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Energy Plan Political Pandering

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Energy Plan Political Pandering

Whenever Congress puts together a bill attempting to find a solution to some sort of real or imagined problem, my immediate thought is that the bill do one of four things:

It will worsen the problem at hand

It will do nothing to solve the problem but instead create a new problem somewhere else

It will worsen the original problem and create new problems

In the very best case it will do nothing at all

Consider the ethanol plan. Growing corn to produce ethanol was supposed to help make us energy independent. What happened was that subsidies to grow corn (an energy wasteful process without the subsidies), did not cause gasoline prices to drop, instead it diverted food products to inefficient energy processes. This raised the price of grain which feeds livestock and corn syrup (used in practically everything as a sweetener).

Inquiring minds may wish to consider The Case for Ending Ethanol Subsidies.

At a time of soaring food prices and concern over carbon emissions, George Bush needs to rethink his biofuel policy.

Just in time for today’s Earth Day festivities, President Bush has announced a new initiative to combat global warming. He set a goal of stopping the growth in greenhouse gas (GHG) emissions by 2025 and reducing emissions thereafter. But rather than plan for 2025—which is another two or three presidencies away—Bush should immediately fix his ethanol policy, which is increasing GHG emissions and raising food prices not only in the United States but all over the world.

American companies are still trying to digest the ethanol mandates passed by Congress last December. Congress mandated the production of 9 billion gallons of ethanol or other renewable fuels this year; that number will gradually increase until it reaches 36 billion gallons in 2022. In addition, ethanol producers receive a tax break of 51 cents a gallon, and corn growers receive huge subsidies that may increase in the next farm bill.

Using ethanol for energy was supposed to be a win-win situation: the United States has so much corn, we were told, that it could use some to make gasoline, thereby reducing its GHG emissions and also reducing its dependence on foreign oil. But in the real world, unintended consequences are all too frequent.

Take the linkage between ethanol and GHG emissions. Scientists now believe that the production of ethanol actually creates more harmful emissions than it prevents. Indeed, Princeton University professor Timothy Searchinger and other researchers have concluded that “corn-based ethanol, instead of producing a 20 percent savings, nearly doubles greenhouse emissions over 30 years and increases greenhouse gases for 167 years.”

In addition, ethanol production is contributing to increases in the price of food, both in the United States and abroad. Not only is corn being made into ethanol, but other crops are being abandoned in favor of corn.

Rather than set a new goal for stabilizing GHG emissions, Congress and President Bush could do one simple thing that would truly honor of Earth Day: eliminate ethanol subsidies and get rid of the mandates.

By the way, that is what all subsidies do by nature. Subsidies never work.

Consumer-Last Energy Plan

Instead of backing away from an ethanol plan gone haywire, Congress is looking at compounding the problem with yet another ridiculous energy bill. Please consider Senate Democrats unveil new energy tax plan.

Democrats in the Senate on Wednesday unveiled a new energy package that would revoke $17 billion in tax breaks extended to big oil companies like Exxon Mobil Corp and slap a 25 percent windfall profits tax on firms that don't invest in new energy sources.

The Consumer-First Energy Act -- assembled by Senate Majority Leader Harry Reid and other key Democrats -- would also stop the Energy Department from filling the Strategic Petroleum Reserve until crude oil prices average $75 a barrel or less for 90 days.

The Democrats' energy bill seeks to lay the blame for record-high gasoline prices over $3.60 a gallon on the Bush administration, big oil companies like Exxon and the OPEC oil cartel.

It also seeks to rein in speculation in oil markets, which Senate Democrats see as a prime mover behind crude oil prices which hit a record high of $123.80 a barrel on Wednesday.

The bill would prevent companies that trade U.S. oil futures from routing transactions through off-shore markets to evade position limits and requires the U.S. Commodity Futures Trading Commission to boost margin requirements for all oil futures transactions.

However, CFTC Chairman Walter Lukken told a Senate subcommittee on Wednesday that speculators were not behind the jump in oil prices and he warned that higher margins would push energy trading off government-regulated exchanges.

"I think there would be a migration off exchanges," said Lukken, adding that higher margins act like "a tax on traders."

Congressional Lack Of Thinking

Eliminating tax breaks for oil companies is reasonable enough given that all tax breaks and subsidies across the board should be eliminated. However, the rest of the bill is nonsense.

Once again no one takes the problem back to the original source.

One problem is peak oil, and I propose the free market would find a solution, if left alone. Instead we have been sidetracked from finding a real solution by an inane ethanol program, that divert resources from finding that solution.

Is Speculation A Problem?

William Engdahl writing for Financial Sense says Perhaps 60% of Today's Oil Price is Pure Speculation.

I am not going to debate the merits or demerits of the article. However, if speculation is a problem, then perhaps one might ask why speculation is a problem. But Congress is absolutely incapable of this kind of thinking.

If speculation is a problem (and it's easy to believe that is the case), then it is caused by monetary policies worldwide that are encouraging speculation. After all, speculation fueled an enormous housing bubble, not just in the US, but worldwide.

So if one wants to stop such speculation, the all one has to do is address the root cause of the problem: global monetary policies by the Fed in particular, central banks in general, Congress, and governmental bodies elsewhere.

But No!

Check out the actual solutions countries are coming up with.

Ambrose Evans-Pritchard is discussing the situation in Global free market for food and energy faces biggest threat in decades.

India shocked the markets yesterday by suspending trading in futures contracts for a range of farm products in a bid to clamp down on alleged speculators and curb inflation, now running at 7.6pc.

The country's Forward Markets Commission said contracts for soybean oil, chana (chickpeas), potatoes, and rubber had been banned for four months, even though a report by the Indian parliament last month concluded that soaring food costs had almost nothing to do with the futures contracts.

Traders in Mumbai slammed the ban as an act of brazen political populism.

Kazakhstan has prohibited wheat exports. Russia has slapped a 40pc export duty on shipments, and Pakistan a 35pc duty.

China, Cambodia, Malaysia, Philipines, Sri Lanka, and Vietnam have all imposed export controls or forms of rationing to ease the crisis.

Argentina has banned beef exports and placed an export duty on soybeans.

Jim Newsome, the head of the New York Mercantile Exchange, said trading curbs on hedge funds woold achieve nothing. "All you're going to do is potentially cripple the US exchanges and move that flow of trading to non-US regulated markets," he told the Wall Street Journal.

Brazen Political Populism

Caroline Baum knocks another one out of the park with Election Year + $124 Crude Oil = Silly Solutions.

The confluence of record oil prices and a presidential election year is proving to be an irresistible combination for Congress and the candidates, all of whom happen to be members of that esteemed body.

Two of the three U.S. presidential contenders are promoting the idea of a federal gas-tax holiday this summer. Two of the three (a different duo) want to enact a windfall profits tax on oil companies, a bad idea whose time has apparently come (again).

One of the three wants both. That would be Hillary Clinton, Democratic senator from New York.

Populist millionaire Clinton (millionaires make the best populists) has lashed out at the oil companies, accusing them of market manipulation and collusion. She's railed against speculators, those evil traders who buy when everyone else is selling and sell when the crowd is buying.

She labeled the Organization of Petroleum Exporting Countries a monopoly and threatened to file a complaint with the World Trade Organization. (Her Democratic opponent, Illinois Senator Barack Obama, inconveniently pointed out that Clinton hasn't signed on as a sponsor to a bill that would make oil- producing and exporting cartels illegal.)

Tax Gas Holiday

Writing about the proposed gasoline tax holiday which Clinton favors but Obama does not, Baum goes on to say:

"If the stated goal of government policy is energy conservation, energy independence and the development of alternative sources of energy, lowering the price of gasoline -- waiving the 18.4 cent-a-gallon federal excise tax for even three months -- is counterproductive. The demand curve is downward sloping, which is a fancy way of saying that at a lower price consumers demand more."

That ought to be obvious, especially to Hillary. So either she is not as bright as people think she is, or she is more guilty of political pandering than her opponents. Take your pick. I am sticking with what I said in Hillary's Scorched Earth Policy.

Instead of addressing the real problem, political pandering has now gone global, with Hillary Clinton as the top cheerleader.

Mike "Mish" Shedlock

http://globaleconomicanalysis.blogspot.com

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It's a sad day...

No one in Washington wants to address and correct the problems. Instead, they insist on dancing around them for the sake of short term advantages (votes).

Ethanol doesn't have to come from corn and at what point will common sense prevail over greed?

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It sounds like that person is calling for open/free markets... i.e. get the government out of the economy.

I'm sure some of you think i sound like 68 : rwd vs fwd ... i'm for limited government.

the oil speculation is mostly driven by the price of gold, then speculation comes in.

price of gold has come down compared to a few months ago, but inflation hurts everyone that's not very well off.

The FED is illegal, and the paper money everyone uses, even I, is worthless.

It's a sad day...

No one in Washington wants to address and correct the problems. Instead, they insist on dancing around them for the sake of short term advantages (votes).

Ethanol doesn't have to come from corn and at what point will common sense prevail over greed?

Corn is hella energy intensive to grow. industrial hemp would be a great way to really drive down the price of biofuels.

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hemp

LEGALIZE IT!!!!

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Bush is one of the many great disgraces to America in recent times. This man has done nothing for this country, other than totally mismanage it and leave it in a state of ruin. And fixing the damage he has done will take quite some time to repair, it will not be totally repaired within the next presidential term.

It is because of the state that this country is in that I wish to spend some time in Europe after college while the $h! in the USA continues to hit the fan.

I despise Bush's flawed energy policies; it is one example in a series of many blundering mistakes this man has done during his rather painful tenure in Washington. He understands nothing about what needs to be done to make this country energy efficient. Ethanol should be used, yes, but it should not come from corn. Using cellulosic sources would be the best way to go in my opinion, and I hope to God that someone in D.C. switches from corn Ethanol to cellulosic Ethanol after the technology to mass produce it comes online sometime in the near future (within the next decade, I assume, from what I understand).

Cellulosic Ethanol offers much lower emissions compared to corn-based Ethanol fuels, is cheaper on a mile-per-dollar basis (cost is about a buck), yields a great energy return, and is very easy to renew. If we can get the technology online to use it, I want to see it being used, no excuses.

Power stations should never use fossil fuels as a power source. NEVER. Every last one of them should be mandated to run on one of four options: solar, wind, water, or a closely monitored nuclear source.

And that is only the beginning to set things straight. Bush will not do it, and I highly doubt anyone else in Washington would either.

Edited by YellowJacket894
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LEGALIZE IT!!!!

then it could be taxed and we wouldn't spend $300million+ (i don't have a reference for this number) enforcing it.

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and I highly doubt anyone else in Washington would either.

how about someone that knows and likes what the constitution says? it is (supposed to be) the supreme law of the land...

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how about someone that knows and likes what the constitution says? it is (supposed to be) the supreme law of the land...

I have no idea which politician out there today that would be. Most politicians are nothing more than money-mongering lawyers and the like that buy their way into political power to stroke their own bloated egos and to tend to their crooked, self-beneficial political agendas. There are many politicians out there that are basically nothing more than petty criminals that deserve to be in a maximum-security correctional facility.

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You know, the politically-related angst I am seeing from the civilians of America (myself included) makes me wonder how much longer will it be before the people will speak up, loud and clear, and make a large effort to take this country back from its poorly corrupted state.

Whoever becomes president of this nation after Bush had better start making great strides in restoring this country from the minute they are sworn into office and they had better do what is right for the people of this country, not for their own personal agendas, or any other politician's, for that matter. If not, I fear the growing unrest in this country will have unwanted consequences for them in the later stages of their term in Washington.

Edited by YellowJacket894
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then it could be taxed and we wouldn't spend $300million+ (i don't have a reference for this number) enforcing it.

Marijuana is no worse than drinking, really. Actually, drinking is worse.

Not that I advocate either, I am just stating a simple fact.

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Marijuana is no worse than drinking, really. Actually, drinking is worse.

Not that I advocate either, I am just stating a simple fact.

yes, and look what happened during prohibition.

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Marijuana is no worse than drinking, really. Actually, drinking is worse.

Not that I advocate either, I am just stating a simple fact.

Getting stoned on alcohol may be worse, at least in the sort term, but not drinking. With marijuana though, there is no point taking it unless you're trying to get stoned. If the loss of control in getting stoned is not bad enough then the long-term health consequences from abuse are just as bad, and usually worse in terms of mental health. This is not propaganda from "the man", it is real. Like other hallucinogens, marijuana damages your ability to tell fantasy from reality, causing paranoia and schizophrenia long after you stop using. Alcohol may have a more immediate effect, and cause other long-term health problems from over-indulgence, but long-term metal health issues from acute vitamin-b deficiency requires a severity of abuse that most people can't manage, even as alcoholics.

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then it could be taxed and we wouldn't spend $300million+ (i don't have a reference for this number) enforcing it.

Anything taxed people will try and get tax-free. What do you think the Secret Service does all day? It is a unit of the IRS.

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Getting stoned on alcohol may be worse, at least in the sort term, but not drinking. With marijuana though, there is no point taking it unless you're trying to get stoned. If the loss of control in getting stoned is not bad enough then the long-term health consequences from abuse are just as bad, and usually worse in terms of mental health. This is not propaganda from "the man", it is real. Like other hallucinogens, marijuana damages your ability to tell fantasy from reality, causing paranoia and schizophrenia long after you stop using. Alcohol may have a more immediate effect, and cause other long-term health problems from over-indulgence, but long-term metal health issues from acute vitamin-b deficiency requires a severity of abuse that most people can't manage, even as alcoholics.

Is this true Camino? :rotflmao:

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It sounds like that person is calling for open/free markets... i.e. get the government out of the economy.

I'm sure some of you think i sound like 68 : rwd vs fwd ... i'm for limited government.

the oil speculation is mostly driven by the price of gold, then speculation comes in.

price of gold has come down compared to a few months ago, but inflation hurts everyone that's not very well off.

The FED is illegal, and the paper money everyone uses, even I, is worthless.

Corn is hella energy intensive to grow. industrial hemp would be a great way to really drive down the price of biofuels.

Hemp is very useful for a variety of things. I once read somewhere that DuPont had it banned (by lobbying Congress) because they had invented Nylon. Before Nylon, hemp was mainly used for rope. AFAIK, hemp can be grown and used for personal items (i.e. you can make yourself a sweater) however it is illegal to distribute and sell. Or maybe it is illegal is large quantities. (I can't remember exactly)

FWIW, hemp is not the same thing as Marijuanna... It's missing that crucial THC substance. :)

Edited by FUTURE_OF_GM
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Bush is one of the many great disgraces to America in recent times. This man has done nothing for this country, other than totally mismanage it and leave it in a state of ruin. And fixing the damage he has done will take quite some time to repair, it will not be totally repaired within the next presidential term.

It is because of the state that this country is in that I wish to spend some time in Europe after college while the $h! in the USA continues to hit the fan.

I despise Bush's flawed energy policies; it is one example in a series of many blundering mistakes this man has done during his rather painful tenure in Washington. He understands nothing about what needs to be done to make this country energy efficient. Ethanol should be used, yes, but it should not come from corn. Using cellulosic sources would be the best way to go in my opinion, and I hope to God that someone in D.C. switches from corn Ethanol to cellulosic Ethanol after the technology to mass produce it comes online sometime in the near future (within the next decade, I assume, from what I understand).

Cellulosic Ethanol offers much lower emissions compared to corn-based Ethanol fuels, is cheaper on a mile-per-dollar basis (cost is about a buck), yields a great energy return, and is very easy to renew. If we can get the technology online to use it, I want to see it being used, no excuses.

Power stations should never use fossil fuels as a power source. NEVER. Every last one of them should be mandated to run on one of four options: solar, wind, water, or a closely monitored nuclear source.

And that is only the beginning to set things straight. Bush will not do it, and I highly doubt anyone else in Washington would either.

I'm really worried that this whole corn mess, combined with big oil and its $$$ will just destroy the biofuel movement in general. The typical american probably isn't informed enough (or doesn't care to become informed enough) to know that Corn is NOT the best source for Ethanol. And articles like these are only reinforcing the negativity.

Wonder how much it has to do with the american automakers 'leg up' on ethanol vehicles and/or Japan Incs 'leg up' on hybrids. Could they be lobbying against ethanol?

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You know, the politically-related angst I am seeing from the civilians of America (myself included) makes me wonder how much longer will it be before the people will speak up, loud and clear, and make a large effort to take this country back from its poorly corrupted state.

Whoever becomes president of this nation after Bush had better start making great strides in restoring this country from the minute they are sworn into office and they had better do what is right for the people of this country, not for their own personal agendas, or any other politician's, for that matter. If not, I fear the growing unrest in this country will have unwanted consequences for them in the later stages of their term in Washington.

Yeah... I think it's funny.

Post 2001 I was pretty anti-american (although my heart still bleeds red, white and blue for September 11th and what this country was) and anyone who has seen my posts here knows that. But back then what I believed was frowned upon and not accepted. Fast forward 7 years and my beliefs are the same beliefs of 90% of my age group.

I hate to break negative on you guys, but I don't think it'll matter much either way. Most people in this country are so disempowered that they're pretty much "along for the ride" either way. Used to I would say that a common bond of being american would pull this country together and allow us to push for change. However, I don't even see that happening either. On top of being the most individualistic society in the world, this country is so diverse and filled with people who would rather identify with their homeland than our country that we will NEVER organize into anything that remotely matters. You can see it in every aspect of our lives from 'globalization' of our economy and purchases (i.e. not buying american because it's american) to globalization of our identity and tastes. EVERYONE in america seems to think that every other civilization in the world is superior to ours in so many ways. Now the ugly truth is rearing its head IMO.

This culture is in the pits and it's only going to get worse.

I'm no fan of communism, but the collectivist mindset is a powerful tool to have when you're dealing with a global economy. Look no further than Asia Inc. for proof that supporting your businesses and your culture will allow you to excel and prosper.

Edited by FUTURE_OF_GM
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This culture is in the pits and it's only going to get worse.

I'm no fan of communism, but the collectivist mindset is a powerful tool to have when you're dealing with a global economy. Look no further than Asia Inc. for proof that supporting your businesses and your culture will allow you to excel and prosper.

calling another person american is pretty hard when you can call them tons of other "labels"

not so much communism here, but general socialism/big government.

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Is this true Camino? :rotflmao:

And you single me out for an answer on this why?

Way too much to respond to in this thread. But, suffice it to say that alchohol (the sort that you drink, not ethanol), causes more damage to the health and wealth of the US than all illegal drugs combined by something like a factor of 10.

Marijuana prohibition is no less an absurd policy than alchohol prohibition was, and the history of this prohibition shows that it is based on far more shaky ground ethically than alchohol proibition ever was. Marijuana was intentionally demonized for political and economic gain, not out of any true concern for public health. It is hypocrisy at its finest, and marijuana remains illegal because so much political capital is invested in that status quo that no poltician dare be honest about the subject - let alone introduce rational reform.

The "drug war" is nothing short of a collosal waste of resources and excuse for the abrogation of rights and freedoms second only to those now taking place in the name of "homeland security"

Oh, and the original article is an agenda - driven bit of propaganda meant to stunt the growth of biofuels in this country.

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And you single me out for an answer on this why?

Because you are older and wiser than I am, I don't remember the 70's as well as you do. :smilewide:

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Because you are older and wiser than I am, I don't remember the 70's as well as you do. :smilewide:

And don't you forget it! :AH-HA_wink:

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Oh, and the original article is an agenda - driven bit of propaganda meant to stunt the growth of biofuels in this country.

if biofuels were such a good idea, why would they need subsidies?

I'm all for biofuels, there are just much much better means to that end than with corn.

just remember, the beef industry thrives only cause of low food prices, and at least some food prices are subsidized through taxes, or the lack of grown food is subsidized too. If global warming is real, meat is much more energy intensive than anything grown. not only causing more CO2 to be produced, but also tons more methane, CH4, and that is a far worse greenhouse gas than CO2.

So the environmentalists are screwing everyone...but the rich.

edit .. i forgot about the pork industry... and that also causes some of the worst water pollution when those areas flood.

Edited by loki
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if biofuels were such a good idea, why would they need subsidies?

I'm all for biofuels, there are just much much better means to that end than with corn.

Of course there are, and they are being developed as we speak. However, most of the negative articles are full of extrapolations based on Corn being the only source that will ever be and that no advances will ever take place while exaggerating or fabricating the supposed negatives of corn derived ethanol. The fact is that ethanol production has little or nothing to do with food prices - that's a myth.

Ask yourself just who might benefit from such negative publicity about corn ethanol.

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Ask yourself just who might benefit from such negative publicity about corn ethanol.

I will make a guess: Big Oil? :P

It does not matter which form of Ethanol you support, Big Oil does make a gain from every bit of negative press against any form of Ethanol fuels.

I still think that cellulosic Ethanol, however, is the long-term answer versus corn Ethanol if it can be mass produced, which there is no reason why we cannot fully develop such technology.

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