is invisible only to those that are “incorrigibly stupid,” or unfit for the position of Emperor.

As his new “suit” is being crafted, the Emperor has a shocking revelation: He can’t see the thread. Worrying he will be exposed as too stupid or unfit for his post, however, the Emperor pretends to see the suit, and summarily puts it on.

When he eventually parades through town with his new outfit, the crowd shouts with feigned praise and awe, each subject hoping to avoid the shame of being the lone person unable to see the magnificent magical thread. Until, of course, a child too innocent to know the difference shouts out, “But he has nothing on!” The Emperor is exposed, the crowd vindicated.

Recent weeks have thrown the climate change debate back into the spotlight, and coming months may mark historic policy change for the U.S. and its international partners. The Environmental Protection Agency announced Monday that greenhouse gasses will officially be considered a “dangerous pollutant,” and should be tightly regulated. The announcement came as world leaders convened in Copenhagen for a U.N. climate change summit, the focus of which is to gain international consensus on reduction of carbon emissions. Domestically, debate among U.S. politicians about the need for extremely controversial “cap-and-trade” legislation heated up as the bill moved through Congress.

The outcome of each of these disparate but converging events is the same: Increased regulation, taxation, and forced reduction of greenhouse emissions. Simply put, businesses will be required to either significantly reduce carbon emissions or pay the government in the form of carbon credits and fines for the difference.

What is exceedingly clear from these policy discussions is that such drastic change will place a heavy burden on U.S. businesses. It’s simple economics: When government forces environmental activism on industry, industry necessarily makes choices for environmental, not economic purposes, and profit falls.

Domestically, increased costs from carbon regulation will have a triple affect on the U.S. economy: 1. Companies will pass the costs through to consumers, resulting in a form of energy tax on U.S. citizens; 2. Many companies will be unable to sustain required technology investments and process changes, driving down profitability and creating job loss; 3. Companies will move overseas to developing nations that do not have such stringent regulations, again resulting in job loss.

For these reasons, industry leaders from across the country have opposed the forthcoming legislation. U.S. Chamber of Commerce President Thomas Donohue said recent regulatory proposals “could result in a top-down command-and-control regime that will choke off growth by adding new mandates to virtually every major construction and renovation project,” and may “stifle our economic recovery.” The National Association of Manufacturers stated that the recent EPA proposal is “certain to come at a huge cost to the economy.” A recent Heritage Foundation analysis of the cap-and-trade bill projects it will cost the economy $161 billion in 2020, or $1,870 for a family of four.

At a time when the global economy is struggling to recover from near collapse, with U.S. unemployment at its highest levels in 26 years, it seems any directive that would significantly damage the economy should come with irrefutable, unquestionable, and undeniable force. It should require immediate action, with evidence so overwhelming that its negative effects are simply an afterthought.

With millions of Americans now questioning the American dream, struggling to pay mortgages and put food on the table, any policy that worsens their odds should be of utterly historic necessity. Right? Not exactly.

Earlier this year, over 700 scientists worldwide conferred to issue a statement saying they fundamentally disagree with the findings of the U.N. panel that are driving current policy discussions. Later, Dr. Kiminori Itoh, a Japanese environmental physical chemist who had contributed to an earlier U.N. climate report, said man-made warming is “the worst scientific scandal in history.” Nobel Prize winner Ivar Giaever called global warming the “new religion,” based on faith rather than fact. A group of 54 noted physicists, led by Princeton’s Will Happer, demanded the American Physical Society revise its position that the science is settled on the issue. Last week, MIT meteorologist Richard Lindzen wrote, “Claims that climate change is accelerating are bizarre,” calling global warming science “the grossest of ‘bait and switch’ scams.”

In a final blow, the now infamous Climategate scandal at the University of East Anglia’s Climatic Research Unit revealed that leading proponents of global warming activism have been manufacturing the scientific “consensus” they claimed, blacklisting dissenting scientists and journals, distorting peer review, and shunning Freedom of Information requests.

It seems climate change may have had its Emperor-With-No-Clothes moment.

So why are activists charging head on into a policy that will surely damage the economy? The story of the Emperor has a telling conclusion: “It seemed to him that they were right; but he thought within himself, ‘I must go through with the procession.’ And so he held himself a little higher, and the chamberlains held on tighter than ever, and carried the train which did not exist at all.”

-Matt Benchener is Supervisor of Newtown Township, and the Founder of TruPolitics.net

Filed under Environmentalism Tagged with , , , , , , ,

Political Snapshot: The Cap-and-Trade Controversy

June 26, 2009 4 Comments

Political Shapshots offer a concise summary of a current issue. Each Snapshot has a representation of the left and right perspective, as well as the TruPolitics take on the issue.

This week, House Democrats proposed a landmark climate bill aimed at greatly reducing greenhouse-gas emissions.  The bill calls for a “cap-and-trade” system which would create a market for companies to buy and sell the right to emit carbon dioxide and other gases. The bill would force a shift from coal and other fossil fuels to more energy efficient sources, while also establishing new building codes that punish environmentally unfriendly structures. The stated goal of the highly controversial legislation is to cap greenhouse-gas emissions at 17% of 2005 levels by 2020, and at approximately 80% by 2050.

Right: Republicans have long been opposed to the cap-and-trade system, claiming that it will come at a high cost to consumers, taxpayers, and the economy. They believe that the increased costs to manufacturers, coming Cap-and-tradeeither through forced investment in “environmentally friendly” facilities or payment for carbon emissions, will be passed through to consumers through higher costs and lost jobs. Many on the right also fundamentally disagree that climate change is a pressing issue, citing the growing body of scientific research that refutes its affects.

Left: Democrats have stated that the legislation is necessary to stem the rapid growth of U.S. carbon emissions. These emissions, say many scientists, are doing great damage to the environment and may result in irreversible climate change. President Obama promised such legislation to supporters during his campaign, and passage of the controversial bill would be seen as a noteworthy victory on a foundational administration policy.  The new program would also give the president strong bargaining power ahead of international climate negotiations later this year, where the U.S. may face push back for its refusal to participate in the Kyoto Protocol.  Significantly, the proposal has seen heavy resistance from Farm Belt and Blue Dog Democrats whose constituents may face increased job loss and decreased industry profit.

TruPolitics: Which of the following is more important to you: 1. American jobs; low energy costs; cash for consumers; strong U.S. industry; or 2. Reduction in greenhouse-gas emissions; environmentalist policy? Your answer to that question will frame how you feel about cap-and-trade policy. For environmentalists, who see climate change as a growing and palpable threat, the increased costs to consumers and damage of U.S. industry are a necessary trade-off. But it is a foolhardy trade-off.

Firstly, the costs of the bill will be significant. Many companies will be forced to rebuild factories and reform emissions, a heavy up-front investment cost. Those that cannot afford the investment will have to pay for their increased emissions, a heavy recurring cost. These costs will have a triple affect on the U.S. economy: 1. Companies will pass the costs through to consumers, resulting in a form of energy tax on consumers; 2. Companies will suffer from increased costs, driving down profitability and creating job loss; 3. Companies will move overseas to nations like China and India that do not have the same constraints on greenhouse gases.

Those reasons are why the U.S. did not participate in the Kyoto Protocol under both the Bush and Clinton administrations—the results would be far too costly for domestic production and industry. They are also why the U.S. Chamber of Commerce, the National Association of Manufacturers, and many Farm Belt Democrats oppose the legislation, warning that it will cause a mass migration of business out of the country.

Secondly, the scientific community is still largely divided over climate change. In 2007, a body of U.N. scientists conferred to draft a document demonstrating the damages of climate change. A few months ago, over 700 scientists (13 times the amount that drafted the U.N. proposal) said they fundamentally disagree with the findings. Dr. Kiminori Itoh, a Japanese environmental physical chemist who contributed to an earlier U.N. climate report, said man-made warming is “the worst scientific scandal in history.”

Al Gore’s famous movie “An Inconvenient Truth” lays out a compelling and emotional case for climate reform, and joins with a large body of research showing the potential dangers of greenhouse gasses. Nobel Prize winner Ivar Giaever, on the other hand, calls global warming the “new religion,” based on faith rather than fact. A group of 54 noted physicists, led by Princeton’s Will Happer, is demanding the American Physical Society revise its position that the science is settled on the issue. The earth’s temperatures have flat-lined since 2001 despite growing concentrations of CO2, and peer reviewed research has now debunked extreme scenarios about polar ice caps, hurricanes, and rising ocean levels.

The bottom line here is simple: The global warming debate is far from settled. The legislation, then, creates a significant cost to the American economy in favor of what is at best a highly politicized theory. The Heritage Foundation projects the bill will cost the economy $161 billion in 2020, which is $1,870 for a family of four. By 2035, when the restrictions on emissions ratchet up, that number rises to $6,800. Are you willing to pay $6,800 in favor of a partisan theory? If you work in the agricultural or manufacturing industry, are you prepared to lose your job because of an environmentalist agenda? This is a classic case of politics overriding prudence.

-Matt Benchener from TruPolitics.net

Filed under Environmentalism Tagged with , , , , , ,

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