Saturday, July 19, 2008

Slim Pickens When It Comes to Economic Sense

One impression that you get from the latest pronouncements by the anti-global-warming crowd is that they are, to a man, innocent of the discipline of economics.

I have already commented on Al Gore's convoluted reasoning with respect to electric power: While his proposal to wean the U.S. electric power industry off fossil fuels in 10 years sounds bold and imaginative, it is, in fact, nonsense. Gore's problem is not that U.S. electric power companies burn fossil fuels; his problem is that those fuels are valuable for producing energy and will remain so as long as they offer a cheaper source of energy than the alternative. Someone, whether U.S. electric power companies, foreign power companies, or some other energy consumer is going to gain access to those fuels and burn them. Meanwhile, under Gore's proposal, U.S. electric power consumers will just subsidize these other consumers to burn the very fuels that could have been used more efficienctly as they currently are.

We are getting further nonsense from billionaire T. Boone Pickens. His obsession is over our "dependency" on foreign oil, on the huge "wealth transfer" that results from U.S. oil imports. In fact our dependency on foreign oil is of exactly the same significance as our dependency on foreign coffee. We import most of what we consume when it comes to both products and we send dollars to foreigners to buy both. The reason we do this is because it would be more costly to try to produce all of our coffee or all of our oil at home.

Do we suffer when jihadists and other lunatics threaten our oil imports? Sure. Do we suffer when oil dollars go to fund the efforts of the same lunatics to kill us? Sure. But somehow goading U.S. electric power companies into using wind power to the exclusion of foreign oil or natural gas does nothing to increase the reliability with which those companies supply the end product, which is electric power. Wind power is itself unreliable and requires backup in the form of traditional power sources in order to work. And it does nothing to stop the jihadists from killing us. They will continue to sell oil for a lot of money until such time as the private sector, motivated by high oil prices, discovers a way to make electric power and other power more cheaply using renewable and non-carbon fuels. (Actually, there is another way, and it's called nuclear power. But that's another story.)

There is no good solution to the dependency problem except for someone in the Arab/Muslim to convince the jihadists that they could find better uses of their time than blowing up oil facilties and generally causing their famous brand of mischief. But wait, isn't that what the government of Iraq is trying to do now? It seems that the most effective way to increase energy reliability and to discourage lunatics from disrupting oil supplies and killing us is to drill for oil at home and to fund the U.S. Army.

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