OPINION/COMMENTARY

More Doom That Wasn’t

Broadcast journalists have been the only ones bidding up gas prices lately. While they foretell a horizon of $4 and $5 gas, consumers on U.S. streets are paying an average of $2.81 – up just 6 cents since hurricane Rita. ABC, NBC, CBS, CNN and Fox News all covered the constant speculation about Gulf refinery damage and subsequent gas price spikes before and after Hurricane Rita’s September 24 impact. CNN used its 24 hours each day to raise fears about higher gas prices with show after show. A Nexis search of CNN transcripts around Rita’s landfall (from September 21 to 25) showed more than 20 mentions of the possibility of $4 or $5 gas from at least 12 different reporters in just five days on that network. “Hurricane Rita is sure to affect you even if you don’t live in the strike zone,” said CNN’s Kelly Wallace on the September 22 “Daybreak.” “How does $5 a gallon for gasoline sound?” Also on CNN September 22: Lou Dobbs: “oil analysts say $5 a gallon for gasoline is certainly not out of the question.” Miles O’Brien: “New predictions say gas could reach five. That’s right, $5 a gallon.” Paula Zahn: “One oil analyst is predicting $4 per gallon gasoline within two weeks, another analyst saying it could go as high as $5 a gallon.” A day earlier, Anderson Cooper warned viewers: “Just like after Katrina, gas prices could climb. But this time, the experts fear, it could be worse. Prices could hit a whopping $5 a gallon.”....

Another Energy Crisis?

But my Canadian friends keep telling me not to worry. Why? Because of the oil sands in Northern Alberta, which, they say, now have proven recoverable reserves of around 175 billion barrels - second only to the Saudis - and may in fact wind up having more reserves than any other spot on earth, especially as the technology to extract it improves. This oil is not pumped from the ground, however. It's mined, and the oil is then extracted from the sands in an enormously expensive process. At $10 a barrel, this extraction process is uneconomical, but at $60 a barrel, it is a highly profitable enterprise. (Break even is around $20 a barrel.) Many of the major oil companies have made multibillion-dollar investments in the oil sands, which are now producing about one million barrels a day, most of that going straight to the United States. Neil Camarta, who heads up Shell Canada's efforts, told me that he expected production to rise to three million barrels a day by 2010. Not having heard much about this before, I was a tad skeptical, so I called T. Boone Pickens, the 77-year-old former raider who knows more about oil markets than just about anyone I know. Mr. Pickens turned out to be quite excited about the oil sands. "That oil is the jewel of North America," he said. He says he thinks that production will never approach the 10 million barrels a day the Saudis currently export - "it's just too expensive to develop" - but that it could eventually get as high as 6 million barrels a day, which would cover more than half of America's oil import needs....

Newsday: Misrepresenting The Endangered Species Act

An editorial in today’s Newsday shows how far apart the right and left are in the Endangered Species Act. It also shows how far proponents are willing to go to distort the issue. Of Richard Pombo’s new bill, it states: One new feature of the bill is downright cynical: It requires the Fish and Wildlife Service to respond in an unrealistically short time to requests from property owners for rulings on whether a proposed action would harm endangered species. Pombo wanted 90 days, but during the markup of the bill, it became 180. That's still an outrageously short time for an agency without enough resources to meet deadlines now. If the agency doesn’t meet this new deadline, the property owner would be entitled to go ahead with the action. So? Property owners have rights, which the ESA has trampled on for over 30 years. Putting limits on a government agency is not cynical—it’s in the best tradition of individual rights. What’s cynical is violating individuals’ property rights by letting the process drag on and on with no deadline in sight. But wait. It gets worse. Pombo’s bill would also sock the taxpayer by compensating property owners who say they will suffer economically if they abstain from an action that might damage a listed species. A complex appraisal process would decide the amount of compensation, but whatever it is, it will constitute a shameless gift of public money. Well, it’s nice to see that Newsday is finally concerned with the long-suffering taxpayer! We can be sure they reiterate that concern the next time Ted Kennedy proposes more welfare spending. Too bad, though, that they are concerned about the taxpayer expense of something that is a legitimate government function: compensating property owners for the government “taking” of their property....

Improving the Endangered Species Act: Balancing the Needs of Landowners and Endangered Wildlife

The Endangered Species Act was intended to bring endangered species back from the brink, but over 30 years it has helped rescue only 10 of the nearly 1,300 species that have been listed—a success rate of less than one percent.[1] At the same time, the Act has dragged landowners into endless conflicts and litigation. Its vague classifications allow private property to be declared “critical habitats” almost arbitrarily, resulting in many use restrictions and seizures. The Threatened and Endangered Species Recovery Act of 2005 (H.R. 3824), introduced by Rep. Richard W. Pombo (R-CA), Chairman of the House Committee on Resources, would strengthen incentives for landowners to participate in conservation, to the benefit of endangered species, while clearing up the vague classifications that put private property at risk. According to U.S. Fish & Wildlife Service (FWS), 39 percent of all species listed under the Endangered Species Act (ESA) have an “unknown” status, 21 percent are “declining,” and only 6 percent are “improving.” This is unimpressive, and it may even be overstating ESA’s success. Many species that later studies have shown should not have been listed under ESA in the first place have subsequently been moved to “stable” status, falsely suggesting improvement. Data errors account for most of these changes in classification. Historically, such errors have been responsible for the delisting of more species than evidence of reduced survival threats or actual recoveries.[2] After 30 years, there is still a blurred line between “threatened” and “endangered” species. About 38 percent of the species classified as facing a “low” threat are listed as endangered rather than threatened.[3]This is a problem because faulty listings divert limited conservation resources from the species that need them most. Under ESA, species classification is based on the “best available” scientific data, a very vague standard that is responsible for much improper listing. Additionally, the current listing process is far from transparent, making it difficult for some stakeholders to participate. The end result is wasted resources and endless litigation....

Better Living, Sensible Regulation

The United Nations' Strategic Approach to International Chemicals Management (SAICM) was discussed last week in Vienna. It seeks to internationalize a "precautionary principle" approach essentially similar to the EU's REACH proposal, which is causing great concern in the chemicals industry in Europe. It appears that the US State Department is considering the UN proposal, and there are fears that it might adopt it. We strongly believe that the Bush Administration should continue to take a principled stand against international agreements based upon the precautionary principle, and continue to advocate the current international standard risk-based legislation. We have accordingly written as Members of the European Parliament to the US State Department, urging them to take this approach. On a recent visit to the United States, we were pleased to attend a meeting on Capitol Hill with representatives from the Bush Administration, who expressed firm opposition to the EU's forthcoming REACH (Registration, Evaluation and Authorization of Chemicals) Directive. With several elements of REACH contained in it, SAICM is equally burdensome, costly and impractical -- and possibly even a back-door way of introducing the problematic REACH Directive on an international level. The US State Department should already be aware that REACH in itself is complicated and controversial in the European legislative process. We have objected both to the principles that underpin this hazard-based legislation, and to the processes that it involves. As an international agreement, SAICM is equally objectionable and we urge all governments -- our own included -- to withdraw support for it....

Collapse: A Book Review

In Collapse, Jared Diamond asks: how could a society once so successful end up collapsing so utterly? One could ask a similar question about the thesis of Diamond’s latest work. Collapse floods the reader with as many anthropological anecdotes as it omits the deepest insights of economics and vital institutions. And that is a shame. The subtitle “How Societies Choose to Fail or Succeed” might have been better suited to the text of an institutional economist like the Nobel laureate Douglass North than to Diamond’s collection of post-Pulitzer assertions. According to Diamond, one of the basic ideas behind why societies collapse is resource depletion and so-called “tragedies of the commons.” Resources are overused when a rational person, directed by self-interest, uses some resource in an area before the next guy. If he doesn’t, you can bet the next guy will. The “tragedy” comes when everyone employs the same strategy and a resource is subsequently wiped out. It is therefore shameful that in a 525 page volume, Diamond devotes less than half of a single page to private property rights approaches to resource allocation and conservation issues. The idea is so simple as to be trivial: people have an incentive to protect and conserve resources that they own, because the expectation of future returns (or the preservation of amenities) depends on such conservation. Diamond skims over this fundamental axiom of economics—effectively ignoring an institution that has done more to generate wealth, conserve resources, and organize human society than perhaps any other human construct. Instead, Diamond gives us a “five-point” thesis, a preexisting environmentalist dogma that lies somewhere between sanctimony and paranoia....

Goodbye to anthropogenic global warming

When CO2 levels fall too low, natural processes cause it to be released from the soil -- as seems to be happening now. Researchers from the UK's Cranfield University found that some 13 million tons of carbon are being released from the soil every year, as Reuters recently reported. "Since the carbon appears to be released from soil regardless of how the soil is used, the researchers conclude that the main cause must be climate change itself. Though they could not say where all the missing carbon had gone, much of it may be entering the atmosphere as the greenhouse gases carbon dioxide and methane, which many scientists say is causing global warming." Scientists from Germany's Max-Planck Institute for Biogeochemistry wrote, "These losses thus completely offset the past technological achievements in reducing CO2 emissions, putting the UK's success in reducing greenhouse gas emissions in a different light." In other words, many Kyoto signatory nations have crippled their industry, spent vast amounts of money and caused rampant unemployment for absolutely nothing. Science -- not junk science based on hysteria and ideology, but real science based on data and reason -- suggests that global warming is driven more by the sun than anything humans have done. A recent study by Swiss and German scientists indicates that the sun is burning hotter than it has at anytime in the past thousand years. "The Sun is in a changed state," stated Dr. Sami Solanki, the director of the Max Planck Institute for Solar System Research. "It is brighter than it was a few hundred years ago and this brightening started relatively recently -- in the last 100 to 150 years." Does that time frame sound vaguely familiar? It's about the same time the Little Ice Age began to end -- the same time that Liberals claim humans began to cause global warming. Isn't it clear that the sun is the real cause? Shouldn't we at least examine this before ruining our economy for nothing? Every experiment must have a control, or a source of data uncorrupted by the experiment itself. There are no humans on Mars, and there's no way we could influence its climate. Yet Mars is also experiencing global warming, which strengthens the hypothesis that Earth's global warming is heliogenic, or sun-based, to the point of positive proof. It's simply not possible that the sun could cause environmental warming on Mars, but that similar warming on Earth is caused by SUVs and capitalism....

Local, State and Federal Gas Taxes Consume 45.9 Cents Per Gallon on Average

In the wake of Hurricane Katrina and the devastation that has followed, consumers are feeling the economic consequences of the disaster. Record gasoline prices are constantly in the headlines, which leaves many asking why prices are so high. While supply and demand are the primary determinants of gasoline prices, a significant portion of the price consumers pay at the pump can be attributed to gasoline taxes. In fact, the federal gas tax alone equals 18.4 cents for every gallon purchased (See Figure 1). In 1932, the federal government imposed the first federal gas tax. It began as a temporary levy with a rate of just 1 cent per gallon. Over the years, the tax burden has increased significantly. The Revenue Act of 1941 made the federal gas tax permanent and increased the rate to 1.5 cents per gallon to help fund the war effort. A decade later in 1951, the tax was increased to 2 cents per gallon to assist in the funding of the Korean War. After President Eisenhower’s idea of an interstate highway system had been instituted, the federal gas tax was raised to 4 cents per gallon in 1959. As recent as 1981, the federal gas tax remained at 4 cents per gallon. Significant tax increases in 1982, 1990 and 1993 increased the federal gas tax by 14.4 cents per gallon, or 360 percent from 1981 levels. In 1919, Oregon became the first state in the nation to place a tax on gasoline and every state has subsequently adopted this form of taxation. This year, according to the Energy Information Administration the average state gas tax is 20.8 cents per gallon. In addition to statewide taxes, often consumers pay local excise taxes on gasoline purchases (see Figure 2). Today, the combined burden of federal, state and local gas taxes costs American drivers an average of 45.9 cents on every gallon purchased. As Figure 2 illustrates, in some states the combined taxes exceed 60 cents for every gallon purchased....