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BuckeyeBlog |
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During election season you hear a lot of hot air about “energy independence.” Usually politicians proclaim that we need to increase our use of biofuels, especially ethanol, to help us achieve this mythical goal. The folks at Reason magazine have produced a short video explaining why this is a horrible idea (unless, of course, you are a corn farmer):
Columbus native and Northwestern University economic prof Lynne Keisling in her excellent Knowledge Problem blog dishes up the meow mix to WSJ’s Rebecca Smith for a badly misinformed analysis of the impact freer electric energy markets are having in Texas.
Perhaps Ohio’s recent decision to extend government regulation of electric utility energy will protect corporation bottom lines and manufacturing jobs in the short run. Eventually, however, the distorted or completely missing signals of true prices for consumption and true returns for production investments will cause Ohioans to lose out on jobs and prosperity to places with freer markets such as Texas.
BTW, Texas added 139,000 jobs so far in 2008. Ohio has added a paltry 6,000 jobs.
There has been a lot of talk lately about Texas Oilman T. Boone Pickens and his plan to save us all from our “oil dependency.” Today, he outlined his humbly-named “Pickens Plan” before a Senate panel, seemingly adding to his credibility as an expert for solving the energy “crisis.” However, his plan has many faults, starting with the principles used to create it.
Many, including Governor Strickland and Senator Voinovich, are blinded by a politically convenient plan from an industry expert; as a result, they fail to remember (or ignore) both where Mr. Pickens’ strengths lie and where they end. Pickens may know a lot about oil, but this does not mean he knows how energy drives an economy. He has no special ability to predict the results and consequences of his recommendations on this nation’s economic health, for which cheap and efficient energy is crucial. In less than a minute, Mr. Pickens lets slip several insights into his lack of economic prowess—his use of the term “transfer of wealth,” and his wish to “slash our dependency.”
The Guardian has obtained an unreleased World Bank study that finds the use of biofuels at fault for up to 75% increases in global food prices. Unsurprisingly, government officials are attempting to push the study aside and ignore it. The Guardian reports that the study remains unpublished to avoid embarrassing President Bush, who has heavily pushed biofuel technology.
“Political leaders seem intent on suppressing and ignoring the strong evidence that biofuels are a major factor in recent food price rises,” said Robert Bailey, policy adviser at Oxfam. “It is imperative that we have the full picture. While politicians concentrate on keeping industry lobbies happy, people in poor countries cannot afford enough to eat.”
The Dispatch reports:
Ohio Sen. Sherrod Brown, who had adamantly opposed [offshore] drilling, is among those warming to the idea. He says any exploration would have to be far from the coast and that the oil produced would be used in the United States, not abroad.
So clearly Senator Brown has no idea how the oil market actually works, does he? After all, it’s not as if U.S. oil is only sold in the U.S., Saudi oil is only sold in Saudi Arabia, Mexican oil is only sold in Mexico, etc. Oil is a global commodity. There is a global market for it. Any attempts to horde oil for sale in only one country would either be completely ineffective or provoke a flurry of harmful counter-measures. As a nation which buys a large share of its oil from overseas, do we really want other nations to refuse to sell their oil to us? (more…)
The Plain Dealer reports today that airlines are cutting capacity to deal with high fuel prices. While this doesn’t necessarily reflect lower passenger demand, as the newspaper points out, it does indicate something else: increased efficiency. Airlines are going to great lengths to use fuel more sparingly:
The fuel pressure has become so intense that airlines are taking steps that would have seemed absurd a year ago. US Airways said this week that it would no longer show movies so it can get the weight of movie equipment off its planes, saving $10 million a year in fuel costs. US Airways and United repainted their aircraft from dark blues and grays to white, which weighs less.
