Re: Cheap Gas=Unnatural Capitalism - Cycling Mob: Road Cycling, Mountain Biking and More

07-10-2003, 07:57 AM

On Tue, 8 Jul 2003 13:52:27 -0400, "Ian St. John" <[Only registered and activated users can see links. ]> writes:

> > The Greenpeace report, unlike ICTA, is not unreasonable.
> >
> > Here's my criticque of it however.
> >
> > From table ES-1:
> > [Only registered and activated users can see links. ]
> >
> > The claim is that Defense is 66% of the subsidy for oil.
>
> Defense is just one part of the subsidy. The subsidies are obscene and
> market distortions without the defense part. The sum is just greater if it
> is included rather than hidden.
>
> > I disagree
> > that it is a subsidy for gasoline at all. The world runs on petroleum
> > fuels.
>
> Not a relevant argument. Petroleum causes a large portion of the defense
> budget. See Iraq, along with military spending in countries there. The cause
> of this is the importance of oil in the current economy but that is still a
> 'cost' of the oil.
>

If you go by their numbers, yes. But most of the benefit of that
defense budget in the middle east is borne by the rest of the
world. The two-thirds oil consumption that are not in the US.

> > Any disruption of those fuels affects affects us, but also
> > affects other countries far far more. I quote the GP report: ''The
> > protection from price spikes that the DoD provides greatly benefits
> > oil consumers worldwide''.
>
> Here you are not referring to the cost of military but to the strategic
> reserve which is a separate element.

No. I quote the Greenpeace report (which the ethanol association cites
as their source.)

See:
''Fueling Global Warming: Federal Subsidies to Oil in the United States''
on [Only registered and activated users can see links. ]

Section 4.1 "Middle East Oil Security"
Page 4-2, or Page 61 in the PDF file.

> > That includes the 2/3 of the non-US oil
> > users. This would seem to indicate that only one-third of that is a
> > subsidy for US oil consumption. 2/3 of that should be assigned as a
> > subsidy for foreign oil consumers. It should be accounted as a cost of
> > foreign aid, not oil subsidy.
>
> It does not matter is someone else benefits as a 'side effect' of the
> policy. The policy was not designed for them.

At some level, this policy is designed for them. A worldwide petroleum
crisis os bad juju for everyone. Sure, we benefit, but that doesn't
mean that 2/3 of the benefits enhance economic stability and political
stability in the majority of the world.

> The cost of maintianing price stability by buying and selling oil to
> ensure stable pricing is a COST of subsidized oil in terms that the
> reason for prices to rise is the low price from other subsidies and
> therefore high demand which can exceed supply. A more rational price
> for gasoline would immediately lower demand and no longer
> necessitate intervention.

I can't comprehend this paragraph.. But, one of the problems with
transportation is that demand is very inelastic. If the cost of
transportation increases, the amount of transportation doesn't vary
much. However, the resulting increased prices and inflation does
effect everyone massively and negatively. Government intervention to
mute the economic cycles is frequently an accepted practice; why
should it be considered a subsidy in particular this case?

Also, if it is in fact a subsidy, it does not distort the market.
There exists no feasible alternatives for automotive power sources.

> > The foreign tax credit also striks me as a strange addition. If I earn
> > income in NY, and live in PA (as I did a year ago). Should I be taxed
> > on my NY income, then be taxed on that income a second time when I
> > bring it to my Pennsylvania bank account? I see nothing wrong in NOT
> > being double-taxed on income. Yet, the FTC seems to do about the same
> > thing on an international scale; I can't quite figure out how it is
> > considered a subsidy.
>
> I am not sure what you are babbling about now but when you work in a foreign
> country such as Saudi Arabia and earn $US100,000 the country forgoes $80,000
> of that income in your taxes.

I am paraphrasing someone elses critique in sci.energy or
sci.energy.hydrogen from about a week ago. Please see that post.

> >
> > Finally, the strategic petroleum reserrve. On page 4-23 of the
> > Greenpeace report, they argue (unconvincingly) that the SPR should be
> > treated as a debt and thus subject to compounded interest. They also
> > omit that the SPR offers benefits to other coountries.
>
> First, we have dealt with this in a previous bit about defense which
> was the theoretical driving force behind the SPR. There are two
> factors here. One is the reserve itself as a static element which is
> part of the cost of defense and legitimately should pay interest on
> the principle.

That is nonsense.

No government organization pays interest on the principal that is
invested within it. I pay (say) $1,000 in taxes. I doubt I get over
$1,001 in benefits.

> > These three subsidies account for 80%-90% of the claimed subsidies,
> > and are arguably 20-60% too high.
>
> You can argue but that does not mean you are arguing from a strong position.
> The benefit to other countreis of stable oil pricing is NOT critical here
> and they do NOT pay the U.S. to do this. The COST is still the same.
>

They are freeloading, but the benefits to them can still be charged
under the account of foreign aid. IE, their share of the benefits
costs $50 billion, they don't pay it, but we can account it as a bill
for $50 billion that gets paid out of the foreign aid budget.

> SINCE you have apologised for your post and
> claimed error I will withdraw my return insults, but this is a pardon, not
> an acceptance of innocence.
>

An unprofessional insult is an unprofessional insult.

Scott

07-10-2003, 09:17 AM

"Scott A Crosby" <scrosby@cs.rice.edu> wrote in message
news

yd65ma2x3x.fsf@bert.cs.rice.edu...
> On Tue, 8 Jul 2003 13:52:27 -0400, "Ian St. John" <istjohn@spamcop.net>
writes:
>
> > > The Greenpeace report, unlike ICTA, is not unreasonable.
> > >
> > > Here's my criticque of it however.
> > >
> > > From table ES-1:
> > > [Only registered and activated users can see links. ]
> > >
> > > The claim is that Defense is 66% of the subsidy for oil.
> >
> > Defense is just one part of the subsidy. The subsidies are obscene and
> > market distortions without the defense part. The sum is just greater if
it
> > is included rather than hidden.
> >
> > > I disagree
> > > that it is a subsidy for gasoline at all. The world runs on petroleum
> > > fuels.
> >
> > Not a relevant argument. Petroleum causes a large portion of the defense
> > budget. See Iraq, along with military spending in countries there. The
cause
> > of this is the importance of oil in the current economy but that is
still a
> > 'cost' of the oil.
> >
>
> If you go by their numbers, yes.

Well we could go by the darkness of the **** but that usually just leads to
more argument.

> But most of the benefit of that
> defense budget in the middle east is borne by the rest of the
> world. The two-thirds oil consumption that are not in the US.

The costs to the U.S. are independent. It is the importance of the oil to
the U.S. economy that drives the military costs and thus the cost/benefit to
the rest of the world does not matter to the subsidy equation in the U.S.
The rest of the world is purely a red-herring.

>
> > > Any disruption of those fuels affects affects us, but also
> > > affects other countries far far more. I quote the GP report: ''The
> > > protection from price spikes that the DoD provides greatly benefits
> > > oil consumers worldwide''.
> >
> > Here you are not referring to the cost of military but to the strategic
> > reserve which is a separate element.
>
> No. I quote the Greenpeace report (which the ethanol association cites
> as their source.)
>
> See:
> ''Fueling Global Warming: Federal Subsidies to Oil in the United
States''
> on [Only registered and activated users can see links. ]
>
> Section 4.1 "Middle East Oil Security"
> Page 4-2, or Page 61 in the PDF file.

O.K. But I don't agree that the military has much role in price
stabilization. OPEC sets the price where it wants unless you are going to
include the illegal Iraqi invasion. And THAT has done little to change oil
prices.

The military spending is mostly irrelevant to the price of oil itself, but
forms a large subsidy as it is a fixed cost that must be born by the U.S. to
preserves *its* supplies. The U.S. is the largest user of petroleum on the
planet and dependent on the middle east for most of that, so it HAS to keep
it's defense spending high to be able to intervene or influence policy
gunboat diplomacy ). These are fixed costs to the U.S. DUE to it's
dependency on cheap oil.

>
> > > That includes the 2/3 of the non-US oil
> > > users. This would seem to indicate that only one-third of that is a
> > > subsidy for US oil consumption. 2/3 of that should be assigned as a
> > > subsidy for foreign oil consumers. It should be accounted as a cost of
> > > foreign aid, not oil subsidy.
> >
> > It does not matter is someone else benefits as a 'side effect' of the
> > policy. The policy was not designed for them.
>
> At some level, this policy is designed for them. A worldwide petroleum
> crisis os bad juju for everyone. Sure, we benefit, but that doesn't
> mean that 2/3 of the benefits enhance economic stability and political
> stability in the majority of the world.

It is STILL a red herring issue. The military is a subsidy to the oil
industry. Period.

>
> > The cost of maintianing price stability by buying and selling oil to
> > ensure stable pricing is a COST of subsidized oil in terms that the
> > reason for prices to rise is the low price from other subsidies and
> > therefore high demand which can exceed supply. A more rational price
> > for gasoline would immediately lower demand and no longer
> > necessitate intervention.
>
> I can't comprehend this paragraph..

Simplified, if demand decreased because of higher prices for oil, the supply
would exceed demand and prices would fall. It is the subsidization of oil
that increases usage to insane degrees that pushes the cost of oil into
unstable pricing affected by small shortfalls. The costs of those price
interventions ( releasing oil from strategic reserves ) is included in the
subsidies.

> But, one of the problems with
> transportation is that demand is very inelastic. If the cost of
> transportation increases, the amount of transportation doesn't vary
> much. However, the resulting increased prices and inflation does
> effect everyone massively and negatively. Government intervention to
> mute the economic cycles is frequently an accepted practice; why
> should it be considered a subsidy in particular this case?

America is the land of the corporate welfare system. It distorts all markets
and it is equally damaging to all markets. The subsidy for road
transportation has decimated the rail system ( which provides a more
efficient transport over long distances ) and forms an inefficient waste.
>
> Also, if it is in fact a subsidy, it does not distort the market.
> There exists no feasible alternatives for automotive power sources.

Certainly there is. Rail is purely feasible for long distance transportation
of goods. Even the amount of sea traffic ( even cheaper ) is affected by the
move to subsidize petroleum and therefore drive more highway traffic. Not
only that but you have to pay for all that increased road necessitated by
the increase.

>
>
> > > The foreign tax credit also striks me as a strange addition. If I earn
> > > income in NY, and live in PA (as I did a year ago). Should I be taxed
> > > on my NY income, then be taxed on that income a second time when I
> > > bring it to my Pennsylvania bank account? I see nothing wrong in NOT
> > > being double-taxed on income. Yet, the FTC seems to do about the same
> > > thing on an international scale; I can't quite figure out how it is
> > > considered a subsidy.
> >
> > I am not sure what you are babbling about now but when you work in a
foreign
> > country such as Saudi Arabia and earn $US100,000 the country forgoes
$80,000
> > of that income in your taxes.
>
> I am paraphrasing someone elses critique in sci.energy or
> sci.energy.hydrogen from about a week ago. Please see that post.

You might learn something about the tax credit itself then. Blaming some
other poster is not a good debating techniques since you take his errors
uncritically.

>
> > >
> > > Finally, the strategic petroleum reserrve. On page 4-23 of the
> > > Greenpeace report, they argue (unconvincingly) that the SPR should be
> > > treated as a debt and thus subject to compounded interest. They also
> > > omit that the SPR offers benefits to other coountries.
> >
> > First, we have dealt with this in a previous bit about defense which
> > was the theoretical driving force behind the SPR. There are two
> > factors here. One is the reserve itself as a static element which is
> > part of the cost of defense and legitimately should pay interest on
> > the principle.
>
> That is nonsense.

Nope. It represents unused money and thus should be costed by the prinicple
investment.

>
> No government organization pays interest on the principal that is
> invested within it. I pay (say) $1,000 in taxes. I doubt I get over
> $1,001 in benefits.

If pays either directly or in opportunity costs when it can't use the money
elsewhere. Same diff.

>
> > > These three subsidies account for 80%-90% of the claimed subsidies,
> > > and are arguably 20-60% too high.
> >
> > You can argue but that does not mean you are arguing from a strong
position.
> > The benefit to other countreis of stable oil pricing is NOT critical
here
> > and they do NOT pay the U.S. to do this. The COST is still the same.
> >
>
> They are freeloading,

False. They do nothing to freeload and they maintain their own military for
similar purposes.

The supposed benefit to other countries for policies aimed at U.S. interests
is a red-herring.

> but the benefits to them can still be charged
> under the account of foreign aid. IE, their share of the benefits
> costs $50 billion, they don't pay it, but we can account it as a bill
> for $50 billion that gets paid out of the foreign aid budget.

This is nonsense. P.S. most foreign aid is in the military support of
Israel, Egypt, and Russia. There is almost nothing left. These countreis
need little help with oil production. By far the most military support goes
to Israel which cannot seem to find any oil in the West Bank. Only blood.

>
> > SINCE you have apologised for your post and
> > claimed error I will withdraw my return insults, but this is a pardon,
not
> > an acceptance of innocence.
> >
>
> An unprofessional insult is an unprofessional insult.

You wanted a professional insult?
>
>
> Scott