Any man who can drive safely while kissing a pretty girl is
simply not giving the kiss the attention it deserves.
Albert Einstein
Earlier One-Off Post: On the Pope Francis Meeting With Kim Davis
Image of the Day
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| Via Cato Institute |
The Failed War on Poverty
Obama Threatens to Veto Oil Exports; Hillary Clinton Comes Out Against TPP
I'm not going to go into detail against these economically illiterate demagogues who are being totally political. I will simply address a couple of talking points. First of all, Obama has never understood energy policy. A brief overview almost any energy analyst will tell you: historically West Texas Intermediate, one of two basic oil price benchmarks, had usually sold at a premium to Brent; it was a lighter, "sweet" oil, easier to refine vs, e.g., Venezuela's "sour" (high sulfur) oil. As the US grew more dependent on external, often sour oil, refiners expanded their capacity to handle sour oil. In totally retarded policy, the US in the 1970's, acting in knee-jerk fashion to the oil embargoes, decided to ban (with some nuances, e.g., Canada) crude oil exports. This was notably done on crude, not on processed products; the intent was to manipulate prices, and as is true with all economically illiterate price controls, it was counterproductive policy. Domestic buyers (refiners) had less competition, and lower prices discouraged domestic production. Refiners have an incentive in discounted captive American oil, while being able to sell refined products at world prices. A quarter of domestic refineries are foreign-owned (e.g., by foreign countries producing sour oil like Canada and Venezuela--expanding sour oil processing capacity), and America is the world's leading processor of sour oil. American producers are running out of domestic refinery capacity for lighter oil, while almost 20 foreign refineries that can process sweeter oil may be in danger of going out of business. (See here for a related discussion.)
As I mentioned in a recent post, the Saudi attack on US shale producers is already hurting production. Maintaining an export ban hurts the ability of producers to invest and stay in business as WTI prices continue to lag Brent (by roughly 3.50 a barrel as I write). Price controls and barriers to entry or exit ultimately fail the consumer. Obama should be encouraging domestic energy development and related well-paying jobs; this may be part of his anti-carbon politics.
As for Hillary Clinton, adding to her flip-flops since leaving the State Department (remember the Keystone Pipeline), opposing a key objective during her tenure, i.e., TPP, is purely an attempt to defend against anti-trade demagogue Bernie Sanders. She is raising the old red herring of currency manipulation--hypocritically given a rogue Federal Reserve which engages in de facto currency manipulation. Let me point out (besides the near impossibility of established true value of a currency): if some foreign country actually declares war on its own citizens' standard of living via currency manipulation, we enjoy more restrained costs of imported raw materials and components, which make the costs of our own related products and services more competitive, not to mention the higher standard of living as American consumers benefit from improved competition and variety of goods; furthermore, dollars from imports often make their way back to our economy in terms of things like financing our debt and investing in the private sector (see here and here for related discussions). As Don Boudreaux points out in response to the bashing of our trade deficits, trade isn't so much a job growth issue but a shifting of labor to those areas or industries where we have more of a comparative advantage.
Facebook Corner
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| via LFC |
Political Cartoon
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| Courtesy of Eric Allie via IPI |
Roberta Flack, "Feel Like Making Love". Her third and final #1.
