« Toilet Seats | Main | The clashing of civilizations is nothing new »

February 22, 2006

Thanks Dilbert

This week's Dilbert comic makes fun of our silly attempts to reduce our dependence on foreign oil.

This nonsense also came up Bush's most recent State of the Union Address.

Lowering the demand for oil would lower the price for oil. This would encourage the highest cost producers to leave the market. We are not the low cost producers of oil, no Our allies, the peaceful, democratic, relatively well-behaved nations of the world.

The middle east has the lowest cost of oil extraction. Saudi Arabia can produce for as little as $1 per barrel. Another unfriendly petro-regime, Venezuela can extract for a mere $2 per barrel. US oil companies must make an average of $8.60 to cover the costs of extracting a barrel of oil.

Reducing our dependence on foreign oil would actually require policies that increase the price of oil, not lower it by decreasing demand. However, these reductions in consumption (and price) might still have a net benefit. By reducing the revenues of our enemies, even if we don't reduce their output we might weaken them. The only question is if we are doing greater damage to ourselves to archive it.

****State of the union link fixed to point to 2006 SOFU***

Posted by OneEyedMan at February 22, 2006 4:13 PM

Comments

You wanted comments…

I understand most of the arguments that are laid out about how if the US does not buy the oil then someone else will and whoever that someone else is will be funding our "enemies". I have a couple questions.... (First fix your link to the state of the union from this year instead of from 2003)

1. Are we to assume that Bush was merely talking out of his ass when he made his state of the union address? I have often been faulted for declaring that Bush is talking out of his ass about things, but for him to come out and say that we are addicted to oil and that we need to change our patterns of behavior seems like he might have more information than we do or is this simply another case of him pandering for approval ratings?

2. Is it not a good idea to have our country working towards a cleaner source of energy?

3. At what point do we have to make a decision that is not purely economic about our use of oil versus the fact that it’s bad for the environment and expendable? (I have a feeling you will say never)

IH

Posted by: InfiniteHippo [TypeKey Profile Page] at February 23, 2006 10:28 AM

1) He is worried about the money we supply to our enemies through the mechanism of paying for oil. Reducing the oil we buy might not reduce the amount of oil they sell, but it might reduce the money they get. Even if it does not (because demand by others grows faster than we shrink our demand) it will reduce the amount we give them, which might have some moral weight. But yes, I also think this is political pandering.

2) I'm not sure that whatever we'd replace oil with would be cleaner. Domestic and Canadian oil have their own environmental costs, as do Coal and nukes. Expensive hardware used to make hybrid vehicles may save on some oil, but that's money that can't be spent on cleaner fuels, filters on smokestacks, buying land to make public parks, and aid for the international poor. Which brings us to 3...

3) Economics is about recognizing opportunity costs. As a moral matter, man owns the earth and it exists for our sake. Nature has value only so far as it is a means for pleasing, testing, and advancing man. Within that context a clean environment (as well as many other environmental policies) has value, and reducing how much oil we use may be the best way to spend our money. But maybe it is not.
China is the source of almost 25% of the smog in California.
http://blogging.la/archives/2006/01/from_china_with_love_smog.phtml

Why use scarce resources to try to use less oil just to have the Chinese use more and dump the resulting pollution on us? Wouldn't that money be better spent on those who dwell in the dust or even on environmental issues where they would actually make a difference?

Posted by: TheOneEyedMan [TypeKey Profile Page] at February 23, 2006 3:38 PM

Post a comment

Thanks for signing in, . Now you can comment. (sign out)

(If you haven't left a comment here before, you may need to be approved by the site owner before your comment will appear. Until then, it won't appear on the entry. Thanks for waiting.)


Remember me?