Thursday, March 1, 2012

High Gas Prices!

Tuesday, during congressional testimony:

Department of Energy Secretary Chu said, “High gasoline prices will make research into such alternatives more urgent”.

Rep. Alan Nunnelee (R-Miss.) asked, “But is the overall goal to get our price of gasoline down?"

Chu said. “No, the overall goal is to decrease our dependency on oil, to build and strengthen our economy.”

Before I bring forth my point, let me deal with other perspectives.

 European gas prices are far higher than American gas prices, in fact nearly double. So why shouldn't Americans pay the same price for a gallon of gas than other countries?  The answer is simple.  We are better than you. That is not a very persuasive argument on its face, so here is the underlying philosophy that makes it true. We do not use our federal government to legislate morality, prop up a false market, or tax one segment of the population to cover for the irresponsibility of another part of the population through wealth redistribution programs. (Inner-monologue: but that’s Obama-Care, Tax the Rich, Solyndra, Freddie Mac/Fannie Mae and free contraception for all……..darn it I am wrong, our current government does do that, even though is was never intended to.) I guess eventually we will be Europe at this pace, but currently we are not quite there. The overall point remains valid, we are better than Europe currently and we even have a nice scale to alert us where we are on the socialism path, the price per gallon!

Higher gas prices will force investment in other renewable sources of energy and allow us to wean the country off of fossil fuels right? The simple answer, NO! It is obvious these types of folks don’t understand markets. Every business man or woman is interested in selling a product to make money, yes even the “morally straight” ones. What about the companies who have a political agenda, like Ben and Jerry's Ice Cream?  They are making money too or they wouldn't exist. (Although I bet they will be making less this year, now that they back Occupy Wall Street.)  So, if you are an oil company who sells a product you know is limited (ie not renewable), you are certainly going to invest some of your money in a future product, or else your company is doomed, when the oil runs out.  For example, according to AOLEnergy, ExxonMobil’s 2011 capital spending budget is set at $34 billion for its ExxonMobil-Synthetic Genomics, Inc Partnership.  The upsides of letting the market find the answer is we don’t have to be suspect of their motivation or risk tax dollars. They want to make money, not get re-elected or pay off someone for a favor. The smaller the current profit margin of these oil companies, the less expendable income they have to invest (certainly more smartly than politicians) in renewable sources of energy.  P.S. These ExxonMobil guys are the ones leading in research of President Obama’s algae fuel, not a government propped up company.

Cut oil company subsidies Chugiak, why didn't you say that? It turns out that they are all tax "breaks", according to CNN Money.  And the total amount of earnings not collected in taxes (which liberals define as a "subsidy") is about $4 billion per year. So follow me class, $32B minus $4B is $28B still able to be invested in renewable energy research.  Go ahead and take the tax breaks away. P.S. the big difference between subsidy and tax break?  The tax break let's someone keep their own money, the subsidy let's someone else get your money.

So what the heck was the point of this post??????  A simple question, what the heck is the federal government of a constitutional republic doing using policies to manipulate markets and using tax dollars to pick market winners and losers (but mostly losers)?

I will give you a simple answer, they are buying votes.

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