Squaring the Culture

"...and I will make justice the plumb line, and righteousness the level;
then hail will sweep away the refuge of lies,
and the waters will overflow the secret place."
Isaiah 28:17

08/04/2008 (1:29 pm)

Pelosian Openness

The argument supporting House Speaker Nancy Pelosi’s Mission to Save the Planet From the Oil Barons came out on the Sunday talk shows this weekend, where she apparently irritated George Stephanopolous by refusing to answer his direct question concerning the matter of offshore drilling: “Why not allow debate and a vote?”

Stephanopolous correctly referred to Pelosi’s own words regarding the openness and fairness of the House procedure that she intended under her leadership:

STEPHANOPOULOS: When you came in as Speaker you promised in your commitment book … that “Bills should generally come to the floor under a procedure that allows open, full, fair debate consisting of full amendment process that grants the Minority the right to offer its alternatives.” If they want to offer a drilling proposal, why can’t they have a vote?

PELOSI: They’ll have to use their imagination as to how they can get a vote and then they may get a vote.

In other words, Pelosi is saying of voting on offshore drilling, “Good luck with that.”

Though Pelosi never actually answered Stephanopolous’ question, the correct answer seems to be that she considers her own position on the offshore drilling to be the only permissible position, and discussion a waste of time. That would not be a sufficient reason unless it were also the case that she felt sure she would lose if it came to a vote.

So, let’s review the flurry of arguments she raised during the interview.

1) We should release the strategic oil reserve.

Perhaps. This is not in any way a solution, but a one-time, temporary, local distortion in the market that will hide the real economic conditions for a while. Personally, I think it would be a misuse of the reserve, which is there to protect us from interruptions in the supply of oil due to sabotage or acts of God. The Energy Policy and Conservation Act does allow partial draw-downs of the reserve due to economic hardship arising from unusual and apparently long-term world shortages, but only for 60 days. We should regard the Strategic Oil Reserve as a small token to be offered as part of a larger strategy for relieving the shortage; I wouldn’t object to it too strongly as a measure in addition to allowing offshore drilling to commence, though I do think it’s a mistake.

I object because releasing the strategic reserve constitutes a form of subsidy — it permits the oil processors to purchase oil at less-than-market prices. The government would then turn around and replenish the reserve at current market prices. The government thus absorbs the difference between the asking price and the market price. This is unsound policy for the long haul; that’s why it’s primarily there for emergencies.

We should note — and I will, when it comes up below — that every argument Pelosi raises against drilling for oil, applies in precisely the same way to the act of releasing the Strategic Oil Reserve. She’s not being consistent. In particular, note that the Strategic Oil Reserve contains roughly 1/6 of the low-end estimates for what we’ll get out of ANWR, which Pelosi and the Progressives said was not enough oil to make a difference. I guess they were lying to us; what a surprise.

2) Drilling will not have any effect for 10 years, and will reduce world prices by $.02 when it does have an effect.

She is saying this 2 weeks after President Bush’s announcement of his removing the Executive Order banning offshore drilling forced the price of oil to drop $20/bbl in less than a week, so the best thing you can say is that Pelosi is being silly. Economists have known since the 1930s that expected future increases in oil supply affect the price immediately. And declaring open season on the development of 80 billion barrels of known reserves damned well will make a difference in the world supply.

3) It’s a single-shot solution, saying “Let’s have more of the same, failed policy.”

My first reaction is that I don’t want to hear “It’s a single-shot solution” from anybody who advocates releasing the Strategic Oil Reserve as a solution. That’s just blatant hypocrisy.

But beyond that, Pelosi is obviously playing partisan politics here, and she’s lying through her teeth. It’s not the same policy; offshore drilling has been banned since the 1970s. And it’s not a single-shot solution; it’s an attempt to affect world crude supply while we’re working on other, long-range alternatives. No alternative is going to significantly affect world energy usage patterns in any time period less than about 20 years; we can make ourselves far less reliant on foreign sources in the meantime.

4) Bush and Cheney are oilmen, and the Republicans in congress are just doing the “war dance of the handmaidens of the oil companies.”


Bush ran a small oil company and has no significant holdings in the industry that we know about. Cheney was President of an equipment company, not an oil company, and has no significant holdings in the industry that we know about. The claim that they’re not acting in the best interests of the nation is an ad hominem fallacy arising from the very worst sort of conspiracy lunacy, without a single shred of evidence supporting it.

False accusation violates the 9th commandment, and is just as evil as violations of the 1st (idolotry), 6th (murder), 7th (adultery), or 8th (theft) commandments. I’m sick to death of hearing Democrats do it as though this were some little game. It’s evil to falsely accuse.

More than 70% of the nation thinks drilling our own resources would be a good idea. Seventy percent of the nation is not being paid by the oil companies. Let’s get real.

5) Oil companies already own leases on lands, and are not drilling them. Now they want subsidies.

Pelosi must have repeated the word “subsidies” five times during the interview. I had to think about what she was talking about, because nobody has proposed any subsidies that I know of. It finally occurred to me that she considers it a subsidy to allow the oil companies to drill on federal lands.

This is another outright lie. Pelosi knows the difference between a lease and a subsidy. There is no subsidy involved. Oil companies pay for the use of the land.

As to the land already leased, the oil companies claim that developing the oil under that land is prohibitively expensive, and they’re telling the truth. That’s saying something: Chevron has a project in the Gulf of Mexico that requires them to submerge drilling equipment under a mile of water (imagine the pressure at that depth!) and then drill down another mile below the Gulf floor. The project is costing them in excess of $1 billion in up-front costs, before they obtain a drop of oil. If they’re doing that, but they’re saying that certain on-shore projects are cost-prohibitive, I think we can imagine the sorts of engineering challenges they face for those on-shore projects.

Besides, tell me how this makes sense: “We don’t want the oil companies to drill for oil that’s cheap and easy to obtain because we know they already have oil resources that are expensive and hard to obtain.” Why should US oil companies, alone among oil producers around the world, be forced to develop the expensive resources first? I argue wholeheartedly against subsidizing US industry in their competition against foreign companies, but I don’t see the sense in deliberately crippling US producers in their competition against the rest of the world. But that’s what Pelosi is arguing that we should do. It’s simply insane.

I’ll deal with the last two objections together.

6) Nothing less is at stake than the planet and the air we breathe. We have a planet to save.


7) We have to tell the private sector which alternatives to invest in.

Earth to Pelosi: you’re not that important, sweetheart. The future of the planet is not in your hands. My God, the arrogance…

Even if she genuinely believes that human burning of fossil fuels endangers the planet and our breathable air — which makes me think she’s too easily swayed by bad science — the incremental contribution of the US’ new oil to that problem in the next 20-30 years will not tip some precarious balance in the direction of total destruction. It’s taken the entire industrial revolution for the human race — all of us — to produce enough CO² to increase atmospheric CO² by 40%. What we’re adding is not that huge a percentage increase to speed that up by much, especially considering that foreign producers are already starting to develop resources off our coasts.

What Pelosi believes is that if we allow drilling to commence, that will decrease the incentive for US companies to switch to alternative energy sources. She actually says this in the interview, if you’re paying attention: “Allow them to drill in areas that are protected now, instead of where they’re allowed to drill, is to diminish all of the opportunity that we have for an electricity standard for our country.”

This admits that high oil prices are a Democratic party strategy, which in turn suggests that their opposition to offshore drilling comes, not from the disingenuous objections that drilling won’t work, but from a near-certainty and fear that it will work. There’s no disincentive if drilling doesn’t produce enough oil to make a difference. This, finally, is the truth behind the Democrats’ opposition.

It’s nonsense, of course. Everybody knows that oil is a finite resource, and dozens of major investors have been funding serious research into alternatives for decades. Those investors include the oil companies, who seriously do not want to become the equivalent of buggy whip manufacturers when the world switches away from fossil fuels. They already have very powerful incentives to research and market alternatives. They don’t need wild-eyed Granny Nancy to scold them into action, and they certainly don’t need her setting their policy for them; she wouldn’t qualify for upper management in any major corporation worth a damn.

The beauty of refusing to subsidize any particular alternative is that it retains the incentive to produce better and better alternatives, and to allow solutions that are optimal for each application. Wind power may make sense in Texas and North Dakota; it makes little sense in Vermont or Mississippi, though. Geothermal power may make sense in Idaho and Wyoming, but never in Texas or North Carolina. If the government subsidizes any particular solution, though, research money flows into that solution for everybody, and away from all other alternatives. Allow the money to go where the opportunities lie, and we’ll get the best solutions in the quickest possible time — and we’ll get them as soon as they make economic sense, and in the locations and applications where they make the most sense. Government subsidies produce solutions that cost everybody more because they don’t make economic sense.

Vox Popoli (the voice of the people) is not always right. In this case, though, more than 70% have the right idea. While we’re perfecting the future, we need to produce what oil resources we have. It will make an immediate difference, and it won’t hurt the environment much. Let’s get behind Congress’ rebellion and force Speaker Pelosi to do her damned job and allow the representatives of the people to vote on the strategy that she knows the people prefer.

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August 7, 2008 @ 2:24 pm #

Good post on Pelosi’s small mindedness!
This refusal to drill is the one ISSUE that will turn this election away from the democrats….their will be hell to pay for Pelosi, Reed and the moron Media!

May 1, 2010 @ 1:55 pm #

[…] be missed altogether. I recall a little less than 2 years ago, clueless liberals in Congress were wondering out loud why oil companies needed leases on offshore oilfields when they already held leases on millions of acres, and did not believe it […]

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