A Careful Look at Issues

Bill O’Reilly has been on a rampage recently complaining that because oil supplies are now ample, prices should be low. He’s had a couple of guests try to explain it to him, but he’s not one to sit still for a long explanation — or actually for a short explanation either. There’s not much chance Mr. O’Reilly will read my explanation, but I suspect many other people have similar misunderstandings so I’ll go ahead explaining anyway.

Wind and solar power are expensive, realistically four to six times the cost of conventional energy sources. If we are going to convert to electric cars we will need lots of energy to make the batteries for the cars as well as to charge them. In a separate category, the global warming scare tries to impress upon us the need to avoid fossil fuels immediately for fear we all fry by 2010, or whatever the current date of doom. Underneath these discussions is the question of how much oil is left. When the oil equivalents like oil shale are counted, we have about 300 years.

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Poe wrote, “Once upon a midnight dreary, while I pondered weak and weary, Over many a quaint and curious volume of forgotten lore.” I’ve done that too, in my case trying to figure out my electric bill. The cheapest electricity is from hydroelectric power, a couple of cents per kilowatt hour. Electricity from coal is perhaps four cents, from gas or nuclear around five to seven cents. But here in California, a small allotment of electricity is billed at around eleven cents, then rates rise rapidly to over forty cents. How are the astronomical rates achieved? It’s hard to figure, but when all the costs of green energy are included, a picture starts to emerge.

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The Gulf oil spill is producing two crises. The obvious one is the disaster with coastal fisheries, but it poses an ideological crisis as well. For liberals, government is supposed to be the solution to all problems. The oil spill is a big problem. So if the government is impotent in solving it, what does that say about the possibilities of government? If the oil spill is a problem that government cannot solve, might there be other such problems? That thought is too horrible to contemplate

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It’s a straightforward observation: when government is presented with a problem, there is a strong tendency to use some form of rationing as a major part of the solution. We see this in health care, water supplies, electricity, and many other aspects of government regulated or government-run operations. It’s is a reasonable to unexpected emergencies, like World War II shortages or hurricane interruptions, But it is an unreasonable response to chronic problems. So why is it the preferred tool? I think it is because it does not require long term planning, it enhances government authority, and it perpetuates an illusion of fairness.

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There is renewed interest, and actual progress, in building new nuclear power plants in the United States.1 A news broadcast last nigh covered plans to build a new plant near existing ones on the Chesapeake Bay. The broadcasters provided an opportunity for a spokesman from the Union of Concerned Scientists to opine that such a power plant could produce an incident like Chernobyl. He specifically claimed that a loss of coolant would result in a spread of nuclear material just like Chernobyl. This claim is nonsense.

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Bill Moyers, the resident socialist on the U.S. Public Broadcasting System, claimed that private water companies should be seized on the grounds that water is too important to be left to private enterprise. I am arguing the opposite, that we would be better off if as much of the market for water was privatized as possible. I am granting that some aspects of water supply development and delivery are better left to government right now. Nonetheless, the government should take positive steps to expand private markets.

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Peak oil theory is that oil production will not just peter out, it will fall catastrophically starting right now, and that no alternative energy source will arise to take its place. The result will be inevitable disaster, so they say. A book advocating peak oil theory starts by erroneously begins with a false application of the concept of a closed system. It’s worth setting straight.

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The main objection to developing the oil resources in the Arctic National Wildlife Refuge (ANWR) is the potential impact on the Porcupine Caribou herd that migrates through the area. The arguments are made in terms of broad generalities, along the lines of “caribou are in the same area, so they are threatened.” If one tries to quantify the threat, is turns out that perhaps 1% of the herd might be impacted in some way, but the actual reduction in the herd size is probably a good deal less.

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There is plenty of oil in offshore areas already leased to oil companies, so why don’t the oil companies just go get that oil rather than ask for new leases. The reason is that the current price of oil is not high enough to make it profitable.

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