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Thread: NYTIMES: Dumb as We Wanna Be?

  1. #1

    NYTIMES: Dumb as We Wanna Be?

    By THOMAS L. FRIEDMAN

    [url]http://www.nytimes.com/2008/04/30/opinion/30friedman.html?_r=1&oref=slogin&ref=opinion&pagewanted=print[/url]

    [B]It is great to see that we finally have some national unity on energy policy. Unfortunately, the unifying idea is so ridiculous, so unworthy of the people aspiring to lead our nation, it takes your breath away. Hillary Clinton has decided to line up with John McCain in pushing to suspend the federal excise tax on gasoline, 18.4 cents a gallon, for this summer’s travel season. This is not an energy policy. This is money laundering: we borrow money from China and ship it to Saudi Arabia and take a little cut for ourselves as it goes through our gas tanks. What a way to build our country. [/B]

    When the summer is over, we will have increased our debt to China, increased our transfer of wealth to Saudi Arabia and increased our contribution to global warming for our kids to inherit.

    No, no, no, we’ll just get the money by taxing Big Oil, says Mrs. Clinton. Even if you could do that, what a terrible way to spend precious tax dollars — burning it up on the way to the beach rather than on innovation?

    The McCain-Clinton gas holiday proposal is a perfect example of what energy expert Peter Schwartz of Global Business Network describes as the true American energy policy today: “Maximize demand, minimize supply and buy the rest from the people who hate us the most.”

    Good for Barack Obama for resisting this shameful pandering.

    But here’s what’s scary: our problem is so much worse than you think. We have no energy strategy. If you are going to use tax policy to shape energy strategy then you want to raise taxes on the things you want to discourage — gasoline consumption and gas-guzzling cars — and you want to lower taxes on the things you want to encourage — new, renewable energy technologies. We are doing just the opposite.

    Are you sitting down?

    Few Americans know it, but for almost a year now, Congress has been bickering over whether and how to renew the investment tax credit to stimulate investment in solar energy and the production tax credit to encourage investment in wind energy. The bickering has been so poisonous that when Congress passed the 2007 energy bill last December, it failed to extend any stimulus for wind and solar energy production. Oil and gas kept all their credits, but those for wind and solar have been left to expire this December. I am not making this up. At a time when we should be throwing everything into clean power innovation, we are squabbling over pennies.

    These credits are critical because they ensure that if oil prices slip back down again — which often happens — investments in wind and solar would still be profitable. That’s how you launch a new energy technology and help it achieve scale, so it can compete without subsidies.

    The Democrats wanted the wind and solar credits to be paid for by taking away tax credits from the oil industry. President Bush said he would veto that. Neither side would back down, and Mr. Bush — showing not one iota of leadership — refused to get all the adults together in a room and work out a compromise. Stalemate. Meanwhile, Germany has a 20-year solar incentive program; Japan 12 years. Ours, at best, run two years.

    “It’s a disaster,” says Michael Polsky, founder of Invenergy, one of the biggest wind-power developers in America. “Wind is a very capital-intensive industry, and financial institutions are not ready to take ‘Congressional risk.’ They say if you don’t get the [production tax credit] we will not lend you the money to buy more turbines and build projects.”

    It is also alarming, says Rhone Resch, the president of the Solar Energy Industries Association, that the U.S. has reached a point “where the priorities of Congress could become so distorted by politics” that it would turn its back on the next great global industry — clean power — “but that’s exactly what is happening.” If the wind and solar credits expire, said Resch, the impact in just 2009 would be more than 100,000 jobs either lost or not created in these industries, and $20 billion worth of investments that won’t be made.

    While all the presidential candidates were railing about lost manufacturing jobs in Ohio, no one noticed that America’s premier solar company, First Solar, from Toledo, Ohio, was opening its newest factory in the former East Germany — 540 high-paying engineering jobs — because Germany has created a booming solar market and America has not.

    In 1997, said Resch, America was the leader in solar energy technology, with 40 percent of global solar production. “Last year, we were less than 8 percent, and even most of that was manufacturing for overseas markets.”

    The McCain-Clinton proposal is a reminder to me that the biggest energy crisis we have in our country today is the energy to be serious — the energy to do big things in a sustained, focused and intelligent way. We are in the midst of a national political brownout.

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    Typical liberal tripe that they know better. The subsidies for alternative energy and using taxes as a weapon to shape economic policy is a failure. Politicians aren't going to solve the energy problems we face. Targeted use taxes and subsidies are both bad ideas.

  3. #3
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    [QUOTE=Winstonbiggs;2516934]The subsidies for alternative energy and using taxes as a weapon to shape economic policy is a failure. [/QUOTE]

    Subsidies for oil and gas are still worse than subsidies for alternative energy.

    How about leaving this up to average Americans to decide...it is after all, their money. Lets ask them which they would rather subsidize more...oil or solar? I think after everyone getting it broke off in their ass at the pump while hearing about record profits, the average American isn't going to be in the mood to help out Mr. Big Bad Evil Oil Baron.

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    [QUOTE=PlumberKhan;2516948]Subsidies for oil and gas are still worse than subsidies for alternative energy.

    How about leaving this up to average Americans to decide...it is after all, their money. Lets ask them which they would rather subsidize more...oil or solar? I think after everyone getting it broke off in their ass at the pump while hearing about record profits, the average American isn't going to be in the mood to help out Mr. Big Bad Evil Oil Baron.[/QUOTE]

    Here's a brilliant idea, how about the government dumping the subsidy programs reducing spending, getting the budget in line which will reduce borrowing costs, cutting cap gains taxes instead of raising them by 86% so that high oil prices coupled with peoples desire to make money by investing savings and lower borrowing rates will create capital formation that will allow alternate energy programs with an actual business model to get off the ground for more than 10 minutes.

    Unfortunately we live in a democracy and government tax policy and incentives are not long term so a subsidy today just creates a failed policy tommorow when the subsidy goes elsewhere, the same is true of punishing people for taking risk which reduces capital formation for long term sustainable projects.

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    That would be awesome...in a perfect world.

    What bothers me the most is that, all of a sudden, people are against energy subsidies. The same people that are most vocal against subsides for alternative energy were mute when the same subsides were handed to money flush oil companies. Whats good for the goose...

    How about leveling the playing field? How come fat f*ck Dick Cheney can have closed door meetings with energy companies to devise ways to screw over Americans?

  6. #6
    [QUOTE=PlumberKhan;2516972]That would be awesome...in a perfect world.

    What bothers me the most is that, all of a sudden, people are against energy subsidies. The same people that are most vocal against subsides for alternative energy were mute when the same subsides were handed to money flush oil companies. Whats good for the goose...

    How about leveling the playing field? How come fat f*ck Dick Cheney can have closed door meetings with energy companies to devise ways to screw over Americans?[/QUOTE]

    What do you mean all of a sudden?

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    What percentage of our oil comes from the Middle East and how much from Venezuela and Mexico.

  8. #8
    [QUOTE=PlumberKhan;2516972]
    How about leveling the playing field? How come fat f*ck Dick Cheney can have closed door meetings with energy companies to devise ways to screw over Americans?[/QUOTE]

    +1

    Not only closed door, but able (somehow) to hide the details of the national energy policy meeting from the public for 7 years!!!!!! ... This, despite freedom of information demands by the public AND members of the legislative branch.

    The secrecy presidency began long before 9/11.

    Just what did they have to hide?
    Last edited by Press_Coverage; 04-30-2008 at 03:13 PM.

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    [QUOTE=MnJetFan;2517223]What percentage of our oil comes from the Middle East and how much from Venezuela and Mexico.[/QUOTE]

    what % of the price of a gallon of gas goes to taxes??? ever check???

    that's what makes this entire thread and the lunatics who believe gas prices are some sort of conspiracy laughable as usual....
    Last edited by Come Back to NY; 04-30-2008 at 03:27 PM.

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    The rise in gas prices is anything but normal . It has gone up a large amount in a short period of time. Im not sure there is any explanation I have seen that makes any sense at all. Theres good points on both sides of the arguement in every gas thread on this forum the only problem is the price keeps going up. We dont seem to be building more refinaries which will probably help the situation. The Question is do the people profiting from whats going on really want to help the situation ? Do you really think they give a sh!t ?

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    [QUOTE=Smashmouth;2518386]The rise in gas prices is anything but normal . It has gone up a large amount in a short period of time. Im not sure there is any explanation I have seen that makes any sense at all. Theres good points on both sides of the arguement in every gas thread on this forum the only problem is the price keeps going up. We dont seem to be building more refinaries which will probably help the situation. The Question is do the people profiting from whats going on really want to help the situation ? Do you really think they give a sh!t ?[/QUOTE]

    Again. Such curious, irrational decision-making, rife with secrecy, arrogance and contradiction is the sign of desperate people. It's not that they don't give a sh!t (though, ultimately they don't), but merely that there's nothing they can do about it without changing the game entirely and investing into the unknown.

    Occam’s Razor (a principle of reasoning associated with medieval thinker William of Ockham, 1288 - 1327) recommends choosing the simplest workable explanation for a phenomenon.

    The explanation here is not the dollar, it's not OPEC's stranglehold, it's not terrorism, and it's not China. It's Hubbert's Peak. All roads lead to it, from imperialism in select countries, to Europe's reliance on Russian oil, to food prices, to the economy, and on and on and on... I daresay, even 9/11.
    Last edited by Press_Coverage; 05-01-2008 at 03:06 AM.

  12. #12
    [QUOTE=Come Back to NY;2517855]what % of the price of a gallon of gas goes to taxes??? ever check???

    that's what makes this entire thread and the lunatics who believe gas prices are some sort of conspiracy laughable as usual....[/QUOTE]

    What do taxes have to do with the price of Gasoline? If adding a dollar to the cost doesn't reduce usage and tamp down demand which would reduce the price, what makes you think reducing the cost of gas through a tax rebate wouldn't increase demand and cause the price to rise?

    Prices go up when demand is stronger than supply and they go down when supply is going up against demand. Cost is only a part of price in a mature market like gasoline. If getting rid of the tax drove gas prices down, I would expect demand to go up and the price would rise right back to where it was with the tax. We have a balance of price and demand at the current price level with or without the taxes.
    Last edited by Winstonbiggs; 05-01-2008 at 05:34 AM.

  13. #13
    One of the most frustrating things is how quick the price jumps at the pump as soon as anything negative happens. But when the price per barrel drops $5.00 it takes up to a month for a drop in price at the pump.

    Gas stations have to go online every night to see how much they have to charge per gallon, even though it is the same gas they paid for months before. Although now I am guessing they go on during the day as well, as gas is one price in the morning and sometimes higher when I am going home.

    [QUOTE=Winstonbiggs;2518835]What do taxes have to do with the price of Gasoline? If adding a dollar to the cost doesn't reduce usage and tamp down demand which would reduce the price, what makes you think reducing the cost of gas through a tax rebate wouldn't increase demand and cause the price to rise?

    Prices go up when demand is stronger than supply and they go down when supply is going up against demand. Cost is only a part of price in a mature market like gasoline. If getting rid of the tax drove gas prices down, I would expect demand to go up and the price would rise right back to where it was with the tax. We have a balance of price and demand at the current price level with or without the taxes.[/QUOTE]

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    [QUOTE=Winstonbiggs;2518835]What do taxes have to do with the price of Gasoline? If adding a dollar to the cost doesn't reduce usage and tamp down demand which would reduce the price, what makes you think reducing the cost of gas through a tax rebate wouldn't increase demand and cause the price to rise?

    Prices go up when demand is stronger than supply and they go down when supply is going up against demand. Cost is only a part of price in a mature market like gasoline. If getting rid of the tax drove gas prices down, I would expect demand to go up and the price would rise right back to where it was with the tax. We have a balance of price and demand at the current price level with or without the taxes.[/QUOTE]

    what do taxes have to do with the cost of gasoline???? it increases them 25%-40% depending on the state you live in.....

    you are refering to usage and demand based on the price of a gallon of gas...I am refering to what the cost of a gallon of gas is actually made up of....

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    [QUOTE=Press_Coverage;2518811]Again. Such curious, irrational decision-making, rife with secrecy, arrogance and contradiction is the sign of desperate people. It's not that they don't give a sh!t (though, ultimately they don't), but merely that there's nothing they can do about it without changing the game entirely and investing into the unknown.

    Occam’s Razor (a principle of reasoning associated with medieval thinker William of Ockham, 1288 - 1327) recommends choosing the simplest workable explanation for a phenomenon.

    The explanation here is not the dollar, it's not OPEC's stranglehold, it's not terrorism, and it's not China. It's Hubbert's Peak. All roads lead to it, from imperialism in select countries, to Europe's reliance on Russian oil, to food prices, to the economy, and on and on and on... I daresay, even 9/11.[/QUOTE]

    No.

    The simpliest answer is really the drastic fall of the dollar. To believe Hubbert correctly predicted the oil peak 30 years ago is a little more complicated that what is staring you right in the face. No?

    Oil is traded in dollars. The dollar is worth almost 25% less then it was 2 years ago.

    The next easiest solution would be investor bubble. We had a stock market bubble and then a real estate bubble and now a commodities bubble. Gold has run down recently but as of a month ago, Gold had seen FASTER growth then oil over the last 12-18 months. It's well known that when the dollar is weak, investors hedge by putting their money in commodities. More investors = higher price.

    To me, applying Occam's Razor wouldn't suggest Peak Oil at all

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    [QUOTE=Come Back to NY;2518875]what do taxes have to do with the cost of gasoline???? it increases them 25%-40% depending on the state you live in.....

    you are refering to usage and demand based on the price of a gallon of gas...I am refering to what the cost of a gallon of gas is actually made up of....[/QUOTE]

    But unless the gas rate has increased or is tied to a percentage (most states seem to be cpg), it would remain fixed.

    When we were paying $2 a few years ago, there may have been a 30c tax per gallon, now we are paying $3.50 and likely have a similiar 30c per gallon.

    Taxes don't come into the equation when discuss the increase of gas prices unless they are structured as a percentage of the cost per gallon. And even then, say like California, you are charged 6% sales tax. the hypothetical increase from $2.00 to $3.50 would be roughly $1.41 due to oil increase, $.09 due to additional taxes..
    Last edited by CTM; 05-01-2008 at 08:37 AM.

  17. #17
    [QUOTE=Come Back to NY;2518875]what do taxes have to do with the cost of gasoline???? it increases them 25%-40% depending on the state you live in.....

    you are refering to usage and demand based on the price of a gallon of gas...I am refering to what the cost of a gallon of gas is actually made up of....[/QUOTE]

    You are refering to cost, in a mature market like gasoline cost has little to do with price. Unless the cost falls below a point where it makes sense to shut down production to bring the supply down to get prices up to a profitible level. We are clearly in the revese situation, if by reducing cost by cutting taxes the price actually fell, demand would rise and bring the price right back up to where it is now. You seem to think there is a disconnect between the price that consumers actually pay and demand. If that were the case, it's a great argument for nationalizing the oil industry.

    If the tax was reduced and the price went down the demand would go up and bring the price right back to the current level.

    I don't doubt that cost is a factor in profitability at the fair market price and you could argue that if the cost was lowered making Oil more profitable the incentive to bring more supply to the table would probably reduce the price dramatically if in fact more oil could be brought to the table. That's assuming the actual Oil reserves weren't controlled by a Cartel that is more and more freezing the Oil companies out of the equation. That also assumes as Press is arguing that they aren't fully pumping every drop they can.
    Last edited by Winstonbiggs; 05-01-2008 at 09:03 AM.

  18. #18
    [QUOTE=CTM;2518882]No.

    The simpliest answer is really the drastic fall of the dollar. To believe Hubbert correctly predicted the oil peak 30 years ago is a little more complicated that what is staring you right in the face. No?

    Oil is traded in dollars. The dollar is worth almost 25% less then it was 2 years ago.

    The next easiest solution would be investor bubble. We had a stock market bubble and then a real estate bubble and now a commodities bubble. Gold has run down recently but as of a month ago, Gold had seen FASTER growth then oil over the last 12-18 months. It's well known that when the dollar is weak, investors hedge by putting their money in commodities. More investors = higher price.

    To me, applying Occam's Razor wouldn't suggest Peak Oil at all[/QUOTE]


    Why is oil up against gold as well as the dollar in dollar terms?

  19. #19
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    [QUOTE=Winstonbiggs;2518904]Why is oil up against gold as well as the dollar in dollar terms?[/QUOTE]

    They've begun to seperate of late(Gold came off the $1000 mark, OIL continued through $100) but long term they follow each other...

    Why have they sperated in the short term? There's a lot of reasons including unrest in ME, the fact that oil is in the news constantly brings more investors looking to cash in, lower costs associated with trading OIL (Gold has a very high margin and I believe the highest cap gains tax to cash in) and the fact that demand has gone through the roof with China and Indy joining party..

  20. #20
    [QUOTE=CTM;2518936]They've begun to seperate of late(Gold came off the $1000 mark, OIL continued through $100) but long term they follow each other...

    Why have they sperated in the short term? There's a lot of reasons including unrest in ME, the fact that oil is in the news constantly brings more investors looking to cash in, lower costs associated with trading OIL (Gold has a very high margin and I believe the highest cap gains tax to cash in) and the fact that demand has gone through the roof with China and Indy joining party..[/QUOTE]

    From what I gather long term about 14 to 15 barrells of oil buys an once of gold, right now it's below 8. Hard to tell if this is a short term trend?

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