Energy


Salena Zito:

The Acosta Deep Mine in Somerset County marks a dramatic upturn for the area. And while President Trump cannot claim that he brought the industry back here personally (this new mine was already being developed before the election), he is an effective cheerleader for folks who’ve been discounted by the political elite.

Instead of trying to kill an industry under piles of regulations and poo-pooing any notions of its survival let along thriving, I think the government should lay off and let the people in the industry configure itself for the economy.

Maybe its smaller than in the past or maybe bigger, maybe more specialized, maybe more dispersed or stays concentrated in a geographic area. How do they compete and serve a customer base? What technologies can they use and invent, and what business processes can they use and invent? How do they attract capital?

These are questions for the people in the industry to figure out from the bottom-up, top-down, and inside-out, not from top-down impositions and elite opinion. And the people in this industry must do so in a free market environment.

The WSJ has a report by James Freeman (behind firewall) on the progress the Trump Administration is making reducing the power of Washington’s permanent bureaucracy, aka the Swamp.

At the State Department:

the State Department is one federal agency that was actually contemplated by America’s founders. Conducting foreign policy is an important and necessary task for our central government. But like so much of the Beltway bureaucracy State has been overfunded and undermanaged for years. Now, despite what you may have read about untouchable bureaucrats unaccountable to the public they are supposed to serve, Mr. Tillerson has found ways to clean house. . .

Furniture from now-closed offices crowded the hallways. Dropping in on one of my old offices, I expected to see a former colleague—a career senior foreign service officer—but was stunned to find out she had been abruptly forced into retirement and had departed the previous week. This office, once bustling, had just one person present, keeping on the lights. . . .

[Sec. of State] Tillerson is not reorganizing, he’s downsizing.

Yes, even constitutionally approved functions need reorganizing, and reorganizing can involve downsizing people and functionality. If ever there were monopolies, government is it. And government monopolies are susceptible to the same abuses as other monopolies. The people there become arrogant, careless, insular, lazy, corrupt. Absent competition, its inevitable no matter how well-intentioned.

There’s movement at the EPA:

Meanwhile over at the Environmental Protection Agency, new boss Scott Pruitt is not just draining the bureaucratic swamp in Washington, he’s taking away the agency’s power to oversee swamps nationwide. . . .

to dismantle another piece of the Obama administration’s environmental legacy, the rule that sought to protect clean drinking water by expanding Washington’s power to regulate major rivers and lakes as well as smaller streams and wetlands. . . .

In a speech at the Energy Department, the president promised to expand the country’s nuclear-energy sector and open up more federal lands and offshore sites to oil and natural-gas drilling.

. . . rescindment this week of the Obama administration’s clean-water rules that farmers and business groups found onerous.

. . . issued a special permit authorizing the construction of a new pipeline between the U.S. and Mexico that would carry fuels across the border in Texas

Its not all positive, though. Healthcare reform could fill the swamp rather than drain it. More military activity in the Middle East and Korea could fill the swamp.

 

Tired of gyrating oil and gasoline prices? Sure you can use natural gas to supply your home with energy. How about adding solar as a source of energy also? Create a diversified portfolio of energy sources so you increase the odds you’ll have a source from somewhere. Does your house get enough sunlight? You’ll have to run the numbers to see if it makes sense. You might be eligible for government tax credits. In any case, Amazon offers a wide variety of solar panel products from which to choose.

Dan Froomkin tries to stir up hatred of people who work for, and invest in, oil companies:

A good chunk of these profits is coming right out the pockets of the American public, thanks in part to astronomical gas prices and to $4 billion to $8 billion a year in deficit-increasing tax subsidies that oil companies continue to get, long after the incentives those subsidies were designed to create ceased to make economic sense.

Rather than invest their profits in such things as product development, new facilities, hot talent or research — things that could create jobs, improve consumer offerings and accelerate alternative energy production — three of the five big oil companies are spending large amounts of that money buying back shares of their own stock.

Economics Professor Mark J. Perry has a little fun with this silly story by changing the industry and companies.

On a serious note, people who work for oil firms are investing the way Froomkin says. It’s just invisible and not headline grabbing.  It would be good to eliminate all corporate subsidies and lower the tax rate but people who think like Froomkin wanted the subsidies incentives in the first place.  That’s crony capitalism and Froomkin was for it before he was against it.

Yes, you read that right. Not shortages of fossil fuels but an abundance of them. Mark Perry with the details.

But Palin differs, saying, “We’ve got to allow the free market to dictate what’s most efficient and economical for our nation’s economy. No, at this time, our country can’t afford the subsidies. Before, though, we even start arguing about some of these domestic subsidies that need to be eliminated — should be — we need to look at ending subsidies and loans to foreign countries and their energy production that we’re relying on, like Brazil.”

Here.

The lady needs to verbiage to describe free markets.  Doesn’t quite make sense.  The “free market” is not a dictator.  It is a process of give-and-take, trial-and-error, and discovery.  It is what works. Further, subsidies are not luxuries we cannot afford. They are political actions implemented by government that distort what buyers and seller truly want. They prevent sellers from discovering what buyers truly want because sellers have to satisfy a new party to transactions: politicians.

Mark Perry links to a Bloomberg article that plots a country’s share of world oil production against that country’s democracy index.  Then he links to an article in the NY Times about the Eagle Ford Field in Texas.

It does not quite support my thesis that oil supplies are constrained by government ownership of petroleum fields but it comes close. Prices are high because governments own those fields and they have to approve the extraction of petroleum. That holds back supply and keeps an artificially high price. You can see the reluctance of U.S. politicians to approve new domestic drilling.

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