Wednesday, July 07, 2004

Oil for Blood

Another "Big Lie." We are pouring American blood on Mid-East sand to prop up suburban sprawl with military protection subsidies.

Of course since it is a secret ("unofficial" but nonetheless real) subsidy anyone who might actually disagree with their scholarly proposition is merely ignorant or uneducated or both. As soon as we actually stop paying world market prices for that double secret subsidized oil you can try again. What? We don't get special prices? We -oh-mi-god- have to pay the same as the Japanese who don't have an exonational military? Hmmmm.

Here's a classic example of what scientists are up against when truth impinges on zealotry. The definition of an externality is something that cannot be costed. Humor and educational value are beyond price. Externalities if you will.

As long as you claim the operative US international energy policy and military deployment rationale and justification is secret and unofficial you can continue to wear your sackcloth conduct self immolation and rant outside the entrance of the Trilateral Commission quarterly meeting and say anything you want. If fact those military forces are there to protect your right to do so. Wow! Imagine that your right (and the Oregonians') to mistaken ideas are subsidized! As a special bonus people like me will continue to defend your right to do so in public. No need to thank me, Indeed, I'd risk protecting even the unworthy in the hopes of their possible redemption.

The US military international presence (usually) helps ensure a stable world where commerce and rights are (generally) protected. A stable world allows things like oil to sell closer to their market driven prices, NOT at a subsidized price. Conversely an unstable international scene causes things like oil to sell for wildly unstable (plus/minus) prices. To that extent, the international US engagement, both political and economic, removes price distortions and allows prices to more accurately track market forces. Pretty much the opposite of the usual anti-POV claims.

Your problem is that you tie the fact of US involvement with the speculative conclusion that it must follow that the engagement is in itself somehow a subsidy.

The basic message of articles like this, it seems to me, is that anti-POV agendaists are misclassifying joint costs as subsidies. This is a common problem in assessing the cost of transport infrastructure.

A classic illustration of this misclassification, using sheep farming as an example, is given in C.D. Foster's 'The Transport Problem'. Confusing subsidies with joint costs is like saying that, depending on what the prices of sheep, wool, and mutton are at any given time, mutton producers are subsidizing wool merchants or vice versa.

IMO its' less sophisticated than that on the part of these theories. To a large extent the "POV/oil military subsidy" path is circular:

"The cost of almost everything is hidden in the price
of almost everything."

Joint costs is much more specific than that. No one calls the Coast Guard a subsidy of the surfboard industry yet the US military is a subsidy of the oil industry.

While we are on the subject, let's look at the taxation of domestic US agriculture that our support of democratic stable foreign governments imposes. If those Chilean lemons were not available on the US market then the Ventura County lemon industry would not be suffering. Is this an anti-subsidy?

The entire US military budget is 340 billion and at 3 trillion miles annually the entire bill via gas taxes is only $2.26 per gallon. That still puts us at less than most EU countries. Even the most anti-POV
critics don't assign more than a quarter of the military budget to protection of oil supplies. Back down to 60 cents per gallon.

Nevertheless this produces a paradox. Supposedly oil is artificially under-priced because of military subsidy yet now the price is not fully accounted for by a combination of public and private spending. Can't have both.

------ News Release

"But according to the Reason Foundation study, auto-users are already overpaying. For example, California's auto-users pay approximately $16 billion through auto-related federal, state, and local levies, while only $7 billion to $8 billion is actually expended on roadways and other related auto use infrastructure
Reason Foundation study also examines alleged social externalities. Such social costs include compensating pedestrians for blocking their way and military activities aimed at protecting oil supplies in the Middle East".
"Related studies on the cost of automobiles and transportation reform include Where the Rubber Meets the Road: Reforming California's Roadway System, and Looking Beyond ECO: Alternatives to Employer-Based Trip Reduction.

The problem with that is that energy is not the "end product" it is a consumable used in delivering a good or service that people value. Ifind the claims of massive energy subsidies for externalities to be guesswork. The FAct that those guesses as to subsidy frequently vary by an order of magnitude reinforces my claim.

The Sierra Klub list of subsidies has been firmly rebutted as has the claim of signifigant auto/road/POV subsidies. Understand that there are externalities associated with almost every valuable activity. In the case of transportation we've made tremendous progress in identifying and internalizing those costs where possible.

Good thing we made money on the first Gulf War. But then we do have the Pacific Fleet subsidizing your Hawaiian vacation as well. One but not the other? Without a military presence in the Mid-East would petroleum be 15% as expensive? If so then the several dozens of billions we spend annually are a bargain are they not?

I now lay my "howitzer of certitude."

I'm all for internalizing identified costs. Point one out and I'll be there advocating for cost assignment.

1 comment:

Seb said...