Red Clay Citizen

Li'l Nukes: Greens will Freak Over This

Domestic power plants of the future? Holy smokes - it just might happen.
-Max Borders

Oil Supply - Conflicting Numbers

Anti-energy lefties dutifully recite the liberal talking point that allowing for offshore drilling in the US won't have any appreciable effect on oil and gas prices. Nancy Pelosi went so far as to describe as a "hoax" any notion that offshore drilling could bring down the price of gas.

The theory goes that there simply isn't enough oil available off the US coast to affect prices in a global marketplace. As this Boston Globe article states:

"But in the best-case scenario, Kaufmann said, the United States could only produce an additional two to four million barrels of offshore oil a day - not enough to shift the global supply-demand balance in a world market that now consumes about 86 million barrels a day and is growing fast."

OK - so a change of 4 million barrels per day will simply have no affect.

Tell that to people actually bringing oil to the world market. This NYT article describes how OPEC members are planning on cutting its oil production in an effort "to stem a rapid decline in oil prices in recent weeks."

Because, as stated before, 4 million barrels a day added to global supply will have no affect on pricing, surely OPEC will restrict production by at least 8-10 million barrels a day if they want to have an effect on prices, right?

Wrong.

"OPEC producers would effectively reduce their overall production by 520,000 barrels a day."

The announcement alone had an immediate impact on oil prices:

"Oil prices traded electronically in New York jumped $2 a barrel after the decision."

So, we are to believe that an additional 4 million barrels a day will have no impact on prices, while those actually bringing oil to the market recognize that a supply reduction of only half a million will impact prices.

Why Drill in N.C.?

Policy analyst and RCC blogger Max Borders answers in this video.

Drill Here, Drill Now: Rader Dead Wrong

In "N.C. drilling is no solution" Doug Rader of Environmental Defense rehashes a number of popular energy myths.

First, he says "drilling for oil off North Carolina's coast will not reduce costs at the pump. Anyone who says so is flat out wrong." I say so. I'm not wrong. Here's why: the prospect of new supplies - from N.C., Colorado or ANWR - will signal speculators to change their investment patterns based on these expectations. Because futures markets determine the price per barrel - which has direct bearing on price at the pump - drilling domestically today could lower price significantly--today.

Then Rader asserts: "potential for significant quantities of liquid petroleum in the Southeast is quite low." If the potential is so low, oil companies won't drill. So Why should he be concerned about lifting any bans. Profit-potential ultimately guides drilling.

What about the N.C. fishing industry? The coastal environment? We need only to look at other states, such as Alaska, Gulf States and other states with offshore industries. Of course, Rader offers no proof at all that platforms harm fishing or the environment. Unsubstantiated claims do not reasoned discourse make, and the lack of offshore oil spills during Katrina can be a guide to the risks of offshore oil in N.C.

Finally, Rader argues "North Carolina should invest in innovative energy alternatives." By "invest" he means subsidize. By "N.C." he means you. Rader wants you to pay ever-higher home energy rates for non-cost-effective (failed) energy sources like windpower, which - by the way - have nothing to do with fueling your car. Such alternatives are unreliable, expensive and require massive subsidy by taxpayers.

Rader passes over the Eastern N.C. jobs that won't be created if we continue with the status quo. Worse, his radical environmental agenda will make us all poorer in the long run.
-Max Borders

Why We'll Never Run Out of Oil

Don Boudreaux is on a roll, evidently. Here, he explains why we'll never run out of oil. This excerpt, pistachio example from Russ Roberts, goes far in explaining the insights of the late Julian Simon, whom politicians and peak-oiler routinely ignore.

My colleague Russ Roberts explains why in his book The Invisible Heart. Imagine, Russ says, a room full of pistachio nuts. You love pistachios and can eat all that you wish as long as you throw each empty shell back into the room whenever you eat a nut. You might suppose that you'll eventually devour all of the nuts in the room. Their number, after all, is finite.

But some thought reveals this conclusion to be, well, nutty. At the start it's easy to find pistachio shells containing nuts. The more you eat, though, the more difficult it becomes to find uneaten nuts among the increasing number of empty shells. Eventually, it will not be worth the time and effort required to search amidst the empty shells for the relatively few remaining nuts. You'll voluntarily leave uneaten pistachios in the room.

And so it is with oil. As we continue using oil, getting more of it becomes increasingly difficult. This increasing difficulty of finding and extracting oil is reflected in its higher price -- a phenomenon that prompts consumers to consume oil more carefully and prompts producers to explore for alternatives.

That we'll never run out is counter-intuitive. Notice their emphasis on price signals. Prices, rich with information and built-in incentives, will carry us to alternatives. Not central planners and Manhattan Projects funded by tax dollars.
-Max Borders

T. Boone Pickens ... Central Planner?

A slice of wisdom from Don Boudreaux, writing the WSJ in response to T. Boone Pickens whose convertion to voodoo economics seems complete:

Crusading for a national "energy plan" and upset that Holman Jenkins isn't on board, T. Boone Pickens asks rhetorically: "My father used to tell me that a fool with a plan is better than a genius with no plan. So I ask, what's Mr. Jenkins's plan?" (Letters, Sept. 2).

Contrary to Mr. Pickens's assumption, an economy is not simply a gigantic business firm.  An economy is both incomprehensibly more complex than is even the largest multinational corporation, and it has no specific, overriding purpose comparable to a firm's goal of maximizing profits - a purpose by which the performance of each employee and each investment decision is relatively easy to evaluate.  So while plans and some measure of central direction make sense for firms, these are poison to economic growth.  They prevent the on-going decentralized experimentation from which spring not only progress that is unplanned, but progress whose details could not have been foreseen before they actually materialize.

The Soviet Union famously had plans for its economy; the United States did not.  Which country was the fool?

This whole idea of successful businessmen like Pickens, Mitt Romney or Warren Buffet earning the right to "run" an economy because they could run a business is dangerous and false. It would be akin to arguing that because the lion is the "King of the Jungle," he should regulate the activities of the rest of the ecosystem.
-Max Borders

Durham Man Puts Blind Faith in Politicians

In response to my published letter to the N&O, Clifford Marshall of Durham felt compelled to write this response:

"I was amused by the Aug. 14 letter "Gasoline is still king." I would normally laughingly dismiss a screed such as this, which totally missed the point, except for the part about public funding of solutions to the current, and impending, energy crisis. Truth be told, our only salvation is a government-led effort to discover the best alternative (how about electricity?) to our "most cost-efficient method of running our vehicles," which is about to be depleted way sooner than any of us can even imagine."

Between failing to describe how my letter "totally missed the point" and his completely false conclusion (proven oil reserves are at the highest levels in history, and will only continue to rise as technological advances make more oil accessible) he proceeds to pen a phrase that should send a cold shiver up the spine of liberty-lovers everywhere:

"Truth be told, our only salvation is a government-led effort..."

Truly frightening.   

Brian Balfour says "Alternative" means Not Economical

In this letter to the N&O. A sliver:

Seems if it were so patently obvious, energy entrepreneurs would be flooding the marketplace with affordable, viable alternative fuels by now. The reality is, in spite of more than a decade of effort and billions in taxpayer subsidies devoted to alternative fuels, oil-based gasoline is still the most cost-efficient method of running our vehicles.

Recycling Scam: Max Borders on Tara Servatius

Max Borders explains why recycling is either waste, theft or both on WBT Charlotte - Tara Servatius.
-Max Borders

Progressives & Climate Change: All Pain, No Gain

Progressives and politicians who support carbon taxes, renewable subsidies and any other climate "mitigation" measures have no plans based in any rational cost/benefit analysis. Consider this slice of sanity from Robert Ferguson...

Got that? Only 31 days for the Chinese to make up N.C.'s emissions if we shut down our state to zero carbon emissions tomorrow. I'd say something about putting that in your pipe and... but that wouldn't be carbon neutral. (Then again, it's really not about the environment at all, but wealth redistribution.)
-Max Borders