TCS Daily


Snake Oil Policy

By Ben Lieberman - September 12, 2006 12:00 AM

Washington has hundreds of pending bills dealing with energy, and it's difficult to predict which ones will move in a Congress under pressure to do something about $3-a-gallon gas before the November elections (even though average prices have recently fallen by nearly 20 percent from that mark). Unfortunately, most of these proposals are anti-market and pro-big government and therefore likely to do more harm than good.

Here's a rundown of the worst of the worst:

1. Oil Rationing -- Politicians routinely complain about $3 gas and then offer up "solutions" likely to raise the cost to $4 or even $5. One such idea is to cap the amount of oil Americans can use. The provisions vary, but most would require the nation to sharply reduce petroleum consumption over the next decade. Proponents claim that a tough limit on oil use will lead to the development of petroleum alternatives -- kind of like banning the use of pharmaceuticals in the hope that herbal remedies will make big strides.

In reality, by instituting a quota we would be doing to ourselves what the al Qaeda terrorists who have attempted to blow up Saudi oil facilities want to do to us -- reduce the quantity and raise the price of oil to unprecedented levels. The only realistic chance rationing has for reducing the price of oil is if this misguided policy sparks a big recession -- a very real possibility.

2. Alternative Energy Mandates -- The flipside of mandating less oil use is mandating more alternatives to oil, and proposals to do so are included in several bills. Of course, replacing oil would be great, if it is with something better that outcompetes it, but not with something that's so bad that the feds must force it on the public. The sponsors of alternative energy mandates always miss this rather obvious point.

Last year's energy bill contained the first such mandate, requiring that 4 billion gallons of corn-based ethanol be added to the nation's gasoline in 2006. Thus far, it has been a disaster. Ethanol costs considerably more than gasoline (If it cost less, it would have been in wider use long before the government required it.) In fact, the mandate is the second biggest reason, behind rising oil prices, that this year has been so painful at the pump. Nonetheless, several bills seek to double or even triple the current ethanol requirements.

Beyond corn, many other agricultural products, ranging from rice husks to grasses to soybeans, are also being considered as materials for making ethanol or diesel fuel. Most of these are even costlier than corn ethanol, and the bills requiring their use will benefit the agriculture sector at the expense of the driving public. Indeed, the misuse of energy concerns as an excuse to pile on more agricultural pork is a common theme among many of these proposed alternative fuel mandates.

3. Windfall Profits And Other Taxes -- If one were to pick an issue and an administration that exemplified Washington at its most inept, energy policy under the Carter administration would be a very good choice. Yet many Carter-era energy ideas are being resurrected. The windfall profits tax is perhaps the worst. It's a tax levied on oil producers when the price exceeds some predetermined level. A pending proposal would impose a 50 percent tax on the price of oil above $40 per barrel. This tax would be levied on top of the 35 percent federal corporate income tax and other taxes imposed on the industry.

When last tried by Carter in 1980, the windfall profits tax proved counterproductive, discouraging domestic oil production while increasing imports from OPEC and other foreign suppliers not subject to the tax. According to a 1990 Congressional Research Service study, the windfall profits tax "reduced domestic oil production from between 3 and 6 percent, and increased oil imports from between 8 and 16 percent." Reagan repealed it in 1988, but now it may make a comeback.

Various other tax hike proposals are nearly as misguided. Though there is populist appeal in raising taxes on big oil at a time when everyone seems to hate them, doing so would do nothing to lower the price at the pump. The price of oil and gasoline is set by market factors, not corporate tax rates. And over the long term, higher taxes would serve to constrain supplies by discouraging investments needed for expansions. We want an oil industry that produces more, not less, in the years ahead, and punitive tax hikes most definitely won't get us there.

4. Price Controls and Price Gouging Laws -- As with the windfall profits tax, these measures likely will make matters worse.

The idea behind price controls is simple enough -- the federal government sets a price for gasoline that is below the market price. But price controls have never worked. Washington can't repeal the law of supply and demand, and any attempt to do so will only cause harm. The market price of gasoline is the price where supply and demand come into balance. Right now that price is high, but that is the market reality. Trying to force the price down below this level means that demand will outstrip supply at the mandated price. That's why price controls in the 1970s invariably caused shortages -- gas lines, rationing and stations running out. Most Americans would prefer that gas be available at the market price than unavailable at a lower price.

More likely to become law than price controls are proposed restrictions on so-called price gouging. These measures feed off consumer anger over high gas prices and suspicion that oil industry misconduct is somehow to blame. But existing antitrust laws already forbid any company from engaging in monopolistic practices or colluding with competitors to suppress supplies and raise prices. A recent Federal Trade Commission investigation into recent gasoline price increases found no evidence of industry violations, concluding that "the evidence collected in this investigation indicated that firms behaved competitively." However, new price gouging bills would vastly expand the definition of illegal conduct, effectively making any price increase, no matter how well justified by market factors, a potential target for criminal proceedings.

Such price gouging restrictions may act as de facto price controls. Wholesalers and retailers could be legally liable if they charged the market price and thus would hesitate to do so. If this happens, it could create shortages similar to those caused by outright price controls.

5. Raising Fuel Economy Standards -- Congress' best ideas on energy focus on expanding domestic supplies. Proposals are pending to open up the Alaska's energy-rich Arctic National Wildlife Refuge, as well as the 85 percent of America's offshore areas that are currently off limits. One thing that has held up these efforts before is the complaint that they're not "balanced" -- that they only deal with supply and fail to suppress energy demand. This has led some lawmakers to call for tightening federal Corporate Average Fuel Economy (CAFE) standards in any energy bill that expands supplies.

But do the American people really want or need the federal government dictating their vehicle choices? Anyone who wants a fuel-efficient vehicle is free to buy one today, and there are many such models to choose from, including a growing number of hybrid models. And evidence indicates that the public is already responding to high prices, both by cutting back on discretionary driving and by purchasing more fuel-efficient vehicles. It's hard to imagine how consumers would benefit by having the government step in and mandate fuel-efficient vehicles, especially given the safety concerns over smaller and less crashworthy vehicles that a heavy-handed CAFE increase could require.

Thus far, the congressional responses to $3 gas have been long on federal intervention in energy markets, grandstanding against big oil companies, repeating the energy policy mistakes of the past, and intruding on personal choice. Other than a promising offshore drilling bill, hardly anything worthwhile has much chance of passing before the elections. But given the desperation of incumbents fearing an angry electorate, any of these bad ideas could end up as law.

Ben Lieberman is senior policy analyst in the Roe Institute for Economic Policy Studies at The Heritage Foundation.

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74 Comments

Energy cost
What we pay at the pump is not the whole cost of our gasoline consumption. Combustion products pollute our air. Importing oil distorts our balance of trade and our foreign policy. Californians recognize this and have repeatedly voted for policies that increase the immediate cost of gasoline in order to reduce the total cost.

Things that have been successful: mandated emmissions standards (and catalytic converters), fuel economy standards (to the extent they were not undermined by the SUV exemption). Lessons learned: legislated conservation and anti pollution measures can be popular and successful, industry grousing (the Ben Lieberman post being a choice specimen) may be ignored.

Legislated conservation
to be effective is nothing more than a fancy name for rationing. It is never popular. Driving up the cost of energy by definition hurts the poor the worst, and hence is regressive. Your ideas are precisely what led California into its energy supply hell.

Actions Congress Should Take
Transportation fuel is critical to our economy and our security. It is also a monopoly market. Security and trade (oil as a monopoly transportation fuel) are enumerated federal government responsibilities. Yet this responsibility should not lead to the adaptation of Statist policies…especially ones that have not worked in the past. The appropriate federal response is to support expanded consumer choice…a “supply side” solution. The goal is to increase the supply of domestic oil and expand the supply of alternatives to oil. A few appropriate policies include:
1) Facilitate offshore and Alaska oil development.
2) Support alternative fuel research.
3) Provide targeted incentives to producers and consumers of alternative fuel products.
4) Redesign agricultural policy to encourage expanded and more efficient fuel production.
5) Eliminate/reduce tariffs on sugar and other products usable as fuels.

The federal government can help to expand consumer fuel choice. They should do their job and let the American consumer do the rest.

California Yep they have done great:
Not allowing new power plants to be built which give you:
- Brown/Black outs
- Having to steal power from other states so California stays “green”
Higher cost of living for everybody
Starting a police state dictating what people can drive or how they can live
o I love this; one reminds me of the good’ol days of Nazi Germany ?

And as for voting; they will vote for anything and everything.

Government needs to stay out of people’s cars. They can drive what they want. It’s a little thing called FREEDOM, but I forgot California does not believe in that. Just uniformity and political correctness.

externalities
Most externalities exist mainly in the minds of the insane.
While it is true that California has mandated polution controls that vastly exceed what the rest of the nation demands. California also has special circumstances. A city with a huge population combined with an inversion layer. Heck, in LA, they've been talking about regulating backyard grills, because of the problems with the fumes from 20 million grills.

As to CAFE, it's been proven that the only gasoline saved by this law, is from the 100,000 people who are no longer driving, because the law killed them.

Any law can be popular, if it is backed by sufficient lies.

I might note that LG didn't even attempt to defend most of the 5 points that Mr. Lieberman wrote about, he just declared it to be industry grousing.)

There's a reason why 100's of thousands of people leave California every year.
...

Liberals and ad hominem attacks
This is the third time today that I've gotten to point out the liberal tendency to dismiss any opinion they disagree with as nothing more than bought and paid for garbage.
To LG, it's utterly impossible that Mr. Lieberman has these opinions because they are correct from an economic standpoint. No, the only possibility is that he is paid to have these opinions by his corporate bosses.

What monopoly?
1) (more drilling) Agree 100%.
2) (alternative research) If it's cost effective, private companies will do it without any govt money involved.
3) (targeted incentives) ditto
4) (redesign ag policy) To the extent that getting rid of bad laws allows the private sector to become more efficient, I agree completely. Beyond that, companies have all the incentive to save energy that they need. Greed. (Every penny I save, I get to keep)
5) (eliminate tariffs) Agree 100%. Actually we should eliminate all tariffs, but that's another argument for another day.

Monopoly and Choice
“What monopoly”

When I buy fuel I have one choice…gasoline. That is monopoly…I am dependent on one and only one product to meet my fuel needs. It is equivalent to having only one beverage, or one brand of cereal, or one type of fresh vegetable to choose from when shopping at a grocery store.

When I visit a fuel station to procure fuel, I want to have choices…gasoline, ethanol, methanol, hydrogen, etc…I can then make a cost/benefit decision on what is best. Consumer choice is the engine of an efficient market, and is critical to addressing the security risk presented by US dependence on foreign oil controlled by our enemies.

Monopoly and choice
"When I visit a fuel station to procure fuel, I want to have choices…gasoline, ethanol, methanol, hydrogen, etc…I can then make a cost/benefit decision on what is best."


So make your business case and open a refueling station with all of those options. Apparantly though, responsible companies have alread made a cost/benefit analysis and will stay with gasoline until the business case for alternatives is a winner, not a loser.

that's not a monopoly
There are dozens of companies seeking to sell that gasoline to you. So there is no monopoly.

The fact that no other material comes close to gasoline in regards to it's usefullness as a transportation fuel.

You might as well complain that the automobile is a monopoly, since nobody is selling flying cars.

They do sell flying cars
they're called airplanes. Joking aside, taBonfils problem is that he wants "choice" in fuels but doesn't want to pay the premium for maintaining separate supply systems.

More to the point, look at the spread between the cost of production of gasoline and its retail price. Any competent microeconomic analysis shows it following a competitive, not a monopolistic or oligarchic price structure.

Umm there is in fact a flying car.
It is made by a company called Moller International and is called the Skycar.

http://www.moller.com/skycar/

It is in hover testing phase now and they are looking FAA cert in about 4 years

What?
"When I buy fuel I have one choice…gasoline. That is monopoly…"

That makes no sense. That's like saying 'When I want to get on the Internet I have one choice - a computer.' and ignoring the fact that there are multiple vendors for both computers and Internet connections.

What you are really complaining about is that no large company has decided to invest the huge sums of money to deliver you a product that is not competitive with existing products, requires huge outlays in infrastructure, and is dealing with a chicken and egg scenario (Why make hydrogen vehicles when nobody will buy them because there are no stations because there aren't enough hydrogen vehicles to support stations).

If you really want it, and think it's viable, start your own business.

Ask and You Shall Recieve
If a sufficient number of consumers demand fuel alternatives, the market will provide.

Out with the bad; in with the good
You picked some great policy failures to trash. Next it's time to talk about energy policies that would actually benefit us.

As much as I've tried to resist, the data on species meta-migration, de-glaciation and perma-frost melting has convinced me that climate change is upon us and that delaying its onset until we can get entirely off of fossil fuels is worth considerable expense. All the more reason to minimize the impact of the wrenching-at-best changes that such changes require.

- go all moonshot/manhattan project on non-fossil fuel energy.

- get greenhouse-gas-free nukes back on the table via speeding/simplifying approvals.

- raise the price of fossil energy by taxing it (e.g, excise taxes on oil, gas, and coal that increase by 50 cents/year for the next 10 years.) put the money into yes-i-know-it's-ridiculously-expensive transit and increased EITC to keep low income people from freezing to death in the dark.

- raise the price of fossil energy by cap-and-trading it.

So...
the earth is warming by a couple degrees that may or may not have any relation with human activities, so we should completely destroy our economy, put millions out of work, and spend billions/trillions on potentially worthless endeavors.

Sure, that sounds good.

Happily, I didn't propose that
Immediately reversing climate change (and assuming that greenhouse gases are the culprit) would be enormously expensive. It's worth noting that the money would mostly stay here...

But I proposed policies that are way short of that and would actually benefit us in lots of ways.

Most importantly, even if you don't buy anthropogenic climate change, you could pretty much justify my proposals on geostrategic grounds alone. They would vastly reduce our dependence on our non-friends/enemies' oil/gas supplies. I see no less-damaging way to do it. Producing more now just hastens the day when we do run out of our stock of fossil carbon.

But it's also worth consider the "be prepared" approach. I don't buy the "do nothing until you're 100% sure" approach that seems to be gaining favor in Europe, but the consequences of climate change are pretty enormous (10s of trillions at least), and worth a significant insurance policy. I'm just trying to keep the premiums as low as possible.

Actually I think you did.
You just don't want to believe it, or have no understanding of economics. These are the points you proposed.

"- go all moonshot/manhattan project on non-fossil fuel energy."

- So we are going to take large sums of money and have the government, essentially at random, pick some technologies and do R&D until we... ummm... get somewhere. This besides the fact that the government is the least efficient at getting R&D done, and that we my inadvertently stifle really good technologies.

"- get greenhouse-gas-free nukes back on the table via speeding/simplifying approvals."

- This one I'm with you 100%. Just do this an I think your goals will be reached.

"- raise the price of fossil energy by taxing it (e.g, excise taxes on oil, gas, and coal that increase by 50 cents/year for the next 10 years.) put the money into yes-i-know-it's-ridiculously-expensive transit and increased EITC to keep low income people from freezing to death in the dark."

- This is apparently where we will get all that money we plan to dump into the great R&D hole. In the process we are going to slam the breaks on anything that uses energy, which is everything. Less energy use means less economic growth, and most likely economic recession and depression. The EITC and transit options are just to waste more money that wouldn't be needed if we didn't take all the money away to begin with.

"- raise the price of fossil energy by cap-and-trading it."

- Once again all you are going to do is kill economic development. See above.

failure?
I would call my post "ad operam" (rusty Latin, probably wrong) rather than ad hominem. I attacked Mr. Lieberman's work (his post), not his character.

I dismissed his arguments as grousing because that's what I think they are. The first is straw man (no pending bills on rationing). The second is wrong (in my opinion) because it ignores externalities. I did not comment on the third, but I don't see why oil companies, as opposed to the American people, should benefit so from price increases and the windfall profits associated with them. The fourth is part straw man (nobody takes price control seriously) and part a twist on 3 -- oil companies understand that failing to meet demand can drive up prices and increase profits. The last is the only serious one, which is what my post addressed.

california
I forgot to say that the population of California is growing and property values are skyrocketing throughout the state. The electricity problem they had in the early Bush years seems to have been brought on by manipulation by evil capitalist corporations. Now, their occaisonal shortages on hot days are like those around the country.

Choice
"That makes no sense. That's like saying 'When I want to get on the Internet I have one choice - a computer."

If I am shopping for internet access, I can choose DSL, Cable, and wireless among others. I have the choice of multiple product types from which to select to meet my needs. When I shop for transportation fuel, I have one choice - gasoline.

I would quite pleased if the transportation fuel market were like the Internet market. In addition, Congress would not have as much reason to legislate price controls, rationing and new taxes.

gross failure
So what if there are no pending bills. Are you claiming that no liberals have pushed these ideas in recent days?
Do you honestly believe that people shouldn't attack bad ideas until after bills are proposed?

The externalities are being dealt with.

Why should the oil companies benefit from the windfall profits? How about. It's their oil. They went out and found it. They bought the drills and other equipment that extracted it.

If nobody takes price controls seriously, why do so many liberals keep bringing them up.

Regarding failure to increase demand. That only works so long as all oil companies agree to fail to meet demand. The problem is, the first company that meets the new higher demand makes bootloads of profit. So there is tremendous incentive to cheat. This is why OPEC has never been able to control output. There is too much profit to be made by cheating.

Try learning a little basic economics.

Why should oil companies lose money providing services that few customers want?
...

bad policies based on bad data
Climate change is always on us. A few hundred years ago we were in a mini-ice age, now we aren't.

In the last 150 years, the earth has warmed up by a whoping 0.6C degrees. At least half of that was caused by the sun getting warmer. Much of the rest was caused by land use changes.

Ran across an interesting fact today.
As everyone knows, greenhouse gases are logarithmic in their effect. That is, each additional unit of gas has less effect than did the previous unit.
66% of CO2's greenhouse potential was reached when CO2 reached 50ppm.
Doubling CO2s concentration to 100ppm gets us to 83% of saturation. About a 25% increase.
Doubling CO2 again to 200ppm gets us to about 91% of saturation. About a 10% increase.
Doubling CO2 again to 400ppm (we are currently at 380ppm)
gets us to about 96% of saturation. About a 5 percent increase.

If we were to double CO2 again, that would get us to 98% if saturation, or about a 2% increase.

Considering the last doubling only caused at most a 0.1 to 0.2C degree increase, the next doubling will only cause half of that.

Hardly reason to panic.

Glaciers, on the whole are not melting. The Antarctic and Greenland glaciers are in fact getting bigger. (And they have about 95% of the world's ice between them.)
The Arctic is near the end of the current warm phase of the PDO. When we switch back to a cool phase, the Arctic will cool. The Arctic is still cooler than it was during the last warm phase which ended in the 1940's.

If you will check your proposals, you will find that you did
You really don't think that a huge increase in gas taxes won't have an effect on the economy?

If you want to defund the arabs, the best way is to permit drilling in the arctic and continental shelves.

defunding arabs
We know that drilling will cause a decrease in oil prices.
We don't know if any of your pie in the sky schemes will ever work.

Actually, it's a pretty good bet that they won't. If there was any chance that they would, indviduals would already be falling over each other to invest in them.

Work with facts, not hyperbole...
Immediately reversing climate change (and assuming that greenhouse gases are the culprit) would be enormously expensive. It's worth noting that the money would mostly stay here...

Actually, it currently looks like the cheapest way to reduce atomospheric CO2 is to sprinkle iron oxide on the Pacific Ocean. Studies are currently being done on just how effective doing that would be. Of course, that is the easiest way to reduce CO2 levels, which should be done for reasons independent of global warming or cooling.

But the deepest darkest secret kept by the environmental ***** is that the primary greenhouse gas is...water vapor. The reason that (human caused) global warming didn't show up until recently is tied to air quality. Cleaner air means fewer pollution particles to serve as nucleii for water droplets in clouds. Clouds of course reflect sunlight back into space, while moist but cloudless air traps heat.

So the cheapest way to reverse global warming is to remove pollution controls. Oops! We could also "pollute" the Great Lakes again to increase algae growth.

Of course, neither of those approaches is something that I would recommend. Adding minerals, mostly iron, to the Pacific Ocean looks very doable, and as I said above, worth it just to decrease CO2 concentrations in the atmosphere. People and most other animals around today evolved to breathe air with a low (around 0.1%) CO2 concentration. (Or 100 PPM if you prefer to state it that way.) Of course, if we took the CO2 levels that far back, and kept the cleaner air, then we would have to worry about triggering a new ice age. But a target of 300 PPM max or so should be reasonable.

I used to be in favor of raising the CAFE requirements
I used to be in favor of raising the CAFE requirements, but I think it would be better to simply require promimently posting of mileage ratings in all ads for new cars.

This would create visibility (and competition).
This wouldn't cost anything.
This would allow people to be free to buy whatever car they wanted.

The costs aren't that high
The R&D work (government-funded, not government-executed) will never cost as much as say, farm subsidies, which money I'd gladly redirect to a much more useful purpose.

Of course, government money is a blunt instrument, but as my two examples show, can produce great results if non-randomly targeted. Since I'm the policy czar today, I'd have it work on things like sequestration as well as cost-reducing improvements in solar and nuclear, which are the long-term solutions.

Nukes: We have a uranium shortage ahead of us unless we convert to a Thorium or other non-trad fuel cycle, so I think it unwise to place all our chips on this, ergo solar.

In the process we are going to slam the breaks on anything that uses energy, which is everything. Less energy use means less economic growth, and most likely economic recession and depression. The EITC and transit options are just to waste more money that wouldn't be needed if we didn't take all the money away to begin with.As we have seen with the sulfur cap-and-trade program, free markets are extraordinarily good at reducing the pain associated with such changes. Yes, there will be economic costs, and they have to be balanced against the benefits. But insurance of any kind reduces growth, yet it's a price we willingly, albeit not enthusiastically, pay.

Even the new gulf finds won't free us from the ME
The fossil-carbon-intensive way to escape Ahmadinejad's clutches is to use the oil sands in Canada, the oil shale in Co. and Wy., and coal gasification, of which we have an effectively unlimited supply.

Shifting to those technologies would also increase costs, without the insurance and likely other benefits of de-fossilizing energy.

Even now, solar is increasing at 30-40%/year
Of course, the base on which the growth is occurring is trivial. Investment in solar is also growing quickly, and has become a Silicon Valley VC fad. Nukes are coming back (they never left really - we get 20% of our electricity from nukes today) and new designs and (later) new fuel cycles are going to return that source to 1st class citizenship in short order.

We call it R&D because we don't know what will work, or more accurately, what it will take to get it to work. The point of using the price mechanism to induce change rather than the idiotic proposals that the original author so rightly derided is that it enlists entrepreneurs and consumers in the fight using their highest abilities - innovating and consuming intelligently.

Profits, Consumers and Choice
Given sufficient demand and the right technologies, oil companies would be diversifying their product offerings and securing their long term future. If consumers do not demand alternative fuel options, then none should be provided by business or forced on the consumer by the government. But if Americans spurn the option of energy diversity, the shawdow of tyranical jihad will be upon us for decades to come.

Interesting, but probably not true
Climate change is always on us. A few hundred years ago we were in a mini-ice age, now we aren't.The default scenario is to adapt to whatever changes come. To prevent Miami and Manhattan from inundation by rising seawater, we use dikes or some other technology to cope. That's not insane, but the question is which is less costly. Dikes and all the other coping strategies will take a lot of money out of a lot of people's pockets that therefore won't grow the economy in productive ways.
In the last 150 years, the earth has warmed up by a whoping 0.6C degrees. At least half of that was caused by the sun getting warmer. Much of the rest was caused by land use changes.We can play numbers games all day. What I see in your answer is that you're spreading a short-term change over a long-period to make it appear uninteresting. The real issue is what has happened over the last 10-20 years as we have crossed over 250ppm CO2.
As everyone knows, greenhouse gases are logarithmic in their effect. That is, each additional unit of gas has less effect than did the previous unit.Hmmm. Even if you're right (I try to treat all assertions in this muddy area as hypotheticals, including my own) there is still the issue of threshholds. Below a certain threshhold, ice stays frozen, but not above it. The same with permafrost. I.e., small changes can have disproportionate effects. The effects I particularly have in mind is that the estimates of the outflow of fresh water from Greenland have tripled in the last few years alone, and the estimates of Siberian permafrost melt have quintupled.
Glaciers, on the whole are not melting. The Antarctic and Greenland glaciers are in fact getting bigger. Not what I'm reading, but again, assuming you're right, shouldn't we be seeing some spinoff effects? Sea levels are (very slowly) rising, not falling. The causes are alleged to be thermal expansion from rising water temperature and increased glacial melting. And don't we finally have a Northwest Passage for the first time since we hit these shores?
The Arctic is near the end of the current warm phase of the PDO. When we switch back to a cool phase, the Arctic will cool. The Arctic is still cooler than it was during the last warm phase which ended in the 1940's.Again and in conclusion, without denying your facts, what I'm proposing is a least-cost insurance plan that addresses the "what if you're wrong" case.

No Subject
Actually, it currently looks like the cheapest way to reduce atomospheric CO2 is to sprinkle iron oxide on the Pacific Ocean. I'm quite fascinated by the notion of bringing the other 70% of the earth's surface to bear on this problem. I don't know whether mineralization is necessary or sufficient or dangerous, but I think we ought to find out (R&D, anyone?)
We are long overdue to get serious on the task of changing the way we think of the ocean from "forest where we hunt (we call if fishing)" to "farm where we grow things". Aquaculture is growing so quickly on its own that its output should equal fish from fishing in 10 years or so and thereafter quickly make today's trawlers and longliners a mere footnote
So the cheapest way to reverse global warming is to remove pollution controls. Oops! We could also "pollute" the Great Lakes again to increase algae growth.It's not a dark secret, but it's more or less the equivalent of CAFE standards. Yes, it might have an effect, but its downsides cross it off any reasonable person's list.
But a target of 300 PPM max or so should be reasonable. It might be reasonable, but it appears that it's also triggering the climate change we have seen so far. Even the most aggressive proposals I have seen (Socolow/Pacala) leave us at 550ppm in 50 years, way more than now.

Is that why house prices are so high there? Cause everybody's leaving?
Don't think so. As crazy as California is, its assets are still pulling people in in large numbers.

It has more to do with massive restrictions on house building.
...

solar
the only reason solar is growing is because of the federal subsidies.
The problem with solar power is that it takes more energy to make a solar cell, than you can expect to get from it during it's lifetime.

costs
Compared to the schemes you have been proposing, shale oil is free.

CO2
For most of this planets history, CO2 levels have been way, way above what we have today. That's one of the reasons why plants respond so favorably to enhanced levels of CO2 in the atmosphere.

probabilities
Since there is zero chance of Miami or Manhattan needing dikes, we need not factor in the cost of building them.

I choose 150 years ago, because that's when the temperatures started rising. It's an interesting FACT, that the temperatures started rising before the CO2 did.

That the atmospheres response to rises in CO2 is a basic scientific fact. You can check it out in any science book.

Antarctica averages around 40 to 50 degrees below the freezing point of water. Do you really believe that a few tenths of a degree rise in temperature is going to melt much of it?

The Greenland glaciers have melted a bit during the last decade, but the interior glaciers have been getting thicker. When the PDO reverses, that pattern will also reverse. Again.

I'm not wrong. Check the science.
Your insurance plan is going to cost more than we can afford, even if I was wrong.

ads
When people care, the automakers do post the EPA mileage numbers. They are doing it on many ads right now.
When they don't, it doesn't matter how much you put those numbers in front of them, they will be ignored.

There are huge developments getting done
Either a) nobody's living in them, or b) the pop is growing steadily. (Hint: option a is wrong.)

Interesting claim. What's your source?
.

You want the high-deductible option, I guess.
Since there is zero chance of Miami or Manhattan needing dikes, we need not factor in the cost of building them.That's if your theory of climate is correct. If the global warmers are right, we have a problem. That's why I look at indicators like the ones I listed above.
I choose 150 years ago, because that's when the temperatures started rising. It's an interesting FACT, that the temperatures started rising before the CO2 did.Temperatures have moved up and down during that interval. That's why I don't try to read too much into average temp data, but instead look at things like glaciation, permafrost, and species meta-migration.
Antarctica averages around 40 to 50 degrees below the freezing point of water. Do you really believe that a few tenths of a degree rise in temperature is going to melt much of it?Unfortunately, average temp is not the interesting item. If you get x more hours each year during which the ice is melting (approximately, that the temp is above the melting point) and therefore x fewer hours each year during which ice is freezing, you can have sustained and even accelerating change.
Your insurance plan is going to cost more than we can afford, even if I was wrong.Well, that suggest that we could afford a different, less costly insurance plan. What do you have in mind? Are does the idea of insurance simply not make sense to you?

CO2
always moves up or down after the change in temperature, not before. That's because of gases entering or leaving solution in the oceans as they cool or warm, respectively.

indicators
I've already shown you why your indicators are either wrong or irrelevant.

What do I have in mind?

Do nothing, since there is no evidence to support the suggestion that anything bad, much less anything catastrophic is about to happen.

And that's before we factor in the huge savings that are being caused by increased CO2.

There's been a rash
of papers in recent years claiming net energy from solar. Here's one for example:
http://jupiter.clarion.edu/~jpearce/Papers/netenergy.pdf

However when you read the paper, it has a very large flaw. Solar pv cells lose high proportions of their energy potential through refraction and reflection effects from scratching. This paper fails to allow for and account for this effect. Since the energy surplus reported in the paper is small, then refraction effects are likely to reduce it to or below zero.

Externalities and scale effects
Are some of the reasons to get government involved. In this case, the exernality is temporal in effect. That is, we're doing things now that our descendants will pay for.

One way for consumers to express demand is by paying taxes and electing people who will redirect policy and resources towards things that the market isn't quite ready to address.

I generally don't advocate that government extend its reach, and I could give you a long list of traditional activities that I wish government would forego.

I am still not 100% convinced about anthropocentric climate change. So I watch for non-frenzied discussions, and dispassionate analysis. Bjorn Lomborg did a great job of that a few years ago in The Skeptical Environmentalist. Recently, Elizabeth Kolbert did the same on the other side in Field Notes from a Catastrophe. I look forward to reading James Lovelock's book, Revenge of Gaia, also on the worrier side.

When you say
"In this case, the exernality is temporal in effect. That is, we're doing things now that our descendants will pay for."

This may be true, but it has always been true and always will be. To imagine that you can avoid placing burdens on future generations is a myth. The statement is also inherently unbalanced, as it ignores the benefits conveyed to future generations by things done today, just as we are the beneficiaries of things done by our ancestors in the past.

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