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Sunday, July 06, 2008

Brilliant idiocy on energy from Democratic über-policymaker Robert Reich

A short piece entitled "Short Straw Economics" in today's NYT Magazine (h/t Althouse) contains questions to and answers from Robert Reich. Reich was Secretary of Labor for the Clinton Administration. He's currently in exile from government as a professor of public policy at UC Berkeley. And the odds are good that he'd show up as a cabinet member again in an Obama Administration. Here's what Reich has to say on the most timely topics of public energy policy today (boldface in this blockquote, as in the original, indicates the NYT reporter's questions):

What do you make of the argument that the only way to lessen our dependence on foreign oil is to tap more oil wells here — in Alaska and off the coasts of Florida and California? When you consider that the oil we pump goes into a global oil market, offshore drilling makes no sense. We take the environmental risk, but we’d have to share the negligible price gains with Chinese consumers and every other user around the world.

Then why do you think President Bush asked Congress last month to lift the longtime ban on offshore oil drilling? If I had to guess, I would say that President Bush is very close to the oil companies and wants whatever they want.

And what they want is license to drill? I think they would like as many licenses and permits as possible granted during the Bush administration. They know they would have a harder time with a Democratic White House.

That first answer tickles the hell out of me.

He's correct that because of the world-wide energy market, in which barrels of oil are fungible as long as the market is operating with a reasonable degree of freedom, Americans would indeed share  with the rest of the consuming world the lower resulting costs from decisions made now to drill ASAP onshore and offshore in America. In other words, Americans would become to the rest of the world the way that Texans and Louisianans are now to Californians and Floridians — i.e., exploited. ¡Qué lástima!

(We Texans and Louisianans try to use that word "exploited" in a good way, though: offshore drilling, done responsibly, brings not only energy to America but jobs and economic benefits to the adjacent onshore states, which is one reason the Texas economy right now looks a hell of a lot better than the California economy. We invite Californians and Floridians to join us in the responsible exploitation of all our coastlines, which is only fair, instead of continuing to get a free ride at our expense.)

What this very smart man is ignoring in his first very glib answer, though, is something so huge that he can't have just forgotten about it. And only by ignoring it can he so cheerfully lie to you through his teeth in his second and third answers.

Short of invading and occupying all or at least most of the nations in OPEC by military force, we can't dictate their production and pricing decisions. And OPEC is a cartel whose existence confirms its member countries' fervent desires to control the supply, and therefore the price, of oil to the extent they can get away with it. It has not, historically, been a totally successful cartel, however, precisely because there are non-OPEC sources of oil — among which is, and always has been, the United States of America.

Reich's policy — and all of the Democrats' policy, including their presidential nominee Barack Obama — will continue to restrict American competition to OPEC. In their preferred future world, as our existing resources dwindle, OPEC's market share will grow. With that growing market share will also grow OPEC's power to be a successful cartel.

And as we saw in the early 1970s, the foreign policies of OPEC members (and for that matter, non-OPEC producing countries that are as friendly to us as Canada and Mexico right now) emphatically does not track our own. If there's a sudden political crisis that again turns today's merely painful energy prices into an actual international energy unavailability, the degree to which we're hosed (and forced to compromise our national sovereignty as a result) will be inversely proportional to the amount of domestic onshore and offshore production then available from the United States and its territorial waters.

Until Reich and his comrades actually succeed in vesting power in the People's Republic of Berkeley and then the Sovereign Soviet Republic of California, however, the State of California, at least in theory, doesn't have a foreign policy that deviates from the United States' own. And until then, domestic production from offshore California would translate directly into domestic security from those who might suddenly wish us (or our friends like Israel) ill.

Our energy policy isn't, or ought not be, just about prices at the pump. It's about, or should be about, national security as well.

Reich knows all this. Indeed, he cleverly reinterpreted the question, which asked about "dependence on foreign oil," into being a question about lowering prices at the pump. Only with the question thus recast could he ignore the "dependence on foreign [countries]" aspect.

He relies upon his readers being either too stupid or (more likely) too partisan to figure this out, though. And for many of Reich's and the NYT's readers, unfortunately, he's right. They'll blithely buy into his song and dance about corrupt Dubya and the evil American oil companies (he'll be intentionally blurry about companies like BP and Shell). They'll rejoice with him when the Democrats ride to the rescue on America's energy problems by driving evil Dubya and the Rethuglicans out of the White House. In fact, Reich and the Dems — who have no actual energy policy except taxation and suffering — are counting on short, stupid sound bites like these to soothe Americans' energy worries and get Obama into 1600 Pennsylvania, whence all other Democratic Party jobs will then flow like mana from heaven, even if domestic oil and gas production more and more flows like cement during those years.

Being, metaphorically, a self-created and -preferred urban eunuch himself, Robert Reich will cheerfully counsel his Democratic masters to put my testicles or yours (or your other sensitive metaphorical bits, if you're not testicularly fortitudinous like me and Hillary Clinton) into OPEC's vise. His ideal population is docile, and they ride on mass transit anyway, where their movements can be monitored and controlled by people like him, who know best. Not that Reich or his buddies still have a complex about being short, by the way. Not at all.

(I can't resist a final comment: In any kind of public debate, Sarah Palin could eat Robert Reich's lunch on these issues. Hell, she could take away the little twerp's lunch money and drink his milkshake to boot.)

Posted by Beldar at 11:46 PM in 2008 Election, Current Affairs, Energy, Politics (2008) | Permalink


Other weblog posts, if any, whose authors have linked to Brilliant idiocy on energy from Democratic über-policymaker Robert Reich and sent a trackback ping are listed here:


(1) DWPittelli made the following comment | Jul 7, 2008 6:24:49 AM | Permalink

A delicious irony is that most of the same Congressmen (Democrats) who want to bring price collusion charges against OPEC members, for the OPEC members' refusal to maximize oil production, are themselves refusing to allow oil production in much of this country (e.g., ANWR, and offshore). As such, the Democrats have been effectively acting as agents of OPEC.

Given sovereignty issues, the Democratic leadership might make a better target of the sort of criminal investigation authorized by their "Consumers First Energy Act."

(2) TmjUtah made the following comment | Jul 7, 2008 7:59:04 AM | Permalink

November is a long time to sell "Hope and Change" to unemployed people who can't afford food and are in danger of losing their houses.

The Congress and both candidates have managed to let the elephant in the living room get so big that they have to argue out on the front yard... and all they talk about is opening our borders and how we "can't drill our way out of high energy prices".

Did I miss the Special Olympics where all our politicians won their seats?

Meltdown. Yes, I think it's going to be that bad. And more like the end of this month. I'm just grateful I live in Utah; we'll probably be greeting the last of the California middle class that doesn't land in Arizona or Idaho.

(3) Charlie (Colorado) made the following comment | Jul 7, 2008 9:24:07 AM | Permalink

Palin needs to be on TV more. She can talk if she wants.

(4) The Drill SGT made the following comment | Jul 7, 2008 1:31:34 PM | Permalink


It's worth reminding folks tht in Jan of 2007 when Nancy Pelosi took over the House, she and her folks had a list of things to accomplish in the first hundred hours. One of them was to lower gas prices (then $3/gl, now $4/gl) by eliminating all sorts of subsidies for oil companies.

How decreasing oil company revenue, and decreasing corresponding R&D could lower prices is beyond this econ grads understanding. Must be PhD level Micro-econ talk at UCB.

/sarc on
Another good post for you would be on the terrible oil spills that resulted in the gulf from Katrina and Rita coming ashore. Or the awful environmental polution that covers Norway and Scottish beaches and makes Norway wealthy.

/sarc off

(5) ech made the following comment | Jul 7, 2008 5:03:39 PM | Permalink

A friend in the "All Bidness" says adding even 1 million BBL/day into the market would have major price effects. And put money into the pockets of the US instead of .

(6) SPQR made the following comment | Jul 7, 2008 6:25:38 PM | Permalink

Beldar, with respect, when you write: "Reich knows all this. Indeed, he cleverly reinterpreted the question, which asked about "dependence on foreign oil," into being a question about lowering prices at the pump. " you greatly overestimate Reich's intelligence.

(7) Gregory Koster made the following comment | Jul 9, 2008 1:12:52 AM | Permalink

Dear Mr. Dyer: I too think Reich is being cynical,but this cynicism is leavened by his own experieince. Viz: when he was Billyboy's Sec of Labor, he watched Billyboy puff and sweat and groan and finally get his tax hike through in 1993. What happened? Sluggish recovery at first, then five years of good times. If you think higher income tax rates slow economic growth (I do) you are confounded. So too, the Reichian reasoning on no more drilling for oil: 'The conservatives were wrong before, and they are wrong now.' As you say, brilliant idiocy.

He's one step away from a much thornier argument that would stop both of us. Few like high oil prices. You've written a sensible post on how beginning to drill now, would squeeze whatever speculation out of the market, and in the longer term drop oil prices. But the trouble is, both of us have also said energy policy should be tied to national security. The moment you make that argument, economics takes a back seat, and may even be heaved off the bus. The trouble with letting "the market" take care of energy problems is that it hasn't worked. The first oil crunch came in the fall of 1973, when the Egyptians tried to murder the Israelis yet again, and got the hell kicked out of them. OPEC found the excuse it hought it needed to use its oligopoly. You and I were in junior high. Are we less dependent on foreign imports, 35 years on? Hardly. We've gone through all sorts of gyrations, from the Bumpkin's idiotic attempts to make all oil equally priced, and the long lines at stations that made. Yet give him credit, he pushed for synthetic fuels, just as Germany did in World War II. That plan failed, largely because the price broke when Reagan did away with the Bumpkin's idiotic controls (inherited from the equally idiotic Nixon, it is true.) What will happen this time? We are pulling two ways:

a) let's work toward energy independence, and
b) let's work for lower retail oil prices.

These two conflict. You can't have both. It's true that government efforts have been far more destructive than otherwise, as the corn ethanol fiasco shows. But the 'free market' hasn't done the job either. It may that this failure is because government hasn't let 'the market' do the job. What would such 'letting' entail? Almost surely, a prolonged spell of rising prices, to the point where the present $4-5 range would seem a bargain. Can McCain sell this to the electorate? I doubt it. But Obama might. His core of voters include all those too young, idiotic, or corrupt to remember the Bumpkin's antics. Under his mantra of "change" he might be able to pull off high prices being necessary. I myself would find the such an approach appealing, and would stop only because common sense would tell me that Obama is a dolt when it comes to governing, and would be an easy mark for all those who itch for more and more government authority. To be sure, McC is just as doltish when it comes to economics, but he reads national security properly, and that would be a big help to any sensible energy policy. He also has better access to real knowledge, as opposed to red meat in the faculty lounge or editorial room.. All things considered, I think energy politics is going to help Obama, not McC. Another gloomy thought for this long hot summer.

Sincerely yours,
Gregory Koster

(8) H.R. Hughes made the following comment | Jul 21, 2008 1:58:52 AM | Permalink

Thje idiots who say we shouldn't start drilling for oil in the U.S. are real idiots. If not now, when? They totally forget the international effects that even the assumption of future increased oil exploration in the U.S. would have on international oil markets.

If you were starving and hungry as hell, would you say whats the use of planting any crops because we would have to wait for them to mature before they would be good to eat? Where do you start doing something for your own good? After it may be much too late?

We may have to tough it out for a while, but it would be nice to know that there will be a light at the end of the dark black tunnel. Bah Humbug!

(9) BruceMoomaw made the following comment | Aug 5, 2008 7:55:59 AM | Permalink

"If there's a sudden political crisis that again turns today's merely painful energy prices into an actual international energy unavailability, the degree to which we're hosed (and forced to compromise our national sovereignty as a result) will be inversely proportional to the amount of domestic onshore and offshore production then available from the United States and its territorial waters."

Not quite. It will, of course, also be proportional to the extent to which we've built, in the meantime, the equipment that will allow us to travel using less oil. And, given that Bush's own EIA says it'll be 2018 before we can get ANY more oil whatsoever out of ANWR -- and that (assuming immediate leasing this year) "access to the Pacific, Atlantic, and eastern Gulf regions would not have a significant impact on domestic crude oil and natural gas production" before 2026 -- might we possibly be able to reduce our vulnerability to a cutoff of our foreign oil inflow faster by expending the money we'll need to construct that drilling infrastructure on instead designing lower-mileage cars, retooling our auto factories to manufacture them, and/or rebuilding and enlarging our railways?

(As for Beldar's comments about "Reich and the Dems [having] no actual energy policy except taxation and suffering", and about supporters of mass transit doing so because they have a totalitarian streak: well, Dr. Johnson's comment about criticism being wasted on pure idiocy seems appropriate. Particularly since -- as Koster points out -- there's just a wee bit of conflict between Beldar's expressed desire to save that offshore and ANWR oil for a rainy day, and his expressed desire to use it to lower our current gas prices.)

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