It is time to stop quivering in our boots in pointless fear of the future and just roll up our sleeves and build it.
- Ray Pierrehumbert

Friday, April 25, 2008

Two Alternative Stupidities

"High gas prices might be uncomfortable while we search for viable long-term solutions, but they’re more comfortable than the alternative: no gas and no solutions." says a delightfully sarcastic article on the Environmental Economics site.

I can't resist brazenly copying whole swaths of this.
Eighty-two Democrats and 3 Republicans in the House have proposed the Federal Price Gouging Prevention Act (H.R. 1252) otherwise known as the FPGPA, pronounced STUPID. So let's take a look at the STUPID price gouging bill...


The STUPID price gouging bill will make it a federal crime to:

...sell crude oil, gasoline, natural gas, or petroleum distillates at a price that is unconscionably excessive or indicates the seller is taking unfair advantage [of] unusual market conditions (whether real or perceived) or the circumstances of an emergency to increase prices unreasonably.

Unconscionable excessive? Unfair advantage? Increase prices unreasonably? Yikes.

Allow me to interpret. The STUPID bill makes it a federal crime to:

...sell crude oil, gasoline, natural gas, or petroleum distillates at a price that makes my constituents complain because they are too lazy to drive less at higher gas prices.


In looking into the STUPID price gouging bill, I came across
the Republican Study Committees reports on the STUPID price gouging bill. In it, they list a set of alternative proposals for lowering gas prices. They are:
  • Streamline the environmental hurdles to building new oil refineries.
  • Make it easier for small refineries to increase capacity.
  • Allow more offshore (e.g. Outer Continental Shelf) and inland (e.g. Arctic National Wildlife Refuge) oil drilling.

In other words...screw the environment and roll back new source review.

  • Temporarily suspend the gas tax.

...because driving more is always a good short-term solution.

  • Temporarily suspend the gas tax and temporarily suspend spending on all transportation earmarks in the most recent surface transportation reauthorization bill.

...because driving more on crappy roads is an even better short term solution.

  • Permanently reduce the gas tax.

...because driving more on crappy roads is an even better LONG term solution.


Marion Delgado said...

It's not. Stupid, I mean. To take note of, and take action against, the collusive and predatory nature of the gigantic multinationals in the non-renewable energy resource trade.

Carter did so, and was right. Everyone that attacked Carter's energy policies at the time, including Reagan, who ripped the solar panels off the White House, was WRONG and STUPID.

Simply repeating it's stupid it's stupid it's stupid and depending on the market cult that Americans are indotrinated in from cradle to grave to pretend that's an argument makes that site, too ... STUPID.

You're sensible about such issues, but that site is NOT.

S Molnar said...

The good news is that lowering the gasoline tax won't lower the price of gasoline.

Michael Tobis said...

I don't agree with that site on everything but I agree that any public action to reduce the price of gasoline rather than to subsidize alternatives is an error, especially if it is at public expense.

I don't know about the "collusive and predatory nature" of gigantic multinationals. Corporations are devices to maximize the interest of their shareholder. We need such devices to maximize efficiency through the coming crunch. Our job as members of the broader public is to align the interests of the shareholder with the general interest. To the extent we do that, corporations will improve matters.

Just because I object to conventional economics doesn't imply that I am enamored of Marxist fantasies. Indeed, one of the ways in which serious examination of economics is suppressed is by implying such an equivalence. There is no reason I can see that there can't be more than two ways to think about these things.

green said...

Well, at least if the roads get worse because there's no money to repair them, that might discourage people from driving. ;)

I liked your "No food shortage" post on Grist, by the way. I think it's pretty hard for people to understand the global economy and how competitive it's getting for resources (especially when it comes to food and fuel), how ugly the realities of the market can be. You add to that globalization policies that have made it so countries import so much of their food when before they produced it at home... It's easy to open the markets to imports, but it's much harder to get farmers back on the land and producing food when it becomes necessary.

Chuck said...

Until businesses have an incentive to have their employees live within walking distance, people will still drive as much as it takes to get from an area of affordable housing to their places of employment.

Steven said...

All of the arguments here seem to start with the premise(s):

1. Oil is bad. Because.
2. Oil companies are bad if not evil.
3. Using carbon fuels is bad.
4. The only answers are to drive less.

etc, etc, etc.

I certainly welcome anyone else who wishes to enter the petroleum market and offer product at lower profit margins. But people seem to want it both ways. They want cheap gas + they want to price people into driving less.

Regarding "screw the environemtn", my understanding is that the technology and cleanliness of automobiles has vastly improved over the past decades. Any car now produces less pollution than any car in the 60's or 70's.

Additionally, the current drilling in Alaska takes place on sites smaller than a football field. I have seen them, they are very neat and tidy- not the messes people are led to believe. The caribou population nearby has quintupled.

I'm waiting for someone to define "price gouging". Increases in price make the next best alternative comparitavely favorable (hydrogen, sour crude, solar, nuclear, wind, whatever) as well as increasing the incentive for getting more product to market, while also leading consumers to self-ration.

I don't understand people saying gas is "too expensive". Compared to what? If you have a cheaper alternative, why aren't you using it?

And unless I missunderstood, I wouldn't cite Carter's gas policies. The result was shortage and lines at the pump.

Michael Tobis said...

Steve, I agree with some of your points.

I think it's true that some people are arguing that oil use is bad and high prices are bad at the same time. I agree that this makes very little sense.

I don't understand the concept of "price gouging" at all.

Unless there is an emergency situation and life or at least very large other losses are at immediate risk, it seems to me that a business is expected to charge what the market will bear. How is one to distinguish between favorable conditions and "gouging"?

Politicians of both parties are pandering to sticker shock, but delaying the inevitable only makes matters worse. Bravo to Obama on this one, as he's the only major candidate who isn't proposing to roll back gasoline taxes.

On the other hand, whether automobiles are "cleaner" in the sense of local pollution is beside the point. The great bulk of the consumed fuel itself is the
pollutant nowadays. There is no escape from CO2 if you burn hydrocarbons. This is serious business.

Corporation of great size are huge beasts. For the time being the oil has to keep coming. People providing that service are doing an honorable and respectable thing.

That said, it is possible that the propaganda campaign has already made all the difference between a livable world in the 22nd century and a vast cataclysm. It's hard to cut much slack for that.

Certain fossil fuel companies have definitely done very bad things in other places, as well as to the climate debate. The idea that they are "the enemy" is unfortunate but it's not without some basis in history.

I think it's a failure of regulation. Companies will maximize profits within the law. If they end up behaving against the interests of the public that means the law is ill-designed or weak.

Unfortunately, the public doesn't understand the extent to which increasing prices are in their interest. So you have a vicious cycle of mutual pandering between the public, the law, and the energy providers.

I thought the peakers were exaggerating but maybe they had it right... Reducing prices at this time is just a sign of collective madness.

Steven said...

You said---
"On the other hand, whether automobiles are "cleaner" in the sense of local pollution is beside the point. The great bulk of the consumed fuel itself is the
pollutant nowadays. There is no escape from CO2 if you burn hydrocarbons. This is serious business."

I have to disagree, to some extent.

Over human history, we have continued to progress from more carbon to less carbon fuel sources.

Consumers have always sought cleaner, denser fuels.

Wood = 10c + 1h
Coal = 2c + 1h
Oil = 1c + 2h
Natural Gas = 1c + 4h

We've moved from fuels which take a lot of labor and trouble, and are difficult to control, to more easily controllable, smokeless fuels.

I believe natural gas will increase during the next decade, and I hope nuclear will increase dramatically. Personally, I would like to see nuclear cover all of our energy needs except mobile ones- which would be the only use of petroleum, and increasingly natural gas. (Also, with economies of scale with increased nuclear power, more electric powered and electric hybrids will be viable). I also think hydrogen will become viable.

And at the same time, all of our petroleum uses should become increasingly efficient and produce less pollution. For instance, we don't capture all the energy lost during braking- this can change. Increases in material science should make safer, lighter vehicles, which require less fuel.