Archive for the Energy Category

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    • Victor Davis Hanson

    Dependent No More

    | April 07, 2012 | 5:49 pm

    There is a revolution going on in America, but it is not driven by the tea party or the Occupy Wall Street protests.

    Instead, massive new reserves of gas, oil, and coal are being discovered almost everywhere in the United States, thanks to revolutionary methods of exploration and exploitation such as hydraulic fracturing (fracking) and horizontal drilling. Recent prices above $100 a barrel make even difficult efforts at recovery enormously profitable.

    There were always known to be additional, untapped reserves of oil and gas in the petroleum-rich Gulf of Mexico, off America’s shores, and in the American West and Alaska. But even the top energy experts never imagined just how vast was the energy there—or beneath far more unlikely places such as South Dakota, Pennsylvania, Ohio, and New York. Some studies suggest that the United States has now expanded its known potential gas and oil reserves tenfold.

    The strategic and economic repercussions of these new finds are staggering, and remind us how a once energy-independent and thereby confident American economy soared to world dominance in the early twentieth century.

    America will soon again be able to supply all of its own domestic natural gas needs—and do so perhaps for the next ninety years, at present rates of consumption. We have recently become a net exporter of refined gas and diesel fuel, and already have cut imported oil from OPEC countries by one million barrels per day.

    Continue reading Victor Davis Hanson…

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    James Huffman

    How Green Is My Folly

    | April 07, 2012 | 6:32 am

    European parliamentarians want the upcoming United Nations Conference on Sustainable Development to demand that all nations hew to a sweeping legal claim: that international law forbids nations to amend or repeal laws designed to protect the environment.

    Most of the European Parliament’s nonbinding resolution is a catalog of the usual appeals for green this and sustainable that, backed by mind-bending assertions such as the scarcity of resources is a “new and emerging problem” and “that a green economy must be focused on decoupling economic activity from resource use.” Hasn’t resource scarcity been the central theme of economic history? And exactly how would the green economy get by without resources?

    The resolution also reiterates the well-trod “precautionary principle.” That’s the idea that the burden is on developers to prove their projects are without risk to the environment, rather than on environmentalists to prove environmental costs of development will exceed the benefits. If adhered to, the precautionary principle is like a trump card that can be played to stop almost any project. It’s the card that author Bill McKibben and his merry band of Keystone pipeline protesters have maneuvered Barack Obama into playing, notwithstanding the U.S. State Department’s carefully considered conclusion that the environmental risks of the pipeline are extremely low in relation to significant economic benefits.

    Continue reading James Huffman…

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    Paul Gregory

    An Inconvenient Truth From the NYT on Hybrid and Electric Cars

    | April 05, 2012 | 4:10 pm

    The venerable New York Times has been a reliable cheer leader for electric and hybrid cars in its A “news” section. Its "Business Day" section is for readers who base business decisions on what they read. They don’t want to be bothered with political correctness – just the facts. Except for a slip here or there, there is little difference between the Times Business Day and Wall Street Journalbusiness reporting. With its table “The Cost of Higher Fuel Economy,” the Times has blown the cover of the electric or hybrid car. They do not make economic sense even at much higher gas prices.

    I see that Drudge has picked up this story. Now everyone will know the house of cards on which the Volt is built.

    In its Payoff for Efficient Cars Takes Years (April 5), the Timespublishes a table that shows that buying an electric or hybrid car makes little business sense as compared to buying the closest conventional model from the same manufacturer. For example, a buyer choosing between a Chevy Cruze Eco and a Volt requires 27 years to break even. The best buy appears to be the Jetta TDI (which sells for only $500 more than the conventional Jetta) and breaks even in a year.

    It takes much too long for the fuel savings to pay for the higher sales prices – even at $5 or $6 gas. It would take $12.50 gas to make the Volt a decent buy even after the $7,500 government credit.

    The Times article concludes that people buy Volts and Fiesta SFE’s because it makes them feel better and more civic minded. That is not a very solid foundation on which to build a market.

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    Gary Becker

    Fracking and Self-Sufficiency in Gas and Oil

    | April 03, 2012 | 7:01 pm

    More or less every American president starting with Dwight Eisenhower, and prioritized by Richard Nixon, called for American self-sufficiency in energy sources. In fact, America is now about self-sufficient in natural gas, and America’s oil imports have declined as a fraction of its total oil consumption from a peak of 60% in 2005 to about 50% in 2011. Part of the decline is due to the Great Recession’s effects on US output and automobile use. Another part is due to rising prices of oil that reduced oil imports, but increased spending on these imports. A third and growing part is due to increased domestic production of oil and especially gas that is likely to continue to grow rapidly during the next decade.

    The main reason for the expansion in domestic gas and oil production is a technique called “hydraulic fracking”. Texas wildcatter George Mitchell was the most important person responsible for the development of the fracking method to extract gas from shale formations in the 1980s. This method uses large quantities of water under high pressure with added chemicals to crack open rocks and extract the gas, and sometimes oil, hidden in these rocks. The cost of using fracking for natural gas extraction has become so competitive that most US natural gas production comes from fracking. As a result, the price of natural gas has fallen from a peak of about $10.80 per million BTUs to $2.20 currently. Instead of building terminals that could import liquefied natural gas, energy companies are now trying to export more natural gas. US natural gas inventories are so bloated there is a possibility that the price temporarily could be forced down toward $0, or even to a negative level.

    Continue reading Gary Becker…

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    David Henderson

    The Problem with a Variable Tax on Gasoline

    | March 26, 2012 | 9:46 pm

    This is from Jim McTague, “Obama is Humbled by the Market,” Barron’s, March 24, 2012. Greg Mankiw linked to it this morning. I’m guessing that what caught Greg’s attention was the article’s advocacy of a tax on gasoline. I won’t bother revisiting that well-worn debate.

    Instead, I want to focus on a paragraph that I bet Greg didn’t focus on, the one I reproduced above. I wrote about a similar proposal, a variable import fee on oil, in two articles (here and here) in the Energy Journal in 1989. A variable gasoline tax is not quite the same, but it would have a similar unintended, but completely predictable, consequence.

    The argument I’m about to give rests on the assumption that the world oil market has an entity in it, OPEC, that has some market power. If you don’t believe that, then you won’t find the rest of the argument convincing. But notice that McTague does believe it. Check the quote from his article above.

    Continue reading David Henderson…

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    Keith Hennessey

    Subsidizing wind and solar because China and Germany are doing it

    | March 24, 2012 | 8:18 am

    Here is President Obama speaking in Ohio Thursday:

    We also need to keep investing in clean energy like wind power and solar power.

    …  And as long as I’m President, we are going to keep on making those investments.  I am not going to cede the wind and solar and advanced battery industries to countries like China and Germany that are making those investments.  I want those technologies developed and manufactured here in Ohio, here in the Midwest, here in America.  (Applause.)  By American workers.  That’s the future we want.

    The President has picked three industries and is arguing for an industrial policy to subsidize them in part because other countries are subsidizing them.

    Let’s extend this logic.  Suppose China or Germany starts subsidizing the biotech industry.  Should the U.S. government subsidize American biotech firms so that “those technologies [are] developed and manufactured … here in America, by American workers?”

    What if China subsidizes web development firms, Germany subsidizes auto manufacturers, France subsidizes biotech firms, Japan subsidizes advanced battery firms, Brazil subsidizes ethanol firms, and South Korea subsidizes chip manufacturers?  Should the U.S. subsidize all of those domestic industries so that we don’t cede any of them?

    What if the Canadian or Mexican government were to subsidize high-tech oil production firms, or Brazil to subsidize advanced tobacco production?  Is the President’s policy to keep here in American through subsidies all industries that other governments are subsidizing, or only the “good” industries that he thinks should be kept in America?

    More generally, should the U.S. government (a) subsidize particular industries and if so (b) determine those subsidies based on what other countries are doing?

    If we are to subsidize particular industries over others, how do we square that with the argument, made by the President and others, that we need to remove such subsidies from the tax code?

    If the rule for structuring subsidies is to make sure we don’t cede certain industries to other countries, how is that different from giving the governments of those countries control over the shape and structure of the U.S. economy?

    If the President wants to subsidize wind and solar power because he wants to accelerate the development of carbon-free alternatives to coal and natural gas, he should make that argument.  If President Obama is instead going to subsidize industries either because he likes them or because other Nations’ governments are subsidizing them, then we must acknowledge that he is engaged in industrial policy, aka state-managed capitalism, with an open question about whether the managing state is based in DC, Berlin, or Beijing.

    (photo credit: Maryellen McFadden)

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    Paul Gregory

    My Diminished Capacity to Understand Obama’s Clean Energy Policy

    | March 22, 2012 | 9:04 am

    It took President Obama’s Press Secretary Jay Carney to shock me to my senses. As someone who favors cutting government spending on clean energy and eliminating government subsidies in general, I was particularly distressed to learn (in Carney’s words) that “I am “aggressively and deliberately ignorant of the world economy not to know and understand that clean energy technologies are going to play a huge role in the 21st century.” Even worse, I learn that “I have a severely diminished capacity to understand what drives economic growth in industrialized countries in this century.”

    And I had thought that if clean energy technologies were going to dominate the 21st century, private enterprise would figure this out and develop them itself. In my ignorance, I thought that subsidies are dictated by and for special interests not by economic rationality. I also believed that Solyndra and SunPower were not aberrations but representative of what is going on in Secretary Chu’s and Obama’s energy department. What I fool I have been.

    I fear there I may be many like me. I suggest the President go on television to explain to why we are better off with higher energy costs and lower standards of living so that wealthy green lobbyists fill his campaign coffers and ordinary people like me buy Volts and solar panels.  Without Presidential direction on these things, we will be lost.

    Continue reading Paul Gregory…

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    Paul Gregory

    More Speculation Nonsense

    | March 16, 2012 | 8:55 am

    I regret that the “profitable speculation” diagram has disappeared from economics texts. If more people knew it, we could avoid unnecessary nonsense. Even observers from the right have no idea of the positive role of profitable speculation. Bill O’Reilly this evening launched another attack on speculators.

    If Bernie Sanders’ (and others’) proposals succeeded in eliminating speculation, we would experience broader price and quantity swings and would be worse off.

    The concept is very simple. If speculators anticipate lower future supplies (and higher prices), they buy now and hold for future sales. If they guess right, they sell in the future at a profit. If they guess wrong, they sell in the future for a loss. The profitable speculator has moved supply from a period of relative abundance to a period of relative scarcity and has smoothed out prices. We have been made better off.

    In other words, profitable speculators perform a positive service for the economy. Unprofitable speculators make things worse, but they can’t stay in business if they continue to guess wrong. They disappear. Those with a knack for speculation remain and smooth out prices and supplies.

    Notice that there is no outcry when speculators conclude that future supplies will improve and they push prices down.

    I guess that people will never understand this simple proposition. So we’ll have to live with this hot air.

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    Keith Hennessey

    Nearly doubling renewable energy generation

    | March 13, 2012 | 2:30 pm

    Today the Administration released their Blueprint for a Secure Energy Future: One-Year Progress Report.

    Almost every time President Obama talks about energy he mentions wind and solar power. He used to talk about nuclear power as well. Doing so was politically courageous for a Democrat because nuclear power splits the environmental left. The President rarely mentions nuclear power these days, I presume because of the Fukushima earthquake + nuclear incident a year ago.

    The White House blog post accompanying the Blueprint includes the following highlight:

    Doubling Renewable Energy Generation: Thanks in part to the Obama Administration’s investment in clean energy – the largest in American history – the United States has nearly doubled renewable energy generation from wind, solar, and geothermal sources since 2008.

    “Nearly doubled” in less than four years sounds pretty good but reminds me of this Dilbert cartoon.  In it Dilbert raises his hand and asks the marketing manager:

    Are you asking a room full of engineers to be excited about a big percentage increase over a trivial base?

    Let’s look at my favorite energy graph, produced by Lawrence Livermore National Laboratory, a part of the Department of Energy.  It translates all energy usage into a common unit (BTUs) for comparison.  You’ll probably want to click on the graph to see a larger (and readable) version.  In particular look at the size of the solar (yellow), wind (purple), and geothermal (brown) connecting lines, especially in comparison to the lines for nuclear (red), coal (black), and natural gas (light blue).

    llnl-energy-use

    Wind, solar, and geothermal sources are trivially small sources of U.S. energy.  Doubling their usage is significant within those industries but when compared to the overall pattern of energy usage in the U.S., the increases are tiny.

    Here are three basic facts to know about energy sources for electricity production in the U.S.:

    1. We have lots of really cheap coal.
    2. Thanks to new fracking technologies we now have lots of cheap natural gas, too.
    3. Nuclear comes in third and represents about 20% of our source of electricity production.

    Don’t forget two points from yesterday’s post which you can see easily from the above graph:

    • In America there is little overlap between fuel used for transportation and electricity used to light, heat, and power our homes and businesses.
    • If you could make solar power price competitive with electricity produced from coal or natural gas you would do almost nothing to lower the price at the gas pump because there are so few electric-powered and hybrid vehicles on the road.

    Let’s compare BTU totals in sources of U.S. energy excluding transportation.

    energy-use-by-source-ex-transpo

    From this graph you can see how small wind and solar power are relative to other energy sources in the U.S.  Even large percentage increases in the use of solar and wind power will have trivial impacts on the patterns of American energy usage.  Doubling, tripling, or quadrupling our usage of these technologies will not fundamentally change the three above basic facts about electricity production in the U.S.  Until there is a technology breakthrough, the U.S. is a land of electricity production from coal, natural gas, and nuclear, with hydro and biomass trailing and with wind, geothermal, and solar too small to matter much at all.

    The value of increased solar and wind production is not the marginal short-term reductions of coal and natural gas we use in America.  These increments are too small to matter. The benefit is instead whatever we learn about producing and using these technologies that might, at some point in the future, result in innovations that so significantly reduce the cost of these technologies that it becomes less expensive to produce power from these renewable sources than it does with our abundant supplies of coal and natural gas.  If the technology ever crosses (or even approaches) those breakeven thresholds, then these energy sources will rapidly and significantly alter the shape of the U.S. energy picture.

    Until then the President has a rhetorical point that sounds good but matters little to how we use and produce energy in the U.S.

    (photo credit: Nedra)

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    Keith Hennessey

    In America power and fuel are separate issues

    | March 12, 2012 | 10:05 am

    In his weekly address President Obama said:

    But you and I both know that with only 2% of the world’s oil reserves, we can’t just drill our way to lower gas prices – not when consume 20 percent of the world’s oil. We need an all-of-the-above strategy that relies less on foreign oil and more on American-made energy – solar, wind, natural gas, biofuels, and more.

    Solar, wind, and natural gas have almost nothing to do with the price of gasoline.

    Policies that affect oil, gasoline, ethanol and biodiesel, hybrid vehicles, battery technology, and vehicle fuel efficiency can all directly and significantly affect the price of transportation fuel (although often quite gradually).

    In America there is little overlap between fuel used for transportation and electricity used to light, heat, and power our homes and businesses.  If you could magically make solar power price competitive with electricity produced from coal or natural gas you would do almost nothing to lower the price at the gas pump because there are so few electric-powered and hybrid vehicles on the road.

    Similarly the development of massive shale (natural) gas resources in the U.S. will make electricity more affordable in the U.S. but will have almost no effect on the cost of our transportation fuel.

    Yes, there are linkages.  There are a few hybrid vehicles on the road, and some commercial vehicle fleets use natural gas as fuel.  But these are vanishingly small when compared with the petroleum-based and bio-based fuels we put in our cars, trucks, boats, and planes.

    Some American homes are heated with oil, so reducing the cost of electricity can gradually, over many years, shift home heating away from oil.

    And in some countries where oil is used to produce electricity, reducing the cost of other types of power production can reduce their usage of oil, which through the wonder of global oil markets can lower the price at an American gas station.  But these effects are for now quite small.

    These linkages mean that the President’s statement is qualitatively correct. But the effects are so small that the President is quantitatively misleading the listener when he suggests that expanded use of solar and wind power will lower gas prices.

    If (when?) battery technology leaps forward to make hybrid or electric vehicles a significant share of the market, then electricity and its sources will begin to act as significant substitutes for gasoline and diesel fuel.  At that point R&D to reduce the cost of solar power, wind power, nuclear power, hydro power, and natural gas power will start to affect the price at the pump enough for you to notice.

    But until then fuel and electric power are for all practical purposes separate issues, and when an elected official’s response to high fuel prices is more research on or subsidies for some form of electric power production, he is either confused or misleading you.

    (photo credit: MissouriS&T)

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    Paul Gregory

    Is There a Clearer Case of Media Bias? Gas Prices under Bush and Obama

    | March 03, 2012 | 5:50 pm

    The Times’ March 1 news piece Tensions Raise Specter of Gas at $5 a Gallon reflects an obvious media bias. As the Times news piece claims, rising gas prices are the result of international events over which President Obama has no control. I cite the first paragraph:

    With no clear end to tensions with Iran and Syria and rising demand from countries like China, gas prices are already at record highs for the winter months — averaging $4.32 in California and $3.73 a gallon nationally on Wednesday, according to AAA’s Daily Fuel Gauge Report. As summer approaches, demand for gasoline rises, typically pushing prices up around 20 cents a gallon. And gas prices could rise another 50 cents a gallon or more, analysts say, if the diplomatic and economic standoff over Iran’s nuclear ambitions escalates into military conflict or there is some other major supply disruption.

    Under Bush, the “rising gas price” news story would invariably mention Bush by name, Big Oil, and his long-standing ties to the oil industry.

    I was about to document this media bias by searching news archives, when I found an excellent blog of March 1 by Julia Seymour, whose main results I cite below:

    The Business & Media Institute examined all the broadcast network news reports mentioning gas prices during each of those time periods and found ABC, CBS and NBC aired more than 2 ½ times more stories (63 stories to 24) in 2008 than they did in 2011.

    But it was more than just the amount of coverage that showed the media’s willingness to spin gas prices one way under Bush, and another way under Obama. In 2008, network reporters mentioned "Bush," the "president" or "government" in gas price reports 15 times more often than in 2011 under President Obama (15 stories to 1).

    Congratulations to Julia Seymour for excellent reporting and analysis.

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    Jon Decker

    Why the White House is Worried

    | February 29, 2012 | 9:50 am

    On the surface, the White House and Team Obama in Chicago have a lot to cheer about. According to the Real Clear Politics average, President Barack Obama’s approval rating is up to 48 percent. By contrast, Congress’s approval rating registers just 11 percent. Looking ahead to November, the President outpolls each of his Republican presidential hopefuls by at least 5 percent. On the economic front, employers have added 1 million workers to payrolls since July, according to the Labor Department. During that same period, the unemployment rate has dropped by 0.8 percentage point, the biggest decline since 1984. Perhaps most important for Mr. Obama, consumer-confidence measures are climbing out of the depths reached during the last recession. So with all this good news, why is the White House worried? Two words – gas prices.

    U.S, gasoline prices have risen 47 cents a gallon over the last two months according to AAA. And with the summer driving season approaching, analysts expect prices to surge even higher. $5 or even $6 a gallon gas is not out of the question. White House officials and President Obama, both of whom have demonstrated a high degree of confidence over the past month, now recognize that President Obama’s chances of re-election are suddenly not exactly a slam-dunk.

    Last Thursday, President Obama traveled to Miami to deliver a speech that both confronted rising public anxiety over rising gas prices and struck back at his GOP critics- who blame the President’s energy policies for the spike in prices at the pump. Yesterday, White House Press Secretary Jay Carney began his daily briefing to White House reporters with a statement that fired back at House Speaker John Boehner who claimed that approving the Keystone XL pipeline, would lower gas prices. “That’s the kind of empty promise that politicians make when we face hikes in the global price of oil that is really dishonest,” said a visibly irritated Carney.

    The White House’s concern is understandable. A recent Associated Press/GFK poll shows that 39 percent approve of President Obama’s handling of gas prices; 58 percent disapprove. Those numbers are troubling for Team Obama, particularly when you factor in that seven in 10 of those polled by AP/GFK find the issue of rising gas prices deeply important.

    It’s not just motorists who have taken notice of the gas price spike—every time they fill up their tank. So have the Republican presidential candidates. Newt Gingrich is hoping the issue jumpstarts his flagging campaign. “I’ve developed a program for American energy so no future president will ever bow to a Saudi king again, and so every American can look forward to $2.50-a-gallon gasoline,” said Gingrich at last Wednesday night’s GOP debate in Mesa, Arizona. Former Pennsylvania Senator Rick Santorum and former Massachusetts Governor Mitt Romney have each begun including lines in their standard stump speeches that criticize President Obama over the surge in gas prices.

    Their political instincts are spot on. With the U.S. economy showing signs of recovery, the one issue that is most promising for Republicans hoping to win back the White House is gas prices. President Obama knows this. And OFA – “Obama for America” knows this. If Republicans can own this issue, Barack Obama will be on the defensive all the way through November. And like Jimmy Carter, it could mean a one-term presidency. That would give Mr. Obama plenty of time to test-drive that Chevy Volt he says he intends to buy when he leaves the White House.

    (photo credit: photoloni)

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    Laura Huggins

    Trade a Tortoise

    | February 28, 2012 | 6:25 am

    Two years ago in PERC Reports Todd Gartner wrote, “I am helping the American Forest Foundation develop a market-based habitat credit trading system in portions of Georgia and Alabama. The incentive-based framework will complement other efforts in the region to keep the eastern population of the gopher tortoise off the Endangered Species list.”

    Today, Gartner, in collaboration with Josh Donlan and James Mulligan of  Advanced Conservation Strategies, are ready to launch their first pilot transactions.

    Here is how the gopher tortoise candidate conservation marketplace is being designed and piloted:

    • An interested and eligible private landowner (the “seller”) receives a negotiated payment to conserve, manage, or restore longleaf pine forests capable of supporting healthy populations of gopher tortoises on his or her property. In so doing, the landowner generates gopher tortoise habitat credits.

    Continue reading Laura Huggins…

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    Victor Davis Hanson

    So Are High Gas Prices Good or Bad?

    | February 24, 2012 | 1:07 pm

    As the global economy gets better, as we freeze federal leases, and as the Middle East heats up, will $5-a-gallon summer gas be good or bad? Suddenly the administration seems to think that high energy prices are bad and, in fact, that it has done a lot to lower them.

    The Obama team’s various explanations for addressing skyrocketing gas prices so far seem threefold: It claims that by getting out of Iraq it is settling down the Mideast; it is reducing demand; and it is increasing production. All of these are either half-truths, or developments that are irrelevant to the presidency. And the fact that gas prices have doubled since January 2009 suggests that whatever the current Obama policy is, it has not worked — at least if lower gas prices were the aim.

    Our departure from Iraq has had nothing to do with calming oil prices. When Obama entered office, Iraq was already quiet; the month we left, no U.S. soldiers were lost. As for Middle East oil, in 2002, the last year before the Iraq invasion, Iraq produced slightly over 2 million barrels per day; oil production exceeded that prewar figure already by 2007 after the success of the Petraeus surge. In 2011 (with thousands of troops still in Iraq), it hit a 3 million barrels average, with projections for even more this year. The Iranian mess, no doubt, has fostered speculation, but I will leave it to others to judge whether Obama’s policies toward Iran have created calm and reassurance in the Gulf region.

    Continue reading Victor Davis Hanson…

    (photo credit: Paulo Ordoveza)

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    Bruce Thornton

    Nature Fakery

    | February 22, 2012 | 11:44 am

    At the turn of the twentieth century, President Theodore Roosevelt became embroiled in a public controversy over how some writers and naturalists described the natural world in overly anthropomorphic and sentimental terms. In a 1907 article attacking Jack London, among other writers, Roosevelt popularized the moniker “nature fakers,” those writers whom Roosevelt called “an object of derision to every scientist worthy of the name, to every real lover of the wilderness, to every faunal naturalist, to every true hunter or nature lover. But it is evident that [the nature faker] completely deceives many good people who are wholly ignorant of wild life.”

    The “nature” the sentimentalists described was not the real nature, but one conjured from old myths and imaginative projections of human ideals onto an inhuman natural world. Unfortunately, a century later “nature fakers” are still promoting their sentimental myths about nature, only now with serious repercussions for our national interests and security.

    These days “nature fakery” lives on in school curricula and popular culture, from Earth Day celebrations to Disney cartoons like Pocahontas. Only now this myth is renamed “environmentalism” and disguised with a patina of scientific authority. Worse yet, this allegedly scientific information provides the basis for government policies that impact our economic productivity and national security. The furor over global warming illustrates this unholy alliance of ancient myth and misleading science. For years we have heard claims that the evidence for global warming caused by human-generated “greenhouse gas” is “incontrovertible,” as the American Physical Society claimed last year in a policy statement, and that “if no mitigating actions are taken, significant disruptions in the Earth’s physical and ecological systems, social systems, security and human health are likely to occur.”

    Continue reading Bruce Thornton…

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    Laura Huggins

    Hunting Endangered Species

    | January 31, 2012 | 9:04 am

    The scimitar horned oryx . . . the addax . . . the dama gazelle – endangered animals one would expect to encounter in Africa. Yet, as some Texas ranches are proving, helping to bring back large numbers of these endangered species can be a profitable pastime. As a 60 Minutes segment shows, by allowing a number of these animals to be hunted for a high price, exotic wildlife ranches have achieved a major feat in wildlife conservation. A billion dollar industry, supporting more than 14,000 jobs—exotic ranches have worked to bolster the populations of approximately 125 different endangered species.

    The funds collected from hunting a small percentage of the endangered animals gives ranchers the money they need to continue to run their ranches. Thus, hunting endangered species in Texas has provided economic incentives for ranchers to continue to conserve and protect the species.

    Read Terry Anderson and Shawn Regan’s article, “Shoot an Elephant, Save a Community,” to see how assigning economic value to animals in Africa is also working to conserve wildlife.

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    Kori Schake

    The Market Value of Iranian Threats

    | January 30, 2012 | 9:00 am

    It’s a banner week for Iran: opportunities abound for its rulers to demand international attention and, perhaps, distract Iranians from repeating their 2009 dissent against a government and ruling elite that has served Iranians poorly.  Campaigning has begun for Parliamentary elections that will be held in early March.  Inspectors from the International Atomic Energy Agency recommence their review of Iran’s nuclear programs.  The Iranian Parliament is considering a law that would immediately cut off oil exports to the European Union in retaliation for EU sanctions.  Secretary Panetta said he believes Iran could have a nuclear weapon within a year, and the ability to attack our homeland with it in two to three years.

    While Iran supplies a significant amount of oil to EU countries (as high as 13% of total crude for Italy and Spain), oil is even more important to the fortunes of Iran: 65% of government revenues result from selling oil. Iran’s threat to retaliate against the European Union by halting oil exports this week fell flat.  The price of benchmark crude was completely unaffected by Iran’s threat.  In fact, it fell below $100 a barrel.  Which means one of two things: either markets disbelieve Iran would turn their spigots off, or markets have a high degree of confidence other suppliers will fill any shortfalls Iran causes.

    The European Union’s willingness to accept significant economic dislocation at a time of weak economies has sent a powerful signal into Iran about the acceptability to “the West” of the Iranian government’s choices.  Not only has Saudi Arabia offered to source any supply shortfalls caused by Iran, they have agreed to do so at current market prices.

    This is a welcome development in an otherwise very difficult problem.  Markets, aided by major oil producers like Saudi Arabia, have taken away one of the few aces Iran holds.  And it comes immediately after Iran attempted to upset markets with the threat of closing the Straits of Hormuz, through which 20% of the world’s oil is shipped.  Iran’s threat to close the Straits was also not believed, attributable to a combination of political leaders not acting alarmed and our military providing operational reminders of its dominance.

    The argument against attacking Iran’s nuclear infrastructure hinges on the widespread belief that Iranians would “rally ‘round the flag” and we would succeed in delaying their nuclear program only at the cost of uniting Iranians in support of their government and enraging the “Arab street.”  While we should be circumspect of how little we actually know of what Iranians think, there are indications Iranians question the value to them of their government’s dedication to its nuclear programs.  Moreover, Iran’s Arab neighbors are intensely concerned, some even advocating U.S. attacks on the nuclear infrastructure.  At a time when those governments are under democratizing pressure at home, they would not likely advocate such positions if they believed there would be a domestic backlash.

    If Iran cannot cripple the economies of countries concerned by its nuclear programs, what sway can it expect to have?  Thankfully, very little.

    (photo credit: ezioman)

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    Bruce Thornton

    How Marxism Killed Keystone

    | January 23, 2012 | 12:22 pm

    The global warming apocalypse and its Elmer Gantry, Al Gore, may have faded from public view lately, but that old-time green religion is still making mischief. President Obama has just delayed until after November’s election a decision on the Canadian Keystone XL pipeline. This truly shovel-ready project would create thousands of blue-collar jobs, help hold down the price of gasoline, and lessen our dependence on oil imported from thugs like Venezuela’s Hugo Chavez.

    The administration’s excuses for this move are preposterous.  The State Department sniffed that it needs more time “to determine whether the Keystone XL pipeline is in the national interest” and, as Obama said in his announcement, can “protect the American people.” But three years, nine public meetings, and reams of reports have already shown that the pipeline’s alleged dangers to the Ogallala aquifer, or the malign effects of “dirty” crude oil, or the threat to endangered species, are specious pretexts. Like his slow-down of oil drilling permits and reduction of oil production on federal lands––down 40% compared to ten years ago––Obama’s decision is in fact both political and ideological, a mollifying bone tossed to the bicoastal progressive elites on whom Obama depends for campaign contributions and political support.

    Continue reading Bruce Thornton…

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    Laura Huggins

    Just Say No to Embalming

    | January 20, 2012 | 10:33 am

    In this two minute video the Insitute for Justice points out the injustice of the Government making entrepreneurs “do useless things for no reason?”

    Verlin Stoll has built a successful business because he offers low-cost funerals while providing high-quality service.  His business is one of the few funeral homes that benefits low-income families who cannot afford the big funeral-home companies.  Stoll wants to expand his business,  but Minnesota refuses to let him build a second funeral home unless he builds a $30,000 embalming room that he will never use. Stoll and the Insitute for Justice are fighting back.

    Continue reading Laura Huggins…

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    Paul Gregory

    A New Low for the Times

    | January 19, 2012 | 8:04 am

    The NYT’s “New Gas Economy Rules Generate Wide Support” is a dishonest piece of news reporting, claiming:

    Nearly everyone involved in the process is on board with the results. More than 90 people who spoke throughout the day asserted that the stricter fuel economy requirements would create jobs, reduce oil consumption, create cleaner air and save drivers money, all while helping automakers increase their profits.

    Not surprisingly, the people “on board” are executives of bailout recipients, GM and Chrysler, and the UAW (whom Obama placed in line before secured creditors). Michigan Democrat, John Dingell (a neutral observer) is quoted as asserting there is “no significant opposition amongst responsible persons.”

    Continue reading Paul Gregory…

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