I agree with you on the subsidy issue, in general. In fact, I think the fact that oil demand is relatively inelastic compared to price also argues against considering it a subsidy. This is the piece I probably need more time to really dive into it, but suffice it to say that there is a breaking point at which prices really rise, but other parts of the supply/demand curve where the price would barely budge with a similar change in supply. It's not something that's easily calculated, in part because of the attempts at manipulating supply by OPEC.

Never mind the formal definitions of subsidy all involve direct aid or money. I'm sure this can spawn a whole bunch of stuff.

One last interesting tidbit I found on the DOE site was that apparently Congress directed sales from the SPR in the 90s to help close the budget deficit. And the amounts that were sold weren't huge, but weren't negligible. Nothing like doing that in those days of relatively lower oil prices.

To change the subject a bit, here one sequence of questions (actually one of many questions) that I have about Obamacare.

Proponents are big to tout that "if you like your current doctor and if you like your current insurance, you can keep them."

What if you want a different private insurance plan from your current one? Do you have the freedom to change carriers within the private system? If so, where does it say so in the bill (any of the draft forms)?

Let's say I have insurance through my employer and change jobs. Where in the bill (any of the proposed drafts) does it say that I am guaranteed the right to a different private sector plan if I want or need to change private plans?

Let's say I have insurance that I'm happy with, but my insurance carrier decides not to continue to offer the plan. Do I have the right to purchase a similar plan from a different insurer? Where does the proposed bill (any of the drafts) guarantee this right?

The wording of all the proposed bills I have seen is pretty loosey-goosey, and at least some of the versions would seem to close the door to these specific options. Where is the wording that specifically leaves those doors open?

(08-11-2009 10:57 AM)gsloth Wrote:  I agree with you on the subsidy issue, in general. In fact, I think the fact that oil demand is relatively inelastic compared to price also argues against considering it a subsidy. This is the piece I probably need more time to really dive into it, but suffice it to say that there is a breaking point at which prices really rise, but other parts of the supply/demand curve where the price would barely budge with a similar change in supply. It's not something that's easily calculated, in part because of the attempts at manipulating supply by OPEC.

Never mind the formal definitions of subsidy all involve direct aid or money. I'm sure this can spawn a whole bunch of stuff.

If you don't like calling it a subsidy, I'm amenable to the notion that it's something that has the economic impact of a subsidy but shouldn't be called a subsidy. To draw a parallel, I consider a loan guarantee (e.g. http://www.lgprogram.energy.gov/features.html ) to have been a subsidy, even if the loan never went into default and the government never paid a dime. Same deal with government construction of power lines intended to connect windmills to the grid. If we want to call them something else for the purpose of discussion, that works for me.

As to the idea that the "relative inelasticity" of oil demand means it's not a subsidy, I have two issues with that. One is that oil demand is clearly not perfectly inelastic (witness decrease in miles driven and increase in interest in fuel efficiency through summer 2008), so even over the "normal range" of oil prices part of a normal subsidy would make it back to the consumer. Second, as the SPR is more like insurance and is not a standard cash subsidy, its impact works somewhat differently than a standard subsidy. It's there as both a direct and a political means to avoid major price disruptions. Without the SPR, we'd be less protected, and oil would be a less attractive to consumers, because relying on it would entail greater risks. In an efficent marketplace, alternatives that involved lesser (or even just different) risks than the true risks of oil would be relatively more attractive.
These benefits to the consumer are essentially impossible to measure directly (kind of like trying to measure the direct benefits of buying a sign that says "This house protected by XYZ security system" on a sample size of one house). The best I can come up with is to assume the benefits equal or exceed the cost. If that's not the case, then we should stop wasting the money and scrap the system.

Regarding oil elasticity, I think what happened in the summer of 2008 is that we got gasoline prices into the range where some elasticity exists. Whether we like it or not, we need to keep prices in that range if we hope to have any intelligent decisions made about energy.

Open up drilling, tax it and use the tax proceeds to fund conservation/alternatives. That's pretty much what Paris Hilton said. She has a better energy plan than either major party. How bad is that?

(08-11-2009 12:00 AM)JOwl Wrote:  

(08-10-2009 09:01 PM)Rick Gerlach Wrote:  

(08-10-2009 03:49 PM)JOwl Wrote:  

(08-10-2009 12:45 PM)Owl 69/70/75 Wrote:  ... If we faced a long-term shortage in an environment where military action was ongoing (a not unreasonable scenario), I think there is a good chance that SPR would be commandeered to support the military needs. We did stuff like that in WWII.
...

True, the SPR could have direct military value if it were commandeered (just like when auto plants were repurposed for building aircraft in WWII). But as with the auto industry, the raison d'etre of the SPR is not military. The costs of creating and maintaining the SPR have been incurred to decrease the possibility and/or severity of an "economic dislocation" from an oil price spike.

Let's face it, an oil embargo on the U.S. would be an attack, albeit economic and not military. The SPR is too limited to have any meaningful impact on price in a crisis, but the reality is that is if there were either an embargo or a catastrophic disruption of supply due to a natural disaster or terrorist attack (or military takeover of shipping or pipelines) the need for an SPR would exist.

It's not there simply to keep prices down, because frankly I don't believe it would do that at all.

Exactly. It's not there simply to keep oil prices down. I'll stick with the description I've used throughout this discussion -- it's most akin to insurance, and is intended to limit our exposure to oil shocks.

The cost associated with building and maintaining the SPR subsidizes our consumption of oil-- without the SPR, our oil dependence would entail even greater risks than it currently does. Again, I'll make an analogy to free, state-provided collision insurance: it wouldn't lower the cost of cars, but would decrease the risk associated with owning them. The state's cost of running the program would be, in my mind, clearly a subsidy to car owners.

Also, note that in the case of the SPR I'm not arguing that it shouldn't exist (I think it serves an important purpose). However, I don't think it's prudent to subsidize oil-- we'd be better served if the costs of the SPR program were passed through to the oil's consumers.

I have no idea of what you mean by passing the costs on to the consumers. The SPR, as you rightly put it, is insurance. It's not really purchased for consumption, (as levels are generally maintained and are not meant to fluctuate wildly . . . i.e. it's constant, ore or less), so who are the consumers we're passing it on to?

It's like any government program. Costs are borne by the taxpayers.

And it's not a subsidy to consumption . . . we're not paying anyone to consume, or even encouraging it.

Is spending money on education a subsidy for the book industry?

No we spend money on education because the consequences of not spending money on education is considered bad.

Similarly, the SPR is insurance against the consequences of an intentional or unintentional restriction on the supply of oil.

I think "insurance" is a heck of a lot closer to the mark than 'subsidy'.

(08-11-2009 01:41 PM)Rick Gerlach Wrote:  

(08-11-2009 12:00 AM)JOwl Wrote:  

(08-10-2009 09:01 PM)Rick Gerlach Wrote:  

(08-10-2009 03:49 PM)JOwl Wrote:  

(08-10-2009 12:45 PM)Owl 69/70/75 Wrote:  ... If we faced a long-term shortage in an environment where military action was ongoing (a not unreasonable scenario), I think there is a good chance that SPR would be commandeered to support the military needs. We did stuff like that in WWII.
...

True, the SPR could have direct military value if it were commandeered (just like when auto plants were repurposed for building aircraft in WWII). But as with the auto industry, the raison d'etre of the SPR is not military. The costs of creating and maintaining the SPR have been incurred to decrease the possibility and/or severity of an "economic dislocation" from an oil price spike.

Let's face it, an oil embargo on the U.S. would be an attack, albeit economic and not military. The SPR is too limited to have any meaningful impact on price in a crisis, but the reality is that is if there were either an embargo or a catastrophic disruption of supply due to a natural disaster or terrorist attack (or military takeover of shipping or pipelines) the need for an SPR would exist.

It's not there simply to keep prices down, because frankly I don't believe it would do that at all.

Exactly. It's not there simply to keep oil prices down. I'll stick with the description I've used throughout this discussion -- it's most akin to insurance, and is intended to limit our exposure to oil shocks.

The cost associated with building and maintaining the SPR subsidizes our consumption of oil-- without the SPR, our oil dependence would entail even greater risks than it currently does. Again, I'll make an analogy to free, state-provided collision insurance: it wouldn't lower the cost of cars, but would decrease the risk associated with owning them. The state's cost of running the program would be, in my mind, clearly a subsidy to car owners.

Also, note that in the case of the SPR I'm not arguing that it shouldn't exist (I think it serves an important purpose). However, I don't think it's prudent to subsidize oil-- we'd be better served if the costs of the SPR program were passed through to the oil's consumers.

I have no idea of what you mean by passing the costs on to the consumers. The SPR, as you rightly put it, is insurance. It's not really purchased for consumption, (as levels are generally maintained and are not meant to fluctuate wildly . . . i.e. it's constant, ore or less), so who are the consumers we're passing it on to?

It's like any government program. Costs are borne by the taxpayers.

And it's not a subsidy to consumption . . . we're not paying anyone to consume, or even encouraging it.

Is spending money on education a subsidy for the book industry?

No we spend money on education because the consequences of not spending money on education is considered bad.

Similarly, the SPR is insurance against the consequences of an intentional or unintentional restriction on the supply of oil.

I think "insurance" is a heck of a lot closer to the mark than 'subsidy'.

Rick, the more i read, the more I think subsidy means to him anything that protects consumers from fluctuations. The SPR protects consumers from price spikes, the Federal Reserve protects consumer's wealth from inflation, the Secret Service protects American consumers from the loss of wealth due to counterfeiting, and the Corp of Enginneers protects americans and and their wealth from the disruptions caused by flooding. All of these are subsidies of the people, not of specific industries. Traditional subsidies proetect an industry, this expanded definition protects consumers. At least that is how I interpret his statements.

(08-11-2009 12:30 PM)Owl 69/70/75 Wrote:  To change the subject a bit, here one sequence of questions (actually one of many questions) that I have about Obamacare.

Proponents are big to tout that "if you like your current doctor and if you like your current insurance, you can keep them."

What if you want a different private insurance plan from your current one? Do you have the freedom to change carriers within the private system? If so, where does it say so in the bill (any of the draft forms)?

Let's say I have insurance through my employer and change jobs. Where in the bill (any of the proposed drafts) does it say that I am guaranteed the right to a different private sector plan if I want or need to change private plans?

Let's say I have insurance that I'm happy with, but my insurance carrier decides not to continue to offer the plan. Do I have the right to purchase a similar plan from a different insurer? Where does the proposed bill (any of the drafts) guarantee this right?

The wording of all the proposed bills I have seen is pretty loosey-goosey, and at least some of the versions would seem to close the door to these specific options. Where is the wording that specifically leaves those doors open?

While we're at it, I have some questions too. I have read that some of the cost of the new system would be recovered by cutbacks in Medicare. I expect the claim will be made that cutting out waste will do the trick, but when has any goverment done that successfully? I think if we have cutbacks in coverage and/or increases in deductibles/copays, the most likely ways to trim costs, then effectively we have passed a tax borne only by those over 65. I can afford the extra cost, but a lot of seniors cannot - that is why they enacted medicare in the first place, isn't it? So, is there someone out there who can speak definitively to this question?

(08-11-2009 02:26 PM)OptimisticOwl Wrote:  

(08-11-2009 01:41 PM)Rick Gerlach Wrote:  

(08-11-2009 12:00 AM)JOwl Wrote:  

(08-10-2009 09:01 PM)Rick Gerlach Wrote:  

(08-10-2009 03:49 PM)JOwl Wrote:  

(08-10-2009 12:45 PM)Owl 69/70/75 Wrote:  ... If we faced a long-term shortage in an environment where military action was ongoing (a not unreasonable scenario), I think there is a good chance that SPR would be commandeered to support the military needs. We did stuff like that in WWII.
...

True, the SPR could have direct military value if it were commandeered (just like when auto plants were repurposed for building aircraft in WWII). But as with the auto industry, the raison d'etre of the SPR is not military. The costs of creating and maintaining the SPR have been incurred to decrease the possibility and/or severity of an "economic dislocation" from an oil price spike.

Let's face it, an oil embargo on the U.S. would be an attack, albeit economic and not military. The SPR is too limited to have any meaningful impact on price in a crisis, but the reality is that is if there were either an embargo or a catastrophic disruption of supply due to a natural disaster or terrorist attack (or military takeover of shipping or pipelines) the need for an SPR would exist.

It's not there simply to keep prices down, because frankly I don't believe it would do that at all.

Exactly. It's not there simply to keep oil prices down. I'll stick with the description I've used throughout this discussion -- it's most akin to insurance, and is intended to limit our exposure to oil shocks.

The cost associated with building and maintaining the SPR subsidizes our consumption of oil-- without the SPR, our oil dependence would entail even greater risks than it currently does. Again, I'll make an analogy to free, state-provided collision insurance: it wouldn't lower the cost of cars, but would decrease the risk associated with owning them. The state's cost of running the program would be, in my mind, clearly a subsidy to car owners.

Also, note that in the case of the SPR I'm not arguing that it shouldn't exist (I think it serves an important purpose). However, I don't think it's prudent to subsidize oil-- we'd be better served if the costs of the SPR program were passed through to the oil's consumers.

I have no idea of what you mean by passing the costs on to the consumers. The SPR, as you rightly put it, is insurance. It's not really purchased for consumption, (as levels are generally maintained and are not meant to fluctuate wildly . . . i.e. it's constant, ore or less), so who are the consumers we're passing it on to?

It's like any government program. Costs are borne by the taxpayers.

And it's not a subsidy to consumption . . . we're not paying anyone to consume, or even encouraging it.

Is spending money on education a subsidy for the book industry?

No we spend money on education because the consequences of not spending money on education is considered bad.

Similarly, the SPR is insurance against the consequences of an intentional or unintentional restriction on the supply of oil.

I think "insurance" is a heck of a lot closer to the mark than 'subsidy'.

Rick, the more i read, the more I think subsidy means to him anything that protects consumers from fluctuations. The SPR protects consumers from price spikes, the Federal Reserve protects consumer's wealth from inflation, the Secret Service protects American consumers from the loss of wealth due to counterfeiting, and the Corp of Enginneers protects americans and and their wealth from the disruptions caused by flooding. All of these are subsidies of the people, not of specific industries. Traditional subsidies proetect an industry, this expanded definition protects consumers. At least that is how I interpret his statements.

OK, but the SPR really doesn't protect consumers from fluctuations either. If there was an oil embargo, the fact that we have an SPR would be helpful to the government, but would not prevent speculation from driving oil prices up. Traders, et al, would not say, let's leave prices the same, because we have an SPR. There's not enough in the SPR to do that.

(08-11-2009 03:42 PM)Rick Gerlach Wrote:  

(08-11-2009 02:26 PM)OptimisticOwl Wrote:  

(08-11-2009 01:41 PM)Rick Gerlach Wrote:  

(08-11-2009 12:00 AM)JOwl Wrote:  

(08-10-2009 09:01 PM)Rick Gerlach Wrote:  

(08-10-2009 03:49 PM)JOwl Wrote:  

(08-10-2009 12:45 PM)Owl 69/70/75 Wrote:  ... If we faced a long-term shortage in an environment where military action was ongoing (a not unreasonable scenario), I think there is a good chance that SPR would be commandeered to support the military needs. We did stuff like that in WWII.
...

True, the SPR could have direct military value if it were commandeered (just like when auto plants were repurposed for building aircraft in WWII). But as with the auto industry, the raison d'etre of the SPR is not military. The costs of creating and maintaining the SPR have been incurred to decrease the possibility and/or severity of an "economic dislocation" from an oil price spike.

Let's face it, an oil embargo on the U.S. would be an attack, albeit economic and not military. The SPR is too limited to have any meaningful impact on price in a crisis, but the reality is that is if there were either an embargo or a catastrophic disruption of supply due to a natural disaster or terrorist attack (or military takeover of shipping or pipelines) the need for an SPR would exist.

It's not there simply to keep prices down, because frankly I don't believe it would do that at all.

Exactly. It's not there simply to keep oil prices down. I'll stick with the description I've used throughout this discussion -- it's most akin to insurance, and is intended to limit our exposure to oil shocks.

The cost associated with building and maintaining the SPR subsidizes our consumption of oil-- without the SPR, our oil dependence would entail even greater risks than it currently does. Again, I'll make an analogy to free, state-provided collision insurance: it wouldn't lower the cost of cars, but would decrease the risk associated with owning them. The state's cost of running the program would be, in my mind, clearly a subsidy to car owners.

Also, note that in the case of the SPR I'm not arguing that it shouldn't exist (I think it serves an important purpose). However, I don't think it's prudent to subsidize oil-- we'd be better served if the costs of the SPR program were passed through to the oil's consumers.

I have no idea of what you mean by passing the costs on to the consumers. The SPR, as you rightly put it, is insurance. It's not really purchased for consumption, (as levels are generally maintained and are not meant to fluctuate wildly . . . i.e. it's constant, ore or less), so who are the consumers we're passing it on to?

It's like any government program. Costs are borne by the taxpayers.

And it's not a subsidy to consumption . . . we're not paying anyone to consume, or even encouraging it.

Is spending money on education a subsidy for the book industry?

No we spend money on education because the consequences of not spending money on education is considered bad.

Similarly, the SPR is insurance against the consequences of an intentional or unintentional restriction on the supply of oil.

I think "insurance" is a heck of a lot closer to the mark than 'subsidy'.

Rick, the more i read, the more I think subsidy means to him anything that protects consumers from fluctuations. The SPR protects consumers from price spikes, the Federal Reserve protects consumer's wealth from inflation, the Secret Service protects American consumers from the loss of wealth due to counterfeiting, and the Corp of Enginneers protects americans and and their wealth from the disruptions caused by flooding. All of these are subsidies of the people, not of specific industries. Traditional subsidies proetect an industry, this expanded definition protects consumers. At least that is how I interpret his statements.

OK, but the SPR really doesn't protect consumers from fluctuations either.

No, but he says it does, so for purposes of discussion...

(08-11-2009 01:41 PM)Rick Gerlach Wrote:  I have no idea of what you mean by passing the costs on to the consumers. The SPR, as you rightly put it, is insurance. It's not really purchased for consumption, (as levels are generally maintained and are not meant to fluctuate wildly . . . i.e. it's constant, ore or less), so who are the consumers we're passing it on to?

All I mean is that the government should levy a tax on oil consumption equal to the cost of the SPR. That way cost of the insurance is borne by consumers of oil. Having it come out of general tax revenues distorts the economic signals.

(08-11-2009 01:41 PM)Rick Gerlach Wrote:  It's like any government program. Costs are borne by the taxpayers.

And it's not a subsidy to consumption . . . we're not paying anyone to consume, or even encouraging it.

Is spending money on education a subsidy for the book industry?

No we spend money on education because the consequences of not spending money on education is considered bad.

Similarly, the SPR is insurance against the consequences of an intentional or unintentional restriction on the supply of oil.

I think "insurance" is a heck of a lot closer to the mark than 'subsidy'.

I have no problem with terming government spending on education as the government providing "subsidized education". And as I mentioned to gsloth, I consider federal loan guarantees and federal infrastructure projects dedicated to certain ends to be subsidies as well.
But if my use of the term in that way is hindering the discussion, I'll drop it.
Instead of terming it a subsidy, I'll say the government's costs in creating and maintaining the SPR are spent for the advancement of oil consumption. (If we didn't use oil, we sure as heck wouldn't need the SPR). My issue is that oil consumption is already plenty appealing without any help, and we already use too much. The last thing I want is for the government to spend money encouraging more consumption. The better thing, in my mind, is for the consumers of oil to bear the costs.

(08-11-2009 05:41 PM)JOwl Wrote:  I'll say the government's costs in creating and maintaining the SPR are spent for the advancement of oil consumption.

My issue is that oil consumption is already plenty appealing without any help,

The last thing I want is for the government to spend money encouraging more consumption.

The second statement is a pretty good clue that the first statement is not true.

The first statement would be true if the words 'for the advancement' were replaced with 'as an acknowledgement'. (i.e., the government acknowledges that strategically, both militarily and our ability to respond to disasters, we need to have some oil on reserve, so things don't ground to a halt or worse).

I don't see how having an SPR is an 'encouragement' to more consumption.

If the government wants to encourage something, like increased gas consumption, there are tons of ways to accomplish that end. I can't believe that encouraging consumption was a goal of setting up the SPR in any way, shape or form.

Given the glee with which the left loves to attack oil, and the sometimes idiotic lengths to which they go to connect all the world's ills to oil, does it strike anyone as odd that Obama's "energy plan" does almost nothing about oil?

Actually, the net result of the various elements of the "plan" will probably be that we import more oil in 2015 than we do today. Does that strike you as a good result?

I think I know what's going on here, but I'd be interested in other perspectives.

(08-11-2009 06:38 PM)Rick Gerlach Wrote:  

(08-11-2009 05:41 PM)JOwl Wrote:  I'll say the government's costs in creating and maintaining the SPR are spent for the advancement of oil consumption.

My issue is that oil consumption is already plenty appealing without any help,

The last thing I want is for the government to spend money encouraging more consumption.

The second statement is a pretty good clue that the first statement is not true.

The first statement would be true if the words 'for the advancement' were replaced with 'as an acknowledgement'. (i.e., the government acknowledges that strategically, both militarily and our ability to respond to disasters, we need to have some oil on reserve, so things don't ground to a halt or worse).

I don't see how having an SPR is an 'encouragement' to more consumption.

If the government wants to encourage something, like increased gas consumption, there are tons of ways to accomplish that end. I can't believe that encouraging consumption was a goal of setting up the SPR in any way, shape or form.

You say it's simply "an acknowledgement" of a fact, as if the fact were immutable. The intent of the SPR is to diminish the cost and severity of potential economic dislocations. To the extent that alternatives to oil do not entail the same risks, a similar insurance effect could be achieved by substituting in alternatives for oil. However, the government has chosen to spend the money to maintain and create the SPR and thereby limit the risks inherent to oil dependence. The SPR encourages oil consumption by partially negating one factor that would make alternatives relatively more attractive.

Maintaining the SPR in an effort to diminish the risks associated with oil dependence strikes me as a prudent and necessary government action. Failing to pass its costs along to consumers does not.

As I've said, the SPR is relatively small among government programs that have the effect of encouraging oil consumption (certainly when compared to military spending to secure our oil supplies). But that doesn't make it any less real.

JOwl,

You make a valid point, but not quite the one you intend. I think you have confused cause and effect. We don't depend on oil because we have SPR and troops in the middle east We have SPR and troops in the middle east because we depend on oil. The dependence on oil is the cause, not the effect, and we need to break the dependence on oil in order to eliminate the need for those other things, not the other way round.

It is fashionable to say, "Oh, I'm opposed to drill here, drill now. That will just perpetuate our dependence on oil." News flash--Our dependence on oil is far more fundamental than that, and will remain so until we address it head on. Until then, our only choice is how much we get from here versus how much we have to import. And the more we have to import, the worse off our economy is, the more vulnerable our environment is (tankers are a lot riskier than oil wells), and the more likely we are to be sending our kids off to die.

We need to address our use of oil head-on. Obama's "energy plan" doesn't.

(08-12-2009 07:15 AM)Owl 69/70/75 Wrote:  JOwl,

You make a valid point, but not quite the one you intend. I think you have confused cause and effect. We don't depend on oil because we have SPR and troops in the middle east We have SPR and troops in the middle east because we depend on oil. The dependence on oil is the cause, not the effect, and we need to break the dependence on oil in order to eliminate the need for those other things, not the other way round.

It is fashionable to say, "Oh, I'm opposed to drill here, drill now. That will just perpetuate our dependence on oil." News flash--Our dependence on oil is far more fundamental than that, and will remain so until we address it head on. Until then, our only choice is how much we get from here versus how much we have to import. And the more we have to import, the worse off our economy is, the more vulnerable our environment is (tankers are a lot riskier than oil wells), and the more likely we are to be sending our kids off to die.

We need to address our use of oil head-on. Obama's "energy plan" doesn't.

I agree with the vast majority of your points. However, I don't think I'm confused on cause and effect -- it's just that cause and effect are tied up together. It's a feedback loop, wherein our oil dependence causes the government to take steps to secure our oil supply, which (if successful) decreases the risks/costs of using oil, which furthers consumers choosing oil.
I think the feedback loop works even more against our interests when one considers our military endeavors to secure supplies of foreign oil. The costs incurred serve to reduce the negatives of _foreign_ oil, which increases its desirability (from the consumer's point of view) when compared to the alternatives (including domestic oil).
As with the SPR, I think (at least some of) our military efforts to secure foreign oil are prudent and necessary given our oil needs, but what strikes me as perverse is that those costs incurred aren't passed through to the consumers of foreign oil. The failure to pass on those costs while the endeavors funded by those costs serve to make foreign oil more appealing just strikes me as backwards. Correct me if I'm wrong, but I think we're in general agreement here.

I'm a fan of your energy plan, particularly its scope and ambition (although as we discussed earlier, I disagree on some of the details). I think my concerns dovetail nicely with that plan. I think if we were to prepare a true accounting of the hidden costs of oil (and in particular, the larger hidden costs of foregin oil) and pass those costs on to consumers (differentiating the costs passed on between foreign and domestic) we'd build more popular sentiment for a plan like yours. And even if we couldn't get something going that's as ambitious as your plan, passing through the true costs would at least engage basic market forces that would start nudging us in the same direction as your plan.

(08-12-2009 11:12 AM)JOwl Wrote:  

(08-12-2009 07:15 AM)Owl 69/70/75 Wrote:  JOwl,

You make a valid point, but not quite the one you intend. I think you have confused cause and effect. We don't depend on oil because we have SPR and troops in the middle east We have SPR and troops in the middle east because we depend on oil. The dependence on oil is the cause, not the effect, and we need to break the dependence on oil in order to eliminate the need for those other things, not the other way round.

It is fashionable to say, "Oh, I'm opposed to drill here, drill now. That will just perpetuate our dependence on oil." News flash--Our dependence on oil is far more fundamental than that, and will remain so until we address it head on. Until then, our only choice is how much we get from here versus how much we have to import. And the more we have to import, the worse off our economy is, the more vulnerable our environment is (tankers are a lot riskier than oil wells), and the more likely we are to be sending our kids off to die.

We need to address our use of oil head-on. Obama's "energy plan" doesn't.

I agree with the vast majority of your points. However, I don't think I'm confused on cause and effect -- it's just that cause and effect are tied up together. It's a feedback loop, wherein our oil dependence causes the government to take steps to secure our oil supply, which (if successful) decreases the risks/costs of using oil, which furthers consumers choosing oil.
I think the feedback loop works even more against our interests when one considers our military endeavors to secure supplies of foreign oil. The costs incurred serve to reduce the negatives of _foreign_ oil, which increases its desirability (from the consumer's point of view) when compared to the alternatives (including domestic oil).
As with the SPR, I think (at least some of) our military efforts to secure foreign oil are prudent and necessary given our oil needs, but what strikes me as perverse is that those costs incurred aren't passed through to the consumers of foreign oil. The failure to pass on those costs while the endeavors funded by those costs serve to make foreign oil more appealing just strikes me as backwards. Correct me if I'm wrong, but I think we're in general agreement here.

I'm a fan of your energy plan, particularly its scope and ambition (although as we discussed earlier, I disagree on some of the details). I think my concerns dovetail nicely with that plan. I think if we were to prepare a true accounting of the hidden costs of oil (and in particular, the larger hidden costs of foregin oil) and pass those costs on to consumers (differentiating the costs passed on between foreign and domestic) we'd build more popular sentiment for a plan like yours. And even if we couldn't get something going that's as ambitious as your plan, passing through the true costs would at least engage basic market forces that would start nudging us in the same direction as your plan.

Isn't what you're really talking about not the 'hidden costs of oil' but the hidden costs of our countries standard of living / lifestyle?

Currently, without oil (transportation, our individual mobility, energy, etc) we could not maintain our standard of living. Alternatives are currently more costly and have their own drawbacks.

(08-12-2009 11:12 AM)JOwl Wrote:  I agree with the vast majority of your points. However, I don't think I'm confused on cause and effect -- it's just that cause and effect are tied up together. It's a feedback loop, wherein our oil dependence causes the government to take steps to secure our oil supply, which (if successful) decreases the risks/costs of using oil, which furthers consumers choosing oil.
I think the feedback loop works even more against our interests when one considers our military endeavors to secure supplies of foreign oil. The costs incurred serve to reduce the negatives of _foreign_ oil, which increases its desirability (from the consumer's point of view) when compared to the alternatives (including domestic oil).
As with the SPR, I think (at least some of) our military efforts to secure foreign oil are prudent and necessary given our oil needs, but what strikes me as perverse is that those costs incurred aren't passed through to the consumers of foreign oil. The failure to pass on those costs while the endeavors funded by those costs serve to make foreign oil more appealing just strikes me as backwards. Correct me if I'm wrong, but I think we're in general agreement here.
I'm a fan of your energy plan, particularly its scope and ambition (although as we discussed earlier, I disagree on some of the details). I think my concerns dovetail nicely with that plan. I think if we were to prepare a true accounting of the hidden costs of oil (and in particular, the larger hidden costs of foregin oil) and pass those costs on to consumers (differentiating the costs passed on between foreign and domestic) we'd build more popular sentiment for a plan like yours. And even if we couldn't get something going that's as ambitious as your plan, passing through the true costs would at least engage basic market forces that would start nudging us in the same direction as your plan.

I think you are correct in that we are in general agreement. If we got handed the job of coming up with a coherent national energy policy, I'm guessing we could resolve the differences before sundown. And come up with something far better than anyone has put on the table so far.

I think we need to get off oil as much as we can as fast as we can. But any prudent plan to realize that objective has to concede that as much as we can isn't totally and as fast as we can isn't tomorrow, so we had better include a sensible plan for meeting our current oil needs while we are drawing them down. I do think that a tax to recover the identifiable social costs (including troops in the middle east), which would coincidentally (or perhaps not coincidentally) also tax oil up to the level where alternatives become much more cost-competitive, simply has to be part of any intelligent energy policy. I think it probably has to be offset with tax savings elsewhere, so as not to crater the economy.

These are the questions about health care that I would like to have answered. Because one of the stock ways to answer uncomfortable questions seems to have become to point out that there is no one bill at this point, and they have differing provisions, wherever I ask about the bill, it would be clear that the respondent can answer based upon any of the different versions, even cherry-picking the version that provides the most reassuring answer, even if that version is clearly problematical on some other issue. To state it another way, I am seeking to preclude the evasive answer, "oh, we don't have one bill at this point, so we can't give a specific answer."

1. Obama has repeatedly said, "If you like your health insurance and your doctor, you can keep them." What that would suggest, but what he has been very careful not to say, is, "You will be free to choose your doctor and your health insurance." When I read the bill, it strikes me that you can be locked into your current plan, with no choice but to go onto the prescribed alternative plan (government, co-op, whatever it ends up being). Will I, or my employer, be free to choose from competing private insurance plans, and if so, where does it say that in any of the draft bills?
2. Obama has repeatedly said that this plan will not add a dime to the deficit, without identifying any additional funding. The CBO has said that it without offsetting funding, it will add $1 trillion to the deficit over the next 10 years. Those statements cannot both be true. Which one is the lie? If the answer is that neither one is a lie because Obama plans to increase taxes so that no deficit result, exactly which taxes are going to be increased, and how much, to accomplish this?
3. Obama has repeatedly denied that this is a government takeover of health care, and the proposed bills do not seem to dictate that specifically. But there are a number of things that suggest movement a fair piece down the road toward eventual government takeover of health care. And Obama himself has stated a preference for single-payer health care with a recognition that there would need to be a transition process. Given that, if this is NOT a step down the road toward a single-payer government health care system, then why does Obama support it?
4. The various bills create a number of new agencies (with some variation from bill to bill). These would seem to have little place in a system where the objective is to remain a private-insurance system but to reduce costs by cutting administrative overhead. Introducing this many new agencies into the system would appear to be one way to guarantee that overhead will increase, if nothing else because the costs of running the agencies themselves will add to overhead. One role that I can see for those agencies is that they would be very helpful to have in place to ease the transition to a government-run single-payer system, but aside from that I don't really see what they will accomplish except to spend more money on what is already an overpriced activity. What will these agencies accomplish that will benefit a private health care system, and what assurances do we have in the bill that these agencies won't be used to facilitate the transition to a government-run single-payer system?
5. Obama has stated that his "reforms" will not lead to euthanizing the elderly and disabled. However, other countries that have gone down the road to single-payer systems have encountered difficulty rationing scarce medical resources. In some cases (like the UK NHS) they have resorted to excluding certain groups from health care because of age or disability. That is a legitimate fear in large part because the proposed Council for Comparative Effectiveness very closely resembles the kinds of organizations that have been used to develop standards for rationing and effectively euthanizing in those systems. The legitimacy of that fear is heightened because of the reasonable expectation that Dr. Ezekiel Emanuel, who has advocated such rationing schemes in print, is quite likely to be a member of such a council, and at the very least instrumental in its direction. What assurances do we have that the Council for Comparative Effectiveness (or any other agency) will not become a vehicle for deciding that certain groups must be denied health care in order for other groups to receive it? And what options will people in denied groups have to obtain the denied health care on their own nickel? Where in the bill are these protections found?

I would ask one more question if given the chance: Why are we trying to reinvent the wheel with health care instead of taking an existing model that has been successful and adapting it? Since the French model is generaly regarded as the gold standard, why are we not simply taking it and adapting it?

(08-12-2009 11:12 AM)JOwl Wrote:  As with the SPR, I think (at least some of) our military efforts to secure foreign oil are prudent and necessary given our oil needs, but what strikes me as perverse is that those costs incurred aren't passed through to the consumers of foreign oil. The failure to pass on those costs while the endeavors funded by those costs serve to make foreign oil more appealing just strikes me as backwards. Correct me if I'm wrong, but I think we're in general agreement here.

Aren't these costs passed on indirectly through our taxes and/or the deficit? Wouldn't it then be fair to say that you favor a more direct and identifiable pass-on of costs? If the consumer cannot identify the additional cost of foreign oil, it won't have an effect on his consumption. The idea in theory is not bad, but I don't know how that could be done, as i cannot see the Government (any Administration) identifying $.xx/gal tax as dedicated to protecting oil supplies in any definitive way. Political suicide for either party.

(08-12-2009 11:32 AM)Rick Gerlach Wrote:  Isn't what you're really talking about not the 'hidden costs of oil' but the hidden costs of our countries standard of living / lifestyle?

Currently, without oil (transportation, our individual mobility, energy, etc) we could not maintain our standard of living. Alternatives are currently more costly and have their own drawbacks.

Yes, our profligate oil consumption does raise our current standard of living. The issue is that I don't think it's sustainable. We can continue to try to secure foreign oil supplies through military action, and continue to ignore the environmental costs, but I think over time we'll be faced with increasing problems and decreasing success in getting oil.
Passing the costs of oil through to consumers doesn't have to mean a net increase in taxation; income taxes could be decreased a corresponding amount. That would have the impact of shifting tax burden towards heavier oil consumers and away from people who consume less, redistributing the costs of using oil to more accurately reflect the reality of the situation.

But I'm under no illusions that just because we could make it tax neutral, doesn't mean there wouldn't be a net decrease in our standard of living. People have optimized utility by making decisions (such as where to live, what transport to use, etc) according to their tastes but based on underlying assumptions about things such as the price of oil. Increasing the price of oil would cause some/many of those decisions to no longer be optimal, and many of these decisions are not easily or quickly changed.
Over time, of course, people would have the opportunity to change those decisions and re-optimize under the new conditions.