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Wednesday, October 01, 2008

New energy to rescue taxpayer from Wall Street's problems?

[I neglected, for some reason, to cross-post here for a guest-post at HughHewitt.com, but I'm remedying it at the same time I'm copying that post here.]

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[Copied here for archival purposes on November 5, 2008, from the post linked above at HughHewitt.com.]

(Guest Post by Bill Dyer a/k/a Beldar):

I haven't double-checked the numbers and can't vouch for them, but commenter cwr at my own blog left this very provocative question and observation early this afternoon:

Will the debate format allow Palin to work in her knowledge of the energy business? So far the GOP ticket hasn't mentioned that the 20 billion bbls of oil offshore and the 20 billion bbls in ANWR would be worth $4 trillion at today's prices. The severance taxes, gov't royalties and corp income taxes from that would easily pay for the "Wall Street bailout."

It's hard to do an apples-to-apples comparison here. For one thing, no one knows what the actual cost will be to the taxpayer from even the plan that Speaker Pelosi allowed to go down to defeat in the House on Monday. Indeed, one of the main points of that plan was to float that huge number — $700 billion — for its positive psychological impact in restoring market confidence, to avoid the need for a fire-sale disposition of assets and permit, for example, more mortgages that are currently in default to be restructured through workouts that end up leaving homeowners in possession and everyone better off than in a foreclosure situation. There's good reason to hope that the ultimate cost to the taxpayer won't be remotely close to $700B, and that the plan might actually turn a profit for the taxpayer.

Similarly, one salutary effect of opening up offshore and ANWR drilling would be to depress current and long-term energy prices by the gradual and eventual increase in supply that would cause. But it's still true that on balance, increasing supplies of energy and lowering energy prices will not only lead to increased revenues to the U.S. Treasury from the taxes and royalties on that energy's production, but also result in a healthier economy that will generate more tax revenues naturally and without tax increases.

Quantifying these relationships isn't a matter of simple arithmetic, but of multi-variable calculus, I suspect.

Still, there should be little doubt that prohibiting production in ANWR right now isn't benefiting anything or anybody except some fairly nasty mudflies who live on the relatively tiny portion of those ugly arctic coastal mudflats which would actually be subject to exploration and drilling. Maybe Gov. Palin will be in a position to announce during the Veep debates that she's managed to change Sen. McCain's mind on ANWR!

In any event, McCain-Palin already has the vastly better position on energy: "All of the above" when it comes to traditional and new energy sources, including "Drill, baby, drill!" At the rate the Dems are back-pedaling on this, perhaps we should expect to see Barack Obama wearing a hardhat and visiting an offshore platform some time in the next two weeks.

— Beldar

Posted by Beldar at 03:40 PM in 2008 Election, McCain, Obama, Palin, Politics (2008) | Permalink

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