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March 17, 2005

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But President Bush says it's okay that we're a debtor nation, because it just means our economy's growing faster than those other, in-the-black economies. Whew! For a second there, Edward had me worried.

[/irony]

It's not popular. The public is against drilling in ANWR in all the polls I've seen. m
What distresses me is less the environmental damage than the lack of a reason for it. Everyone knows their conservation policies are a joke, that we could take very low cost, reasonable steps that would do more to reduce dependence on foreign oil than ANWR. They're drilling because their contributors want them to, and most conservatives who support it do it out of sheer spite.

Why do we drill in the Arctic National Wildlife Refuge? Because it's there. That's what's depressing to me.

Why do we drill in the Arctic National Wildlife Refuge? Because it's there. That's what's depressing to me.

It's actually more insidious than that. They want to kill its symbolism. We drill in ANWR because the oil industry doesn't like the concept that it cannot drill anywhere it wants to. It's an ideological blow:

On Tuesday, September 23, 2003, during a closed-door session of the House GOP leadership, House Majority Leader Tom Delay (R-Texas) said that the battle in Congress to open up the Arctic National Wildlife Refuge to oil exploration is a fight over whether energy exploration will be allowed in similarly sensitive areas in the future.

Reporter John Bresnahan, working for the Washington D.C.-based publication Roll Call interviewed several Republican leaders, some of whom expressed surprise over Delay's statement. Bresnahan reported, "Delay insisted that backing down on ANWR would be a mistake for those who support the measure, popular with the oil industry, although Delay also acknowledged that the provision was likely to fare poorly in the Senate because of opposition from Democrats and GOP moderates."

"'It's about the precedent,' Delay told the assembled Republican leaders while making several references to the 'symbolism of ANWR,'" reported Bresnahan, citing GOP sources.


Consumers in China and Japan, not the U.S., will be the real beneficiaries of any big Alaska find.

Eh, the drillers, pumpers, and transporters of this oil will be real beneficiaries of any big Alasaka find, too.

Recall that satisfying the domestic market was the main selling point of the Trans-Alaska pipeline, way back when. Congress went so far as to ban the export of Northslope oil. That ban was lifted in the mid-90s. This time we'll get the domestic-market support rhetoric, but no domestic-market distorting Export Ban.

sorry, that link should be this.

OFF-TOPIC: Sorry, but I'm startled by today's news:

The Post says that "The House voted 420 to 2 yesterday to prohibit the use of supplemental appropriations to support actions that contravene anti-torture statutes. The measure's co-author, Rep. Edward J. Markey (D-Mass.), singled out renditions, saying 'diplomatic assurances not to torture are not credible, and the administration knows it.'"

Hilzoy, Katherine, somebody---is this the same bill that y'all brought to our attention earlier?

gah.

I'm in two environmental law classes right now and they have this way of sliding into existential despair every other class....as with so many areas: there are hard questions about which reasonable people can disagree. But those aren't the questions we're asking now, we're getting all the easy questions wrong and getting wronger by the day. My professor mentioned the Luntz memos--"the science is closing against us [on global warming] but not yet closed"--what do you do when the other side stops operating in good faith?

Anderson--no, different bill. I explain in slightly more detail on the rendition thread (scroll up from the bottom from me yelling at Timmy). This one's just symbolic, but Markey played it very well and it is a hopeful sign nontheless: When they are forced to vote on this issue, and cannot hide it in the back of a long bill or pretend it's anything other than a vote on legalizing torture, they vote the right way, just as with Durbin's anti-torture amendment in the Senate.

"What distresses me is less the environmental damage than the lack of a reason for it."

What environmental damage? There's nothing there. If we ever became spacefaring, I wouldn't be surprised to find that some of y'all opposed drilling on the fricking Moon because it would cause "environmental damage".

And there's plenty of reason to drill for oil. Oil gives off lots of energy when you burn it. Energy makes our machines go, our cars go, our computers go, and it powers all of our activities that don't involve hard manual labor and many that do.

The market for oil is a worldwide market. Oil that China is buying from Alaska is oil that China is not buying from Saudi Arabia; we can buy that oil instead. Increasing supplies, no matter where the new stuff goes, means that our own ability to get oil from our own sources is improved.

And conservation efforts later will be cheaper than conservation efforts now. Technological advancement is our friend, and the more opportunity we allow for technological advancement before we need to conserve, the better.

"And conservation efforts later will be cheaper than conservation efforts now. Technological advancement is our friend, and the more opportunity we allow for technological advancement before we need to conserve, the better."

This is exactly wrong. Technological advancement doesn't happen in a vaccuum. It happens because we demand it, so in fact it's cheaper the earlier you start. I am married to an environmental economist, but I wouldn't need to be to know this; just look at the way fuel economy in U.S. vehicles declines every single year.

Ken, but you sound as if you're already spacefaring. You're remarkably wrong on nearly every point:

What environmental damage? There's nothing there.

Actually, my alien friend,

The Arctic National Wildlife Refuge is home to some of the most diverse and spectacular wildlife in the arctic. The Refuge's rich pageant of wildlife includes 36 fish species, 36 land mammals, nine marine mammals, and more than 160 migratory and resident bird species.

And there's plenty of reason to drill for oil.

Not right here either, at least not in respect to the reasons we're being fed by our government. We can't burn oil we don't keep, and all the estimates of the impact this will have on domestic supplies are profoundly dishonest, ignoring the reality of getting that oil to our refineries. For example, the Energy Information Administration is suggesting that

Petroleum imports are projected to decline one barrel for every barrel of ANWR production.

That would only be the case if we kept ALL that oil, which as Verleger points out is not economically feasible. Much of that oil will go to China, meaning our imports will NOT decline on a one-to-one ration. Further the EIA uses that lie to suggest further

Opening the coastal plain of ANWR is projected to reduce 2025 oil import dependence from 70 percent in the AEO2004 reference case to 66 percent in the mean resource case. The high and low oil resource cases project a 2025 oil import dependency of 64 percent and 67 percent, respectively. Expenditures on foreign oil and petroleum products are also projected to be lower in 2025 by $8 billion dollars (2002 dollars) in the mean oil resource case, and by $15 and $6 billion dollars in the high and low oil resource cases, respectively.

Again, we'd have to keep that oil for any of that to be the case. We're not gonna, so it's one big fairy tale.

And conservation efforts later will be cheaper than conservation efforts now.

This is morally bankrupt, I'm sorry. The idea that consumption can continue unchecked now because at some point in the future some magical solution will be found to save us is the most irresponsible sort of thinking, but actually totally in keeping with the present adminsitration's modus operandi.

It happens when we demand it, of course, but when we demand it, it's better for there to be more tools available to achieve it than fewer tools. Technological improvements throughout society, whatever their original purpose, become tools that later efforts in different areas (such as conservation) can take advantage of.

And while we're at it, it's long past time to start building nuke plants again...

Isn't Cantonese the language you should learn if you are worried about China? :)

I assume we'll actually need P'u-t'ung-hua as there's no guarantee our new overlords will speak Kuo-yü but a bit of Cantonese would help as well, I'm sure.

"Isn't Cantonese the language you should learn if you are worried about China? :)"

As a perennial optimist Sebastian, I'd have thought you've have recommended learning Hindi.

On another note, I wonder if Rummy has revised his thoughts on old Europe's importance when it was realised that Siemens and Thomson and BAe can export their shit to the PRC. The Iraq war has indeed improved the security of a nation. That nation is China.

"Congress, have helped China become the second-largest holder of U.S. debt, with a little under $200 billion worth."

Umm, just spent a little time over at Setser's place. This, at least as I read it, is clearly wrong.

China by most analyses added $195 billion in 2004, and is most likely holding at least $600 billion total.

i was highly amused to hear E. Dole (R-NC) on NPR going on about the great things drilling for oil in ANWR would do for us, and how clean and safe the process is. no wait, that wasn't amusing. what was amusing was that her little sound bite was immediately followed by a note that she opposes oil exploration off the NC coast because it might damage the seafood and tourism industries. apparently oil extraction is much safer and cleaner in Alaska than it is in North Carolina.

It is amazing to hear the righteous harrumphing about how ANWR is essential to national security, as it will reduce our dependency on foreign oil, and the crickets when it is pointed out that the very best way to acheive that critical national security objective is to use less oil overall.

And Ken, the last paragraph of your 10:46 thing has got to be the most pathetically flimsy argument I have ever read on this or any other board. Technological advancement does not uniformly move forward as an automatic function of the passage of time. We advance in those areas that we as a society invest in, and that includes the commercial sector, individuals, and yes, the government.

Your argument is the same one I made as a drunken freshman, hitting the keg Friday and Saturday when I had a term paper due on Monday. "I work better under pressure! Once I need to do it, I'll really, really focus! Give me another beer! Turn it up! Woooooo!"

That said, I think the title of the post has to win some kind of award for Most Alarmist Title Ever.

That said, I think the title of the post has to win some kind of award for Most Alarmist Title Ever.

Oh, gee, I didn't prepare a speech...it was just such an honor to even be nominated...uh, uh...I'd like to thank my agent...

"Your argument is the same one I made as a drunken freshman, hitting the keg Friday and Saturday when I had a term paper due on Monday. "I work better under pressure! Once I need to do it, I'll really, really focus! Give me another beer! Turn it up! Woooooo!"

This is also the GOP approach to fiscal policy, more or less.

Isn't Cantonese the language you should learn if you are worried about China?

No:

Mandarin is spoken by possibly more people than any other language: over 1 billion. It is the main language of government, the media and education in China and Taiwan, and one of the four official languages in Singapore.

Cantonese is spoken by about 66 million people in Guangdong and Guangxi provinces and Hainan island in China, and also in Hong Kong, Macau, Singapore, Malaysia and many other countries

off, you perpetual link

We advance in those areas that we as a society invest in

We also move in areas that we as a society don't invest in. Technological advancement has been known to occur outside of the governmental umbrella.

Reserve Accumulation

Above is a typical analysis from Setser. "Officially" Chinese central banks bought $47 billion. Setser makes it his job to look deeper:

"Clearly, someone somewhere in Asia ultimately owns some of the $231 billion purchased through London. Presumably close analysis of the UK's balance of payments data would reveal who is funding the UK (and UK based financial intermediaries), and thus who is funding the purchase of the $231 billion in US securities bought by "investors" resident in the UK."

That may sound like he is just speculating, but he brings other tools, reports, and data to the table. I can't always follow his investigations well, but I am fairly confident in the numbers above. Friedman is probably just using offical central bank transactions.

Technological advancement has been known to occur outside of the governmental umbrella.

More and more, it's known to occur outside the US altogether.

Well there we go. Mandarin it is! In reality I think that English will be fine. After all it one of the prime common languages of the superpower for the next 100 years.... India. ;) (Ok, learning Hindi isn't going to kill ya).

As an engineer, I hereby dub this the "cheese theory of engineering development". Technology will automatically improve if we just leave it alone and age it enough.

As an engineer, I hereby dub this the "cheese theory of engineering development".

That might be amusing if I could only figure out what "this" refers to.

Aw, $200 billion, $600 billion? Not a problem. Well just sell the west coast. Think about it:

No more Hollywood
Even more coastal oil deposits will be newly available
Fewer blue electoral votes
A good part of the immigration problem gets written off the books
We're all Communist already anyway
No more Nancy Pelosi

Everybody wins!
</crackpipe>

That might be amusing if I could only figure out what "this" refers to.

I suspect it was this pearl by ken:

And conservation efforts later will be cheaper than conservation efforts now. Technological advancement is our friend, and the more opportunity we allow for technological advancement before we need to conserve, the better.

What Edward said. In industry, if you actually never bother to do the "D" part of "R&D" you fairly quickly lose the expertise.

Gotcha. I think I might know what Ken meant by what he said, but he's really the one who ought to defend it. Plus if I'm right, I think he's making the assumption that things like energy-efficient technology are going to get developed in advance of the need to conserve, rather than because of it.

We also move in areas that we as a society don't invest in. Technological advancement has been known to occur outside of the governmental umbrella.

Er, please read my original comment before you respond to it. You are reacting to the first half of my sentence, in which I said - "We advance in those areas that we as a society invest in," but ignoring the second half, which said: "and that includes the commercial sector, individuals, and yes, the government."

Thus, I'm not suggesting that the government is responsible for all innovation (though they do have a very large role in pushing innovation in many areas). My point is that simply saying "well, let's not concern ourselves with this, because 'technology' will take care of it later" is really, really, shortsighted and idiotic. Technology does not advance in all fields, at the same rate, just because time passes. The emphases that we place in our habits, in out investment decisions, and, yes, in our government policies help define priorities that are very resistant to change.

The private research market tends to cluster around the pre-existing profit centers. While it is possible that some guy in his garage may nmake the petroleum industry obsolete with some super-efficient solar cell, chances are good that most of the large-scale, money-and-technology-intensive research work in this field will be done refining the products already on offer (witness the new "hydrogen cars" which run on a hydrogen product derived from - you guessed it - petroleum).

It may be true that when oil reserves finally dwindle that we may, by sheer necessity, come up with something/anything to make it passed the crisis. But waiting for that kind of crisis absolutely guarantees that the solution we craft will be a jury-rigged assemblage of stopgaps, with no care taken to ensure that the solution isn't worse than the problem. Hell, I graduated college, so I must have gotten those term papers in somehow. But I could have done a lot better than I did.

The point is that the national conversation about ANWR and national security is missing a huge piece of context - that if we really think that reducing our reliance on Middle Eastern oil is essential, than there are lots of things that we can do about it. We can drive less, we can buy more fuel-efficient cars, we can lobby state governments to impose higher efficiency standards than the feds, we can invest in stock derivatives that place funds with alternative energy research firms. Doing these things will all ease the bump when it comes, and will enable us to take control of the inevitable transition from the current environment where oil is essentially free, to an environment where the price of oil bears a more rational relation to its absolutely critical importance to our lives and our economy.

I'm not a doomcrier, claiming we are going to run out of oil in fifty years. We're not. But I promise you one thing - oil is going to be a f**kload more expensive in 2060 than it is right now, and that is going to distort our economy in a lot of ways. Do we want to sit back an say - hey, don't worry, "technology" will save us!" or do we want to start dealing with this problem now?

To be honest, I think that the Democrats missed a key opportunity back in '02 when they still had the Senate majority and the ANWR thing came up for a vote. The Dems should have twisted the GOP arm hard, explicitly defined the argument as a national security issue, and allowed ANWR drilling in exchange for significant increases in national CAFE standards and targeted tax breaks for research into alternative fuels and fuel-efficient vehicles, and construction of plants to build hybrid and other FE vehicles, so long as these plants were built in the US (this last would get the AAW to drop their long-standing objection to the CAFE hike). This would have started this conversation in a much more constructive way.

but ignoring the second half, which said: "and that includes the commercial sector, individuals, and yes, the government."

I guess it all boils down to what is meant by we as a society. To me, it means that it's the result of some sort of consensus, which dispenses with individual initiative. So, in answer: I did read the entire sentence, but it appeared to me that the second half was completely inconsistent with (and possibly even negated by) the first half.

Just to clarify. I think you've explained yourself to the point where I don't take issue, though.

I think he's making the assumption that things like energy-efficient technology are going to get developed in advance of the need to conserve

With all due respect...a thousand times wrong.

The need to conserve comes BEFORE we "must" develop wildlife refuges. Not AFTER.

"The idea that consumption can continue unchecked now because at some point in the future some magical solution will be found to save us is the most irresponsible sort of thinking...."

This is arguably so, and I certainly agree that blind optimism is not a strategy to count on, but it's also inconvenient to these arguments that historically the assertion that everything is going to crash due to running out of vital resources has been made countless times, and only in limited circumstances (such as Easter Island, or famines) has it come true, whereas the optimists have wound up getting it right in the end -- in the long term -- countless times.

I'll repeat again that there's no guarantee that one can count on that simply repeating in all cases. Nor in the least would I ever argue against conservation or prudence, or any number of other sound cautionary practices.

But it's also not sensible to ignore the fact that shortages do, historically, tend to be more limited and temporary, overall, than is almost ever forcast. (Which doesn't suggest we'll magically find significant new sources of oil in the future, but simply points towards the probability that we'll find new sources of usage energy instead.)

On the other hand, I actually read a blog the other week in which the writer explained that since the Rapture would be coming soon, there's really no need to worry. Yes, I do find thinking like that somewhat scary.

As a former Northerner, I should probably mention that North Slope oil development also endangers a major northern resource shared by both the US and Canada, the Porcupine caribou herd. The Arctic environment is far less forgiving of damage than other environments, which is why this particular development is especially nasty.

And by the way, anyone who says that it's okay to do this because there's "nothing there" is displaying both staggering ignorance, callous indifference, and a complete lack of curiosity, as a couple of minutes online would easily tell them different.

I've lived in the region, and it is brimming with life, which is especially impressive given how harsh the environment is. People have lived in balance with that environment for the last 25,000 to 40,000 years, and it's tragic that it may well be devestated just to line the pockets of the oil industry.

"Aw, $200 billion, $600 billion? Not a problem."

(I don't know if this thread is really about ANWR and conservation, and I am OT.)

Well, considering China's GDP is around 1700 billion, the difference between $47 billion(official) and $200 billion(unofficial) is the difference between 3% of GDP and 12% of GDP. Macroeconomic questions arise as to how long China can sustain this level (or higher it keeps going up) of buying our debt; and what happens when they stop. There are lots, I mean lots, of people trying to figure this out. Brad DeLong is participating in a bi-partisan all-day panel on the 31st dealing solely with this subject. See his blog for details.

Not to mention geopolitical possibilities. If China has been covertly buying dollars, they might have intentions of blackmail (China has relationships with Taiwan,Iran,Venezuela). Or intentions of dumping their dollars if the threats don't work, for instance if we attack Iranian facilities, China dumps dollars starting a crash, the resulting economic catastrophe kinda distracts us while China grabs Taiwan and Iran grabs Basra. China is much less vulnerable to the world recession that would result, being a dictatorship and all.

One might hope, that Bush and Greenspan et al having put the US in this position, they would feel responsible and sensible enough to kiss China's behind. Publicly.

Oh, and for those of you concerned about how China might treat us once they rule us, Bush says don't worry

The Bush administration will not propose a U.N. resolution critical of China's human rights policy this year because of recent concrete steps by Beijing in the treatment of political prisoners and protection of religious services, U.S. officials said Thursday.

The decision removes one of the major flash points of the annual six-week session of the 53-nation U.N. Human Rights Commission, which began Monday.

State Department spokesman Adam Ereli said China had taken "some important and significant steps" to improve conditions, including freeing some political prisoners, according them legal rights equal to other prisoners and respecting church services in people's homes.

Freedom on the march, my ass.

Edward, you realize that of the international players, we are the hardest on China right? A multilateral approach that took into account the views of the German and French governments would be easier on China than Bush is.

Edward,

I'm not opposed to a sensible energy policy, in fact, I don't believe we have much of one, but skewing the facts doesn't help the debate IMO. Mr. Verleger seems to have omitted some relevant facts. (scroll down to Alaskan crude, the west coast is region V)

It is true that no oil would get to the Gulf refineries, but that holds true for midwest and east coast refineries also. The chart above does show that currently the west coast recieves Alaskan crude, so why would they not get any from ANWR? The EIA's numbers are estimates,granted, and a case can be made against the 1:1 reduction in imports, but I'm having trouble with the concept of no benefit to the U.S.

The west coast is isolated, transmission wise, from the rest of the country, so they have to import most of their stock. Why would they replace Alaskan crude with Saudi oil? How efficient is that? I don't doubt that some would end up in Asia, but most of it?

It looks like someone was misquoted, or has an agenda to push. Like I've said, a debate is healthy, but if all the facts aren't on the table, words like lies and fairy tale can derail the discussion.

"Gotcha. I think I might know what Ken meant by what he said, but he's really the one who ought to defend it. Plus if I'm right, I think he's making the assumption that things like energy-efficient technology are going to get developed in advance of the need to conserve, rather than because of it."

No, I'm saying that things like energy-efficient technology are going to be easier to develop in a higher-technology environment than a lower-technology environment - not that it will be developed without a market or mandate.

With a bigger toolbox, the odds of finding a useful tool to help fulfill your purpose go up, even if the tools were put there before anyone thought of the purpose you have in mind.

Happy Jack,

I never argued there would be "no" benefit to the US. I specifically wrote that it "will actually do nowhere near as much toward that end as Norton is suggesting."

Regarding having all the facts, perhaps you can tell me if that Alaskan oil in the west coast refineries is coming via ship or pipeline. I honestly don't know, but if its the latter, that would strenghten Verleger's case.

The "fairy tale" I accuse Norton of offering can be found debunked here, by the way.

Edward, you realize that of the international players, we are the hardest on China right?

We're also the ones who claim our policy is to help freedom seekers wherever they may be. How is letting the pressure off China helping the dissidents in China?

You should really learn Mandarin anyway. Tonal languages are good for your brain.

Ni hau ma?

And conservation efforts later will be cheaper than conservation efforts now. Technological advancement is our friend, and the more opportunity we allow for technological advancement before we need to conserve, the better.

I think this is completely wrong, for the reasons outlined earlier.

I would add that there is a continuing and often ignored cost for damage from pollution already present in the environment. Any conservation technology applied reactively to increased pollution at a future time will be designed to mitigate pollution levels at that time. Pollution already deposited in the system will not be remediated without a separate technology. Passing legislation to repair environmental damage seems even harder to do politically than passing it to prevent further pollution, and the latter seems near-impossible historically (see the current Mercury standards discussion, the continuing failure of CAFE standards improvement, and the defunding of the Superfund* for recent examples.) Look at the $30 billion it's estimated to cost to clean up the Hudson River. I don't think it would have cost $30 billion to keep the pollution out in the first place, if for no other reason than you wouldn't have to separate the pollution from the water and riverbed. That's not easy, both from a technology perspective and an engineering one.

So whatever pollution controls implemented in the future will more likely be targeted toward no further pollution, but the damage already done will be left alone. The pollution that can continue to do damage will be allowed to do so, at increasing and uncounted cost to the health of plants, animals, food crops, livestock, and people. And there will be an economic cost we could mitigate or eliminate today, if the government was more forward-thinking.

CS

* - More exactly, funding has been cut by over $100 million overall in the past four years, and the Trust Fund to which the biggest polluters contributed has been cut by 80 percent. It looks like the Superfund money is now by-and-large a general revenue expense and subject to budget cuts it was not vulnerable to a few years ago. See here for an annual budget list for the Fund, from 2003.

Edward,

Either I misread you, or you miswrote :)
The EIA just produces raw numbers. I assumed by your comments that "lies" and "fairy tale" were directed at the EIA, but if I'm not mistaken, your ire is directed at the Bush administration, not the bureaucracy. If so, I stand corrected.

I agree, numbers can be massaged, depending on whether you want an optimists or pessimists view. This was the crux of my comment, that we need honesty in the debate ( not directed at you, but the purveyors of information).

I still don't think Verleger's statement is correct, but this could be due to Friedman. The link for the pipeline question is here.

It may well be true that it will be easier to design tools for remediation and conservation with the tools available to us in ten or twenty years' time than it is now. Similarly, it will be easier to cure many diseases with the tools available then. And that's why I'm going to wait several decades to cure any disease I get in the future: it will be easier and cheaper.

There's something wrong with this argument. What could it be?

Happy Jack,

I was being sloppy, you're right. The lies are from the charmless Norton and the misleading predictions from EIA.

I still don't think Verleger's statement is correct, but this could be due to Friedman. The link for the pipeline question is here.

That link suggests, as I suspected, that most Alaskan oil is transported to California via the pipeline. Unless they're gonna build a pipeline from the North Shore, I suspect the routes of the tankers taking the oil from ANWR will be rather equidistant to Northern Pacific Asia as they are to the US West Coast, suggesting Verleger is right, no?

And that's why I'm going to wait several decades to cure any disease I get in the future: it will be easier and cheaper.
There's something wrong with this argument. What could it be?

Actually, not as obviously wrong as you might imagine. One example is that comes to mind is that quite a few people would be significantly better off if they'd avoided knee surgery 20 years and waited until now. Though the scar is impressive!

No, I'm saying that things like energy-efficient technology are going to be easier to develop in a higher-technology environment than a lower-technology environment - not that it will be developed without a market or mandate.

I have to disagree. Sure, one can more easily implement energy-efficient technology after that technology has been fully developed. Sure, one can more easily develop a given technology after (perhaps) technologies supporting it have already matured. But this is an argument for doing nothing, or at least it appears to be.

Or, we could invest a great deal of money in time machine development, so we could just jump ahead to when there's a Mr. Fusion in every home.

What I'm trying to say, Ken, is that you're counting on a seredipitously easy path to be cleared for energy-efficiency technology advancement, without actually having a plan in place to make sure the path gets cleared.

If this doesn't jump us into first place in Google-searching "technology", I don't know what will.

Mac, my answer to that is the same: hindsight is 20/20. You can always pick a course of action that, had you chosen it at sometime in the past, would have made a huge difference. This sort of argument is tantamount to whacking your forehead for not having had the foresight to invest in waterfront property back in the '50s.

Also, Ken, as Tim H noted: " In industry, if you actually never bother to do the "D" part of "R&D" you fairly quickly lose the expertise."

In other words, it's an ongoing process...not something you can jump start if you wake up one day and realize oil's up to $200 a barrel.

Besides, having to drill in a wildlife refuge represents a point which we should have been seriously promoting significant conservation long before we reached it.


I agree with you, Edward, but I'd also like to ask you how long you've been banging the conservation drum. Is it possible you're nearly as guilty of shortsightedness and short attention span as the rest of us?

Mac, my answer to that is the same: hindsight is 20/20.

No disagreement and I wasn't making a specific argument. Just observing from personal experience that hilzoy's point was as self-evident as it might appear.

"hilzoy's point was as self-evident as it might appear."

Yep.

Actually, my point was supposed to be not that it never ever turns out that waiting is best, just that it's silly, when you have a problem that's getting worse over time, to wait 20 years in the hope that you're in one of those cases in which it does turn out that way, as opposed to the rather more frequent cases in which you say, silly me, I should have cured my cancer using the available technology instead of letting that darn tumor metastasize in the hope that, as Mr. Pickwick (was it Mr. Pickwick, or someone else in the book)? would say, something will turn up.

Happy Jack wrote:

"The west coast is isolated, transmission wise, from the rest of the country, so they have to import most of their stock. Why would they replace Alaskan crude with Saudi oil? How efficient is that? I don't doubt that some would end up in Asia, but most of it?"

Depends.
(Purely technical explanation follows. :) )

First on the West Coast refinery capacity.
(Capacity in 2002 around 3.1 million barrels/day according to U.S. Refining Capacity by Region, 2002.)
Could they handle additional Alaskan crude oil?
I´ve heard 800.000 barrels/day mentioned.
That would be 25% of the overall refinery capacity in 2002.
If not then any surplus oil will be transported elsewhere.

And second the "quality" of ANWR crude oil.
Is it "light" or "heavy" crude oil?
A refinery equipped to deal with "light" oil for example can´t process "heavy" oil.
I don´t know how many West Coast refineries actually exist and I don´t know the proportion between "light" and "heavy" crude oil refineries?

Third, read this Energy Citations Database summary from 2001.

"With California production, Alaskan oil, and imports brought into California for refining, California has an excess of oil and refined products and is a net exporter to other states[Arizona, Nevada, Oregon, Washington].^The local surplus of oil inhibits exploitation of California heavy oil resources even though the heavy oil resources exist.^Transportation, refining, and competition in the market limit full development of California heavy oil resources."

I agree with you, Edward, but I'd also like to ask you how long you've been banging the conservation drum. Is it possible you're nearly as guilty of shortsightedness and short attention span as the rest of us?

I was brought up in an economically depressed area of Ohio with 25% unemployment. Conservation was drilled into my head by my father, who worked his ass off to put food on the table and grumbled quite agressively when paying bills or finding lights on in empty rooms. Conservation was a necessity, not a luxury or socially conscious decision. When I began to move out of that area, I was simply stunned at the waste and conspicuous consumption I saw.

To me, conservation is not a matter of economics or even the environment. Waste is simply obscene.

Having said that, my idea of waste is very different from my partner's, who grew up in the Soviet Union and saw his country plunged into grotesque poverty after its fall. That lad can recycle a toothpick and squeeze the last milligram of toothpaste out of the tube.

I don't own a car, I re-use shopping bags, I turn lights off when I leave a room, I'm conscious about how much water I use when I shave...I always have been. What more do you want to know?

One example is that comes to mind is that quite a few people would be significantly better off if they'd avoided knee surgery 20 years and waited until now. Though the scar is impressive!

What about the fact that they would have lived with a bad knee for twenty years? If it's always wiser to wait for better technology then no one would ever buy a PC, for example.

Waiting for better tools incurs the cost of not using those currently available. If we assume better technology will be available in twenty years then our choce is between leaving things alone for twenty years or using what's available to improve things while we wait.

Bummed about this ANWR stuff? The Heretik is disgusted, just about to quit over it. But then we will always have movies. Like scary movies? The Heretik knows you do.

. . . we got to fight it. . . fight the the power . . . . fight the powers that be . . .
The Isley Brothers

I hear you Heretik. I was so thoroughly disgusted when the news came through yesterday I drafted a final blog farewell post, feeling what's the use? Sauron got the ring, the Shire is toast.

Then I took a deep breath, and went over and plowed my way through some ill-considered celebrations on Red State and felt much better.

What more do you want to know?

That'll do, Edward. I wasn't accusing you of hypocrisy so much as asking if you might be not quite as late to the party as the people you're being critical of.

Which turned out not to be the case.

Smart Hawks

Bull Moose suggests that Democrats use vulnerability to China as a campaign issue to demonstrate their hawkishness. He spends the 2nd half of the post defending Wolfowitz, but hey, he is a DLC kinda guy.
....
If I might suggest a 2006 campaign ad based on the famously effective Johnson "Daisy Ad", in a kinda reversal.

The logic chain goes: Bush policy => China Blackmail => Iran as nuclear power => Hezbollah bomb going off in Tel Aviv or New York.

I say "Bush policy" because it is not only the fiscal and monetary indiscipline that may lead to the death of millions. My position is probably known, that if you are going to war over the world's energy reserves, you don't do it halfway and on the cheap. I would have a million troops in Iran right now. Or we could have attacked Iran 1st. Or saved a bunch of money by not going to war at all. Or whatever. But "worst President ever" is a grotesque understatement.

And I could be completely wrong, and everything will turn out fine. I hope so, really. And if not, Republicans will find historians to blame it all on Clinton.

Oil is a commodity. If because of a lower cost to ship Alaskan oil to China or elsewhere the oil companies get a better "net price" then those same oil companies and thus "we" are better off.

Now while I'm not an expert on oil markets, I did catch Sen. Pete Domenici on C-SPAN yesterday who pointed out that Prudhoe Bay oil was at one time mostly sold to Japan etc but laws were passed in the late 90's to force the sale of that oil in the US. But it seems to me that such legislation was and is misguided for the reasons stated above.

Noah,

driling in ANWR was not sold on the notion that "we" (and by "we" here I'm left assuming you mean shareholders of ExxonMobile stock) would be better off, but rather that we needed the oil there. If that oil is not coming here because of geographical logistics, we were sold a bill of goods.

"If that oil is not coming here because of geographical logistics, we were sold a bill of goods."

And this is different than other Bush Administration policy initiatives because?

If demand has now exceeded supply (and it kinda looks to me like it has) then developing an oil field that mostly goes to China will not get the U.S. any loose oil. I don't think that oil is a fungible commodity in that case.

"I don't think that oil is a fungible commodity in that case."

Yeah. There are many uses for oil, as lubrication and petrochemicals, that are not going to be satisfied with alternative energy sources. The way the oil market is looking, in the 5-10 years it takes it get ANWR online, we may decide that it is better left unpumped in in the Strategic Reserve. I honestly doubt that we will be selling iit overseas.
....
One fun thing to do to see how weird our situation is to price the Dow in barrel-of-oil equivalents. And then back into dollars. In other words the "oil value" of the Dow is roughly half(?) what it was a few years ago, and a value of 5000 instead of 10000. But this isn't showing up in the economy, mainly because of foreign financed debt.

"driling in ANWR was not sold on the notion that "we" (and by "we" here I'm left assuming you mean shareholders of ExxonMobile stock) would be better off, but rather that we needed the oil there. If that oil is not coming here because of geographical logistics, we were sold a bill of goods."

I don't understand this argument. What we need is oil cheap enough to allow us to go about modern life. We aren't going to run out of oil any time in the forseeable future in the sense of there not being oil in the world. The danger is that consumption will increase so far beyond supply as to make oil very expensive. The way oil prices stay down is by ensuring a large supply and a slowly increasing demand. ANWR drilling effects the supply part, conservation effects the demand part. Ultimately it doesn't matter where the supply comes from nor does it matter where the conservation is going on. Now if someone anywhere discovers some great conservation tool it will be fantastic for the whole system--lower oil consumption and thus lower prices since people aren't fighting over the not-so-scare supplies.

Complaining that the physical oil does or does not come directly to the US is to misunderstand the whole aspect of a commodity. Lets take a simple 3 country example. Say there are 100 units of oil available. Say country A wants 60, country B wants 30, and country C wants 30. This will lead to high prices because the demand is 120 while the supply is 100. Say country C is the richest of the three countries so it gets all it needs while country B is the poorest so it gets very little. Now if country B discovers 50 units per year of oil, the price will drop dramatically because the demand is 120 and the supply is 150. It will do so even if the oil pumped in country B is sold to A and C. It isn't lying, and shouldn't even be confusing, to see that pumping those new sources in B is good for B even if the physical oil pumped in B is sold to A and C.

The oil will flow to the money, whether dollars or renmibis. Whichever way it flows, the effect of ANWR oil on the US domestic market (particularly outside of California which suffers already from tight refinery capacity and tighter emissions rules that keep out-of-state gas out-of-state), ten years hence, will be indirect and slight.

Sebastian, meet Gale Norton.

Gale, and many others like her, suggest that we "must" drill in ANWR to decrease our "dependence on foreign oil" (her words, not mine) which as we all know is related to why thousands of us were killed on 9/11. How any of that jives with

Ultimately it doesn't matter where the supply comes from nor does it matter where the conservation is going on.

remains a mystery to me.

"The way oil prices stay down is by ensuring a large supply and a slowly increasing demand. ANWR drilling effects the supply part, conservation effects the demand part."

I haven't seen much conservation policy. But there is another way to slow demand. Tight money, high interest rates, tight fiscal policy, increased taxes...in other words slow the economy down.

Instead we have had a very stimulative fiscal and monetary policy during a period when it was predictable that supply would be disrupted(Iraq) and demand was sure to rise(China & India). An awful lot of people are upset by this, with good reason.

Sorry, if demand is permantly greater than supply you cannot treat oil as a commodity. To come up with the investment for a refinery, pipeline, power plant, petrochemical plant, or anything, specific sources of the resource are going to have to be identified and locked up beforehand. The stuff will be ultimately much more valuable to the U.S. if it was just left there in reserve.

I can understand learning Mandarin, but isn't going on a hunger strike taking it a bit far?

I can understand learning Mandarin, but isn't going on a hunger strike taking it a bit far?

Eats, Shoots and Leaves, eh?

OK...Learn Mandarin, Quickly

better?

I suggest the liberal members of the thread go back and read the "Wealth of Nations".

If oil companies make more money by getting the best net price, then they have more money to explore for new resources, pay out dividends, etc. It seems clear that the liberals don't really believe in free markets or capitalism. I suggest they review the history of what has happened in Zimbabwe, for example, where anti-market racist ideology has turned a once prosperous nation into an AIDS ridden thugocracy. (I would not even grant them the noble goal of socialism).

I can't speak for Gale Norton, but it would be more proper to say that increasing supply reduces dependence on any one supplier.

Now if we choose, we could mandate that the oil stay in the US. But it would be stupid to do so. Why? Because if it is going to other countries, it is doing so because locationally it is cheaper to ship it to China to reduce China's demand on the suppliers that ship it more easily to the US. Lets take country U and C. If it costs $1 to ship from Alaska to C and $1.25 to ship from Alaska to U it makes sense to ship it to C so long as the supply to U can be filled by say Saudi Arabia. If it costs $1 to ship from Saudi Arabia to U and $1.25 to ship to C it makes more sense to ship to U.

Now we could make a law saying that Alaskan oil MUST ship to the USA, but in that would cause us to pay more than needed for oil and it would cause China to pay more for oil. Since the whole idea is to make oil cheaper, that seems counterproductive.

Geez, did I accidentally write that we should nationalize the oil companies? I must have had a blackout.

"but in that would cause us to pay more than needed for oil and it would cause China to pay more for oil."

But in this case we are taking "x" amount of demand out of the market, causing the world price of oil to decrease. Since ANWR will by no means supply all our needs, we buy our remaining demand at a proportionally lower price. I suspect it is a wash.

"But in this case we are taking "x" amount of demand out of the market, causing the world price of oil to decrease. Since ANWR will by no means supply all our needs, we buy our remaining demand at a proportionally lower price. I suspect it is a wash."

What is a wash? If we reduce the price by the same amount we lose in forced shipping to the US that isn't a wash because then you might as well not drill at all--it is just silly if we could both reduce the price and have reduced shipping costs.

So, when you get past all the populist nationalist rhetoric, drilling in ANWR increases the SUPPLY of oil versus the DEMAND for oil...voila Econ 101...a lower price for oil.

"because then you might as well not drill at all"

Not drilling at all would not reduce our demand, and thereby not reduce the world price.

Ok, so not a wash, but also not the full additional shipping costs, because of demand reduction.

I am trying to think of a conservation analogy. If it costs you $150 in technology to save $100 dollars in energy, because you reduce demand the price of energy will go down to where the total cost of change will be say only $140. And I think we had some effects like this in the early 80s, where we had better than expected results from conservation measures.

Sorry, incoherent rambling does not count as debate.

"drilling in ANWR increases the SUPPLY of oil versus the DEMAND for oil."

That kinda assumes a fixed or inelastic demand, doesn't it. And certainly the last thirty years has taught us that as price decreases, demand increases.

Or are we in the weird world of economists, where demand can never exceed supply.

Aha! Acceptance of the economic paradigm is the first step towards rational discussion. Next step is reading elementary economic texts where the issue you raise is discussed absent overheated rhetoric...even Krugman might agree here.

Or are we in the weird world of economists, where demand can never exceed supply.

Well, yes. Sorry to be pedantic but there is massive confusion here about those terms. Demand equals supply because the price adjusts if it doesn't. You can't talk sensibly about it otherwise.

Since everyone in the blogosphere loves to rant about Econ 101, let me take a turn. Demand and supply are not quantities, they are relationships between price and the quantity people are willing to buy (demand) or sell (supply) at various prices. The market price is the price at which the quantities demanded and supplied are equal.

It is meaningless to say a country, or an individual for that matter, "wants" a certain amount of oil. How much it wants depends on the price. If the total amount everyone wants at the current price is more than suppliers are willing to sell at that price, then some buyers will bid more, and some will drop out. Also, new sellers will appear in response to the higher bids. The price rises. And vice versa.

Drilling in ANWR will certainly increase the supply of oil, which is to say that the price of oil will be lower than it would be without ANWR. How much lower I don't know.

I suggest the liberal members of the thread go back and read the "Wealth of Nations".

If oil companies make more money by getting the best net price, then they have more money to explore for new resources, pay out dividends, etc. It seems clear that the liberals don't really believe in free markets or capitalism.

Noah,

May I suggest you cool it. What any of this discussion has to do with people being against free markets is a mystery to me.

You might also review some basic finance. If there are profitable oil exploration opportunities there will be financing available without relying on oil company retained earnings. There is no need to let the companies drill in ANWR to make money to pursue other projects.

And this is what I mean by that weird world.

"How much it wants depends on the price."

Might I suggest a floor to demand, like fueling fighter jets, below which we will not go? And a ceiling on price, like a trillion dollars a gal, at which we will probably attack Saudi Arabia?

Might I suggest that nations facing revolution, war, or economic ruin might not always be rational economic entities, either as buyers or sellers?

"Also, new sellers will appear in response to the higher bids."

Unless there is no more product to sell. Now I know about Canada shale, and I do not think we have reached Hubbert's peak. But if China tomorrow decided it wanted an additional 5 billion barrels a day, immediately, it would not get them at any price. There would be war if the sellers decided to follow that money.

And yes at a given price alternative sources become viable, but there is a lag. And if oil hits $150 a barrel this year and stays there, we will likely get a new congress, if not a new president.

"which is to say that the price of oil will be lower than it would be without ANWR"

If there is pent-up unsatisfied demand ANWR might have no effect at all. As ANWR came online, demand would rise to meet the new supply.

Now I know I am all ignorant about supply and demand, both of which are abstract infinite relationships, but I also don't think I can buy the Declaration of Independence, or maybe even "Starry Night"

This is not about Econ 101.

The estimated oil in ANWR is trivial in relation to world reserves. It will do nothing to affect price and cannot make us oil independent (I think the estimate is that it might reduce the current 54% import rate by a few points) -- it is not possible to produce our way to oil independence by greater US production. US production peaked in 1970 and will forever decline. Petroleum geologists (i.e., the ones the oil companies pay for advice) have been analyzing this for years (an example), and that is the consensus.

The issue here is do we drill for incrementally small quantities of additional oil no matter where it might be, or are there areas we chose not to drill for other reasons. The Republican philosophy is to drill anywhere, except off-shore in Republican coastal states. For example, current Bush policy is to buy back off-shore leases in Florida, but refuse to do so in California.

You support the ANWR drilling because you believe it is OK to drill for oil in wildlife refuges, wilderness areas, or national parks; even though the oil realized is trivial in relation to overall supplies and demand for oil.

Edward,

"Therefore, it's time to appeal to the only emotion apparently still capable of motivating Americans to act politically: fear."

Haven't you learned that this rhetoric is worthless and partly why the Democrats couldn't connect with enough American's to win the election?

If anyone seems motivated by fear here it isn't those of us who serve as Bush's minions...

I would think that supporters of the party who brought us, "9/11 changed everything! Mushroom cloud! Chemical weapons! Saddam Hussein! Gay marriage! Kerry is a commie!" would be a little more . . . mmmm, what's the word? Reticent? Tactful? Self-aware ? . . . about criticizing others for attempting to use fear as a motivator. Then again, I think a lot of things that are plainly counterintuitive.

dmbeaster,

If the "you" in your comment is directed at me it is inappropriate. I do not substantially disagree with your thinking.

I was making a technical point. I happen to think it's important to understand that point before one goes on about demand exceeding supply, or whatever, because if (generic) you don't, what you say won't make a lot of sense. Is there enough oil in ANWR, available at a reasonable cost, to affect prices? I don't know. You say not and I suspect you're right, but that doesn't change anything I wrote.

Bob,

Well, yes. Large discontinuities would have serious effects. But that's not what the discussion is about. As far as fuelling fighter jets, do you doubt that there would be fewer training missions flown if the price of jet fuel doubled?

If there is pent-up unsatisfied demand ANWR might have no effect at all. As ANWR came online, demand would rise to meet the new supply.

Aaargh. ANWR will not change demand. This is the sort of confusion I was talking about.

I also don't think I can buy the Declaration of Independence, or maybe even "Starry Night"

Of course you could. You're the one talking about huge discontinuities. Do you think a few hundred million wouldn't get you one of those?

Greg Palast stirs the pot at the BBC.

http://news.bbc.co.uk/2/hi/programmes/newsnight/4354269.stm>Secret US plans for Iraq's oil

Now if we choose, we could mandate that the oil stay in the US. But it would be stupid to do so. Why?

Because that would be living up to the rhetoric used to sell this shameful sham?

If anyone seems motivated by fear here it isn't those of us who serve as Bush's minions...

Vacuous ambiguity hits it apex. Film at 11.

Vacuous ambiguity hits it apex. Film at 11.

The popcorn you're eating has been pissed in. Film at 11.

"Do you think a few hundred million wouldn't get you one of those?"

What do you think Repubs, will you sell the original signed Declaration to China for a billion dollars? And I actually don't know who has "Starry Night" so lets say the "Mona Lisa". The French I think would be loathe to give it up.

"You're the one talking about huge discontinuities."

Actually, I am trying not to. If we were talking about memory chips...well, actually even the market price of memory chips is distorted by Asian desires to be net-exporters.

But we are talking about oil. And from OPEC to the war in Iraq to China's strategic need to develop to 1st world economic status, I think gov'ts are so massively involved in oil production that politics should be the first tool in analyzing that market.

"Aaargh. ANWR will not change demand. This is the sort of confusion I was talking about."

Ok. you are right,I am confused. China is committed to double-digit growth, for both domestic and strategic reasons. Most likely in the next few years we will see a point at which production and transport capacity (ok,maybe just temporary, but OPEC says only 700m more in the next two years) or price drops Chinese growth down to 5%. When ANWR comes online, China immediately pays any sane price to increase growth up to 6 or 7. Maybe the price will be too high to sustain that growth, but their engineers and managers are getting real tired of riding bicycles to work. And America is messing around the Western provinces.

Liberals or not, some on this thread do not understand free markets nor the motivations of those who drill for oil as opposed to digging oil shale for example (or doing much of anything).

If it is not economical to drill in ANWR, the oil companies will not bid for leases. It is becoming economical to dig tar sands in Alberta from what I understand.

In West Texas wildcatters still go out and drill a few wells looking for isolated pockets of recoverable oil and gas. It is a risk/reward calculation that is very much driven by the price of oil and gas. By the logic of the recent posts the government should stop them because the quantities recovered are truly miniscule in the big picture. By the same logic I suppose the Iraqi oil fields should not be brought into full production since they will not "solve" the supply problem either.

As the supply for oil dwindles (or rises slower) in comparison to demand, the price rises. This is what we are seeing today. Every time there are sharp rises in the price of oil the same crackpots trot out their "oil company conspiracy" theories...happened just last year...some people never learn. Then the price of oil drops and the crackpots go back to sleep or something. We never see headlines "Oil Company Conspiracy Theory Debunked By Reality".

Ok, forget Econ 101, go to the library and check out Milton Friedman's "Free to Choose"..an interesting primer on the power of free markets. The cover shows a picture of Milton Friedman looking at a pencil. Now, thirty years later, I still remember the story of the intricate worldwide market involved in the manufacture of the lowly pencil!!

A political decision may have been made to drill in ANWR. There are those who have been advocating it for years. Those who are against have their arguments. We went through essentially the same fight over the Prudhoe Bay oil. Personally I don't care one way or another.

Liberals or not, some on this thread do not understand free markets

Do you know the difference between a market and a free one? From your comments, you do not. Learn the difference. It is important. Smith knew it, he wrote a pretty good book about it. I read it, I hope you didn't, because if you did you must have skimmed over the important parts of that great liberal work.

Bob McManus: What do you think Repubs, will you sell the original signed Declaration to China for a billion dollars?

I'm sure they'd sell it to you for 2 billion, but it will actually end up costing you 200 billion.

Felixrayman,

I initially commented on this thread because the Friedman article quoted in the initial post is in my opinion a "crackpot" theory on its face by elementary economic theory. I think Smith and Friedman would agree. If you don't agree make an argument. But I suspect that you either don't understand economics or if you do, you find that understanding inconvenient for your position whatever that might be.

What I see here are wild assertions by some that supply really doesn't matter. That demand is not really influenced by supply. And wilder yet that Republicans advocate drilling everywhere!!! The "subtext" being basically an all encompassing theory: Bush/Republicans are evil.

There are many Republicans that are against drilling in ANWR.

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