Education is not the filling of a pail, but the lighting of a fire.
William Butler Yeats
Andrew Breitbart: Done Too Soon at 43
Breitbart was the undisputed leader of the new generation conservatives, someone whom was influential in iconic websites DrudgeReport and Huffington Post and had several of his own with a Big[name].com: BigGovernment, BigPeace, BigHollywood, etc. He was seen collapsing on a late night walk by a neighbor, whom called an ambulance; he allegedly had known heart problems. Breitbart often assumed guest host duties of Dennis Miller's radio show (Dennis Miller also does the greatest interviews with actor Orson Bean, Breitbart's father-in-law); in fact, I was listening to one of those guest host podcasts yesterday.
Breitbart broke a number of well-known stories, including some of the Acorn stings, the infamous Shirley Sherrod audio/visual clip that led to her termination, etc.
Ms. Sherrod expressed her condolences to the family, and I applaud her for that. I still have mixed feelings about the Sherrod incident. The "big sin" was that Breitbart, who had been given an excerpt of the speech, went public before getting a copy of the full speech if it was available. I still think it would have been better for Ms. Sherrod to be prudent in explaining how she felt about the white farmer whom had disrespected her. I don't think I would have released it having heard the whole speech. Ms. Sherrod was certainly entitled to her opinion.
I have mixed feelings about Mr. Breitbart. I thought he was always interesting to listen to, although I thought he was a bit too focused on and defensive about progressive's abusive assaults on conservatives. My feeling is, get over it: life isn't fair. I don't think it's prudent to show the jerks are getting under your skin.
But as someone who myself started out as a liberal Democrat, it was always refreshing to hear of another conversion to conservatism; we had something in common. He, of all the media conservatives, came across as a genuine, very nice man. He left behind an amazing family with several beautiful pre-teen children; my thoughts and prayers are with his surviving family members and friends.
Romney Takes Wyoming Caucuses
For Fourth Consecutive Win
Maine, Arizona, Michigan and Wyoming add to Romney's prior victories/ties in Iowa (tie), New Hampshire, Florida, and Nevada. The Gallup tracking poll, as I expected, has Romney up by 11% over Santorum, and Rasmussen has Romney up 40-24 over Santorum, reversing an early 39-27 advantage for Santorum. Next week will be more of a challenge with Romney up in Massachusetts, Virginia and Vermont, Gingrich up in Georgia, and Santorum up in Ohio, Tennessee and Oklahoma. Romney is a lock in Massachusetts and Virginia, only facing Ron Paul. And after Santorum bragged about earning just as many delegates in Michigan as winner Romney, one delegate was effectively flipped for Romney. Romney holds an estimated 182 of 1144 delegates needed for nomination. Romney picked up the endorsement of an influential Georgia newspaper, and Gingrich admits that winning his home state is make-or-break for his campaign.
On the Latest Episodes of
"O'Reilly Knows Nothing (About Economics)"...
Before proceeding with the video commentary below, the reader may want to review my original response to the first episode; I also provide a related excerpt from Cafe Hayek at the end of a long commentary here.
I'm a little frustrated here, because I don't think the oil industry spokesman in the piece does a very good job of explaining a number of things. True, he talks about global prices, but he needed to be somewhat more specific. First, it's not true that America is self-sufficient in oil. Even with North Dakota's production, we are still dependent on about half of the oil we use. Second, money is fungible: the price of oil (holding type of oil constant) is determined by the global market. The spokesman did mention the global market, but did not explain about valuation of American oil. To suggest, as O'Reilly does, that American oil and derived products be sold below global costs is perverse economics and bad accounting: what is relevant is current/future prices for ongoing enterprises. It is true that matching existing inventory acquired at a lower price will show higher profits, but those profits are an artifact of accounting procedures: the inventory is really worth the current price. The use of obsolete prices of source resources would be unsustainable and misleading. Third, O'Reilly's market manipulation argument won't work (unless a company is distressed and will sell at any price). A vendor should be indifferent where he sells the goods (inside or outside the country): the relevant price is the global market price. Bill thinks that the vendor would be forced to sell at whatever the local market will bear. But as a vendor, I have no incentive to sell below my relevant costs; I would rather store my product until I get acceptable prices. Note that Bill's argument could be used for any exported good: given the supply/demand curve he figures larger supply means lower price. Just don't export any good, and Americans will pay lower prices. There are several problems with that (besides the argument I just made about vendors refusing to sell below relevant costs), including the fact that American higher-value goods often require imported resources or components: how does the American manufacturer get his supplies if we aren't exporting? Fourth, Bill is pulling a bait-and-switch; he's talking about gasoline and other downstream products, but refining is only one set of operations for Exxon and contributes only part of the revenues and profits earned by the parent company O'Reilly cites. An Exxon refinery in theory could process crude from any source, over and beyond Exxon's own exploration and production unit. And Exxon's production unit could sell to any refinery in theory. What's the settled price? Clearly the market price for crude. The refinery has its own market, and it operates at typically lower margins than other aspects of the oil business (production, transport, etc.). For example, according to Ycharts, Valero, a very large refining and marketing operation, has a margin of 5.58%. Finally, market prices encourage locating and developing additional or alternative supplies. Bill's market manipulation does no such thing. New discoveries can have a material downward affect on global prices.
- "A decade ago, oil exports were not even among the top 25 exports." Even if true FOR DOWNSTREAM PRODUCTS (not crude, which O'Reilly implies), irrelevant. As Dobbs pointed out, there are higher-growing economies with expanding middle-income families buying cars. It may also be that international refineries are already running at capacity and hence are looking to the US refineries.
- "Many Republicans want to drill baby drill but what's the point if all the oil goes to China? Increased production obviously doesn't mean lower prices for us." Let's get this straight: China's demand is going to go up as its middle class grows, with or without new discoveries of American oil. So what Mr. Bill is saying here is "don't discover new oil--which will positively affect oil prices--because the Chinese are out to buy every barrel it can and/or downstream product it can find anywhere." Um, Mr. Bill? What about the fact that we're continuing to depend on foreign suppliers of oil, and we have to bid against China for that oil? What you are suggesting is MAKING A BAD SITUATION WORSE. That's not "looking out for the folks".
- "However, if the Obama administration wanted to, it could ask Congress to raise export taxes on the oil companies to encourage them to sell their products here." Not a chance in hell the GOP will raise business taxes, which are contrary to their entire rhetoric against Obama's anti-growth economic policies. Bill O'Reilly, as usual, gets it exactly backwards: the correct policy is to encourage domestic investment by constraining the EPA, expanding leases, streamlining approval processes, etc. More domestic supply encourages energy independence. What O'Reilly is doing here is a violation of equal protection principle; it engages in the same sort of picking winners and losers in the marketplace--an argument the GOP has been pressing against the Dems.
- "Well, Republicans generally don't want to inhibit the oil industry. And Democrats generally want high gas prices so folks switch to other modes of transportation and embrace alternative energy". The GOP, if it argues that it believes in the free market (which it has) will not intervene in the market. They have been arguing against the Dems engaging in industrial policy. I will point out that the Dems are well aware that the GOP will use high prices against Obama in the campaign--because Obama has opened only a marginal number of new sites. But both Dems and Republicans have thrown money at alternative energy, which is an indirect way of boosting prices for alternative fuels. And the Dems' standard talking point on this issue is more subtle than O'Reilly presents: they argue that new discoveries won't hit the market for years and hence will have no affect on prices in the short term. False; it depends on the nature of the find.
- "The cartels overseas and the oil companies here set the prices based upon what they can get anywhere in the world." Apparently O'Reilly thinks there's a problem which suppliers charging what the market will bear. As I explained in an earlier post, price-fixing is economically inefficient; oil shocks can trigger recessions and cut demand and also provide an incentive to find new supplies or make alternative energy supplies more feasible.
More on the second video to follow...
(About halfway through this commentary O'Reilly talks about oil and President Obama's leadership.)
PRESIDENT OBAMA: The amount of oil that we drill at home doesn't set the price of gas by itself. The oil market is global. Oil is bought and sold in a world market. And just like last year, the single biggest thing that's causing the price of oil to spike right now is instability in the Middle East. This time around Iran.
O'REILLY: But that's not entirely true. As "The Factor" has been reporting the oil companies are selling products that originate in America overseas because they can get more money in China and other places. That is the primary reason we're paying more for gas right now, because our domestic supply up because of the mild winter is being diverted to other countries so the oil companies can make more profit.Obama, in this instance, is correct (not something I say that often). However, his energy policies have deterred the industry from finding or developing new supplies, and his policies towards Iran are playing a role.
O'Reilly is simply misleading the folks. First of all, we're still importing about half the oil we need. By what stretch of logic is he attributing refinery products to domestic (vs. imported) oil? Moreover, O'Reilly is confusing different markets here. There's the issue of heating oil, a different product. Heating oil is also being affected by Americans converting to cheap natural gas (which we have in abundance) versus home heating oil. And O'Reilly has things exactly backwards here: the reason we are paying more for oil reflects the global market price, not America's exports of oil products.
Therefore President Obama and Congress have a perfect right to regulate where fossil fuels that originate in the USA go because it's basically the property of we the people. But once again our leadership lets us down. If I am president I say to the American oil companies, hey, you have to sell a certain percentage of what you find and refine here to Americans.Gas retailers already provide as much domestically-gasoline at a market price as consumers want or need. There are additional shipping costs for exported oil products.
And if you don't, we're going to slap an import tax... an export tax I should say on what you send overseas. Now that will bring down the price of gasoline? Would it not?No. What will bring down the price of gasoline is decreased global demand (e.g., a recession) or increased global oil supply. We should not be discriminating against American downstream product exports; exports enable imports of goods that are cheaper to produce by others than we ourselves (the law of comparative advantage). You can't force a producer to sell below price, and discouraging American exports also adversely effects well-paid staff and (largely senior investor) stockholder income. What O'Reilly also fails to see is that we are not exporting crude--the raw material of oil products--but generally higher-margin value-added products.
Mr. Obama could call every American oil president into his office tomorrow. He could say exactly what I have just said in this "Talking Points" memo. You guys either sell a certain percentage of your oil to Americans or you've got to pay a price.First of all, I don't believe in an imperial Presidency. Obama has no authority to unilaterally change terms of a contract after the fact (which oil companies have for domestic exploration and production); I didn't like it when Bush Treasury Secretary Hank Paulson forced banks to accept federal money against their will, I didn't like it when Obama ignored higher-standing bondholders ahead of his crony union members. Second, even assuming the GOP House would pass this nonsense, which I doubt given the fact the GOP opposes industrial policy, it doesn't do anything to solve the real problem--that global demand is outstripping supply. What the Republicans need is a long-term solution to phasing out dependency on foreign energy supplies, not O'Reilly's megalomaniac short-term fixes which do nothing to address the long-term needs.
Political Humor
"Today is the 100th anniversary of the Oreo cookie. For New Jersey Governor Chris Christie, it's a holy day." - David Letterman
[Thank God that Letterman didn't think about doing a Barack Obama joke.
Santorum charged Romney of twisting the cookies apart and settling for the middle and Newt Gingrich of dunking his Oreos in batter and deep-frying them. As in all things, Santorum himself sees the discussion of Oreos as black and white.]
Musical Interlude: My Favorite Groups
Paul McCartney & Wings, "Silly Love Songs"
