McCain, Obama Equally Gassy on Oil

Demagoguing and economic ignorance on gas prices

Radley Balko | August 19, 2008

In an interview last week on National Public Radio, Barack Obama was asked about his proposal for a "windfall profits" tax on oil companies. To her credit, the interviewer prefaced her question by noting that nearly all economists from across the political spectrum oppose the idea. Taxing oil company profits won't make gas any cheaper—it'll likely make it more expensive in the long run by discouraging exploration—and it won't speed the development of alternative energy sources. Obama's answer was pure demagoguery, pitting senior citizens and working class families against oil companies, who he says are reaping profits "hand over fist."

Obama's opponent John McCain has smartly opposed a tax on oil company profits—and Obama has promptly attacked him for it.

But McCain isn't much better. McCain has proposed an equally ridiculous "gas tax holiday," which will also do almost nothing to provide relief at the pump. Obama has smartly opposed the idea—and McCain has promptly attacked him for it.

Economic ignorance is nothing new in politics. Neither is the idea that a candidate would perpetuate economic idiocy he knows to be false because it plays into the narrative he's pitching to the voters. But no issue seems to prompt more jaw-dropping sophistry and anti-capitalist demagoguery than gas prices.

Both candidates have promised to crack down on so-called "oil speculators," who are really only commodities traders wagering on whether the price of oil will go up or down. Speculators are an important part of the market process because they're generally knowledgeable about what they're trading, and their collective wisdom sends useful signals about supply and demand. "Cracking down" on speculators is silly. In the first place, it isn't possible. Oil futures are traded all over the world, well outside of U.S. jurisdiction. In the second place, if you own a 401(k), you're likely an indirect "speculator" yourself.

We Americans seem to think we have a right to cheap gas. There is no such right. Like anything else sold on the free market, the gas at the station pump belongs to someone else, at least until it falls into your tank and you swipe your credit card. From extraction, to processing and refining, to retail sale, someone owned the oil in your car at every step of its manufacture. And each owner was free to put whatever price on the stuff he pleased. You have no more right to cheap gas than you have to cheap bananas, or a cheap iPhone. This notion that cheap gas is part of our national heritage has been both nurtured and exploited by politicians, despite the fact that there's little they can do—or should do—to make it so.

In fact, that's exactly what's happening. We're driving billions fewer miles per month than we drove last year. We're biking more, walking more, and more often opting for public transportation. Sales of sport utility vehicles have plummeted, while quaint gas-sippers like the Geo and the Mini-Cooper are all the rage. The big car companies have all but stopped production of gas-guzzlers, and can't churn out hybrids fast enough to meet demand.

We're changing our habits. We're driving less, and driving more fuel-efficient cars when we do. The market is working. High gas prices are altering behavior and nudging us toward more conservation-oriented transportation habits.

So why are our politicians tripping over themselves to keep prices low?

The easy answer is to win votes. The better answer is that Washington can't handle not having control. Letting market forces dictate our energy habits isn't satisfactory for our all-knowing leaders in Washington, because elected officials want their hands on all of the economy's levers, all of the time. Instead of letting supply and demand alter consumption patterns and drive the market to come up with better sources of energy, they'd rather keep gas prices low through government fiat, while at the same time promoting their own favored forms of alternative energy through subsidies, tax breaks, corporate welfare, and research and development boondoggles. It's waste piled upon waste, and a massive strain on taxpayers. But we let it go on.

The whole mess does nothing to ensure that the cleanest, most efficient, or most innovative ways of harnessing energy will win market share. On the contrary: The winners in this system are the energy suppliers with the most political clout in Washington—a lesson you'd think we'd have learned from the ethanol debacle.

Unfortunately, this isn't likely to end anytime soon. Pandering to voters by making impossible promises and vilifying faceless speculators is quite a bit easier than explaining to the American people that sometimes, sometimes, they're going to face problems that cannot—and should not—be fixed by politicians.

Radley Balko is a senior editor of reason. A version of this article originally appeared at FoxNews.com.

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|8.19.08 @ 8:07AM|#

What incentive would a politician possibly have to proclaim that the market should sort things out? It's almost as though you have a touching belief that these candidates are motivated by something other than their own self-interest and the interests of the political class.

Elemenope|8.19.08 @ 8:20AM|#

What incentive would a voter possibly have to believe that the market should sort things out? It's almost as though you have a touching belief that these voters are motivated by something other than their own self-interest and the interests of their class.

|8.19.08 @ 8:24AM|#

I told my liberal friends that oil going up would cause a lot of the changes that they wanted, but nooooooooooooooo. I was using market hoobily joobily!

|8.19.08 @ 8:37AM|#

almost as though you have a touching belief that these voters are motivated by something other than their own self-interest and
------

?????

I believe voters are motivated primarily by self interest. What are you on about?

|8.19.08 @ 8:45AM|#

The "windfall profits tax" isn't intended to lower gas prices, so it's a bit odd to see Obama criticized for "economic ignorance" because his proposal wouldn't do what he's never said it would do.

Elemenope|8.19.08 @ 8:53AM|#

If you don't get it, I doubt an explanation would help.

|8.19.08 @ 8:59AM|#

For years now, our political leaders have told us that we need to wean ourselves off of oil and gas and find cleaner, more renewable energy sources. McCain and Obama are no exception. But there's no surer way to change our behavior when it comes gas consumption than high prices at the pump.

Interesting, isn't it? 30+ years of political wrangling over CAFE standards and other government intrusions...and it only takes 3 months at $4 a gallon to change everything. American car manufacturers sell upwards of 1 million new cars a month. It doesn't take long to recognize a buying trend, does it?

On the other hand...it also shows value-based conservation to be relatively useless when compared to economic-based conservation. Maybe Dick Cheney was right after all.

Nigel Watt|8.19.08 @ 9:00AM|#

joe, what exactly is the "windfall profits tax" supposed to do, besides getting off the people convinced that all oil companies are evil?

ed|8.19.08 @ 9:01AM|#

The "windfall profits tax" isn't intended to lower gas prices

Indeed, it's a purely punitive measure. Because Big Oil is the enemy. It must be taught a lesson.

|8.19.08 @ 9:07AM|#

Must. . .get. . .revenge. . .for. . .my. . .people. How presidential. Too bad the proposal is economically foolish.

|8.19.08 @ 9:09AM|#

isn't the "windfall profits tax" supposed to be used to subsidize alternative energy research of the sort that the politicians in power would benefit from giving money to? Oh, I mean... to subsidize the MOST PROMISING alternative energy research?

|8.19.08 @ 9:12AM|#

Nigel Watt,

It's intended to fund alternative energy investment. Or, rather, get the oil companies to fund alternative energy investment, since money invested that way wouldn't be taxed.

It's described on his issues page. That's one of those things you can udnerstand, Elemenope, if you bother to find out.

You too, ed - you could make the effort to educate yourself and THEN come up with an opinion, instead of just letting everything by a map of the inside of your own skull.

Nancy Pelosi|8.19.08 @ 9:14AM|#

You people are so stupid. The fee on excess profits will encourage the rapacious oil barons to invest in wind-powered autos so America's Children™ can again afford nutritious meals. Or something. I'm on vacation for crying out loud. Leave me alone!

Episiarch|8.19.08 @ 9:14AM|#

joe, LMNOP wasn't talking to you. But feel free to insult him anyway.

(sigh) I wish I was as good at making friends as you.

ed|8.19.08 @ 9:15AM|#

I don't need a troll to tell me how to think, joe p. stalin. But thanks for your concern.

|8.19.08 @ 9:16AM|#

I overwhelmed by the substantive replies, as always.

Nigel Watt|8.19.08 @ 9:17AM|#

joe, so they're going to lose the money anyways? It sounds like it might incentivize investing in the most expensive, harebrained scheme one can think of. But of course the economic geniuses in Washington would never promulgate a policy with unintended consequences, so I suppose I'm just pissing in the wind.

kinnath|8.19.08 @ 9:17AM|#

"windfall profits tax"

Exxon operates with a profit margin that is about half of what my Fortune 500 employer produces.

Exxon makes big dollars because we burn so much fucking gasoline. Exxon is not gouging Americans at the pump, there is no "windfall".

Nigel Watt|8.19.08 @ 9:18AM|#

joe, people might be inclined to reply substantively to you if you ever had an original thought.

|8.19.08 @ 9:19AM|#

Whoops, sorry Elemenope. Unfortunate juxtaposition of comments.

Episiarch, let's work out a signal. When I'm interested in your opinion about my tone, I'll type of series of Xs and Ys like this: XXYYXYXXXXY.

OK? Watch for it!

|8.19.08 @ 9:20AM|#

We need to put a windfall profits tax on Microsoft and give the money to artificial intelligence developers. I want my robot!

Elemenope|8.19.08 @ 9:20AM|#

joe, LMNOP wasn't talking to you. But feel free to insult him anyway.

Double fault, Epi. I wasn't talking to joe...I was making fun of mark.

Episiarch|8.19.08 @ 9:22AM|#

I'm not really interested in whether you are interested in my opinion, joe.

LMNOP, that was exactly my point. joe thought you were responding to him when you were responding to mark. I understood you just fine.

|8.19.08 @ 9:24AM|#

"I don't need a troll to tell me how to think, joe p. stalin. But thanks for your concern."

Yeah, that's what talk radio is for!

|8.19.08 @ 9:25AM|#

Nigel Watt,

There's a difference between initial costs and longterm viability.

ed,

While noting the stated purpose of and reasoning behind Obama's profits tax/energy investment proposal isn't original - it is, in fact, a statement of a widely-know, easily-researched bit of data - that's sort of the point. BTW, you see what knnath and Nigel did just upthread thar?

kinnath,

Exxon operates with a profit margin that is about half of what my Fortune 500 employer produces.

Exxon makes big dollars because we burn so much fucking gasoline. Exxon is not gouging Americans at the pump, there is no "windfall."

Right, which makes the point that this is a proposal to steer investment, rather than an actual "wealth tax," particularly relevant to the question of whether it represents "economic ignorance." If the proposal actually was as described - an effort to get gas companies to lower their prices by taxing them - that would demonstrate considerable economic ignorance; but it's not. It's something else.

Nigel Watt|8.19.08 @ 9:26AM|#

Oh sweet, we have both of our resident Obama guzzlers in on this thread.

|8.19.08 @ 9:26AM|#

Obama would probably try to get the money funneled to important oil alternatives, like ethanol. The government's track record on all of this is not good. Now that there are market pressures that make alternatives to oil attractive, how about letting the market work it out? Or, as an alternative, why not simply nationalize oil production?

I, for one, would support a software windfall tax, so long as the money was directed towards developing a stable operating system. In addition, I support a movie studio windfall tax, provided that the money is directed to making better quality movies.

Nigel Watt|8.19.08 @ 9:27AM|#

Correct, joe, though every economic manipulation has significant initial costs and no long-term viability.

kinnath|8.19.08 @ 9:28AM|#

It's intended to fund alternative energy investment.

I've never understood this logic.

1) If you want to spur development, lay out a big prize for whoever gets there first.

2) Why would you want the entity that has a stranglehold on the current technology to take the lead in developing the replacement technology. If you want better prices, you need an independet group to create the next technology to provide competition to the incumbant.

Bags|8.19.08 @ 9:28AM|#

Yeah, that's what talk radio is for!

ZING! POW!

|8.19.08 @ 9:31AM|#

Nigel,

every economic manipulation has significant initial costs and no long-term viability.

Is this the part where I cross myself three times, or the part where I kneel?

Pro Lib,

Nobody wants to nationalize the oil industry, because the government doesn't operate industries very well, for the most part. That, as a matter of fact, it why it makes more sense to incentivize private energy companies to invest in the alternative energy projects that make the most sense to them.

I'm not really interested in whether you are interested in my opinion, joe. Good, then you can stop jacking every thread on the page into these idiotic conversations now. Glad we cleared that up.

"Oh sweet, we have both of our resident Obama guzzlers in on this thread."

Yeah Nigel, I'm a big fan of Obama. Do you read the threads here at H&R?

New World Dan|8.19.08 @ 9:32AM|#

Oooooh, I have an idea... why not invest in a national stockpile of oil to help moderate prices. During a price shock (like we're experiancing now!) we could sell oil from our "reserves" to moderate prices and discourage speculaters from pricing in "risk" for events that never happen. Then, once we've got this stockpile, we could say it's really only for National Emergencies(tm).

Or maybe this is all just crazy talk.

anon|8.19.08 @ 9:32AM|#

It's intended to fund alternative energy investment. Or, rather, get the oil companies to fund alternative energy investment, since money invested that way wouldn't be taxed.

And that, by definition, is economic ignorance.

Elemenope|8.19.08 @ 9:32AM|#

I understood you just fine.

I know you did. *My* point was given the way the comments lined up (and the fact that I did not quote the Parent quote) and given the way joe is treated like a red-headed step child around here (fairly or unfairly), joe's reaction was, if not correct, at least understandable.

You know I would never question your reading comprehension, Epi. I leave that for trolls and Guy Montag...er, trolls.

|8.19.08 @ 9:33AM|#

"1) If you want to spur development, lay out a big prize for whoever gets there first."

Well, I guess that is the idea. Those that invest get a protection from the tax. That's the prize. It's an incentive whether its a reward for doing good or a punishment for not doing good.

There is an excellent historical precedent for this. You all remember the windfall profits tax imposed on the Pony Express which funded the development of the telephone, don't you?

And the windfall profits tax imposed on the sailmakers which funded research and development of steam power?

It's called "industrial policy", people, and it works like a fucking charm. Every time.

kinnath|8.19.08 @ 9:35AM|#

Well, I guess that is the idea. Those that invest get a protection from the tax. That's the prize.

Next up, people that don't use drugs, won't be shot on sight. That's the prize.

|8.19.08 @ 9:35AM|#

kinnath,

1) Oh, there's a pretty big prize for whoever gets there first as it is. (We are now going to be treated to a number of comments by people who don't understand the concept of margins, and yet proclaim their superior understanding of economics).

2) There's some truth to the that, but on the other hand, having the incumbent develop a big interest in the alternative makes it less likely that they will use their market power to squash it. There's an element of co-opting them here.

Nigel Watt|8.19.08 @ 9:35AM|#

Is this the part where I cross myself three times, or the part where I kneel?

Oooh yeah, that's one substantive reply. That'll keep me chewing - somebody for whom Obama can do no wrong accusing me of being dogmatic.

Mr. Nice Guy, sorry if I misattributed your frequently bizarre positions to support for Obama.

|8.19.08 @ 9:36AM|#

P Brooks
Didn't Japan follow a fairly tight industrial policy in its post-WWII rise? I'm not trying to sucker you, I honestly don't know the answer but I think I remember a prof back in college talking about it.

The winners in this system are the energy suppliers with the most political clout in Washington-a lesson you'd think we'd have learned from the ethanol debacle.

You'd think? I would have thought so, once upon a time. I've long since given up on the idea that even the most basic laws of supply and demand have any place in our national political discourse. Imagine the nerve of those oil companies, making money hand over fist! Somebody needs to put a stop to that.

|8.19.08 @ 9:37AM|#

anon is a Demand Kurv person.

Sigh. Yoo just kneed to take Ekon 101.

Nancy Pelosi|8.19.08 @ 9:37AM|#

Don't make me come up there!

Episiarch|8.19.08 @ 9:37AM|#

I think MNG and I can get behind a Blackman/Jellineck ticket for '08.

Nigel Watt|8.19.08 @ 9:38AM|#

joe, would you care to debunk supply and demand for us? I'm intrigued.

|8.19.08 @ 9:39AM|#

Shorter Nigel: Demand Kurv!

|8.19.08 @ 9:40AM|#

Nigel
I think Obama was a terrible choice as the nominee. Here we are with a troubled economy, an unpopular war and an unpopular GOP President, and this guy is barely winning. This should have been a cake walk for the Dems but now th election s a referendum on their choice rather than a referendum on the last eight years of mismanagement and corruption.

This is what happens though when you pick someone for a job not on their qualifications but to make yourself feel better. Liberals saw a chance to heal America's racial wounds and to get that warm glow of voting for the black guy and forgot about how important winning the White House might be for a change.

Nigel Watt|8.19.08 @ 9:41AM|#

Mr. Nice Guy, aren't you identifying (very real) problems with our political system in general, rather than the Dems not picking Richardson?

joe, I'll take that as a concession speech.

|8.19.08 @ 9:41AM|#

It strikes me Epi that there are some shadows in Jellinek's closet that might hurt that ticket, but man Oynx can speechify to put Obama to shame!

Slightly less short Nigel: I'm right cuz Demand Kurv!

You don't even have an argument. If you think there is anything contrary to "supply and demand" in anything I've written, you don't even understand economics.

"refute supply and demand." What the hell does that even mean? Nothing, beyond an assertion of superior understanding completely lacking in any support.

|8.19.08 @ 9:42AM|#

I view talk of windfall taxes against any industry as pandering of the worst sort. The oil companies are certainly benefiting today from high oil prices, but they aren't the cause of the spike, nor will the fun last forever for them. Whatever good or bad one wants to speak of the government, it usually isn't good at R&D, with a few unusual exceptions (like the atomic bomb). And it most certainly isn't efficient at R&D.

The money for energy research and the future economic incentives for such research are there. We don't need to steal money from companies or people to fund it. Even the oil companies have to look into alternatives, given the fact that oil has a finite future, even if it lasts the world another hundred years.

Frankly, I'm embarrassed that we still rely on chemical reactions to power our society. Fusion--or even fission--would be cooler. Or a third energy source to be named later.

Sure wish we had better candidates, a better Congress, or limited government. Or some combination of the three. I'm sick of all of these meddlesome kids, myself.

Episiarch|8.19.08 @ 9:42AM|#

And Onyx has executive experience, unlike Obama!

Nigel Watt|8.19.08 @ 9:43AM|#

Ooh, the trademarked "joe move" (uncapitalized for extra edge) - argue against something the other person hasn't come close to saying!

|8.19.08 @ 9:44AM|#

If the oil companies are going to make a bigger margin on the alternative energy than they make on oil in the future from being encourraged to invest their profits in the development of that alternative energy, isn't it immoral to be giving them tax breaks for something that will benefit them in the long run?

Nigel Watt|8.19.08 @ 9:44AM|#

And joe, at least the market has successes to back it up. The only thing that suggests a new economic policy will work is ignoring the past 150 years of failures.

Nigel
I think the very real problem with our political system is that most of the electorate should not be allowed to operate a motor vehicle, much less choose the leaders of this nation.

But give credit to the GOP, the "stupid party" picked the best nominee they possibly could have (from the available choices) for winning in 08.

kinnath|8.19.08 @ 9:46AM|#

joe, big companies do not innovate well. In fact, my company has an entire department established to hunt down innovators and smoother them with a wet blanket before they can do any real damage.

Breakthrough technologies come from clever people's garages. The vast majority of those people fail and are never heard from. The rare few that do succeed either create a new business or transform an existing one.

I don't see any real possibility that Exxon is going to transform their entire business model because of the threat of some new tax. It's wishful thinking.

|8.19.08 @ 9:46AM|#

"And joe, at least the market has successes to back it up."

I guess we can ignore the whole boom and bust cycles that used to be frequent in more laissez-faire days?

Nigel Watt|8.19.08 @ 9:47AM|#

If the majority of people can't drive, how can they be trusted to elect a bureaucracy that will prevent them from doing so?

(We're saying the same thing, I'm just being pedantic.)

|8.19.08 @ 9:47AM|#

Pro Lib,

I view talk of windfall taxes against any industry as pandering of the worst sort. What do you expect, they're politicians. I'm just relieved that this pandering is purely rhetorical, a dressing for a serious policy proposal.

Even the oil companies have to look into alternatives, given the fact that oil has a finite future, even if it lasts the world another hundred years. Two possibilities here: either that is really the case, which means this proposal will have no effect, as the oil companies will already be making this investment; or that is not the case, and there is a shortage of money invested in energy alternatives, and this proposal will remedy that.

Mr. Nice Guy: Never will you see me suggesting any system will result in utopia.

|8.19.08 @ 9:49AM|#

Whatever good or bad one wants to speak of the government, it usually isn't good at R&D, with a few unusual exceptions (like the atomic bomb). And it most certainly isn't efficient at R&D.

Does this mean you think General Electric could have made a better atomic bomb, cheaper? (If they had believed a market existed which would justify the expense?)

|8.19.08 @ 9:50AM|#

I think there is some definite pander in Obama's proposal, but there is some sense to it too. The idea is to "correct" the market, to create incentives for some public good (more alternative sources of energy) that the market may not be providing. The pander is to frame it as sticking it to the oil companies, whom everyone hates.

McCain's gas tax holiday just has very little going for it. It hurts government revenues and provides a short term relief but makes no attempt at any long term incentives for anything.

|8.19.08 @ 9:52AM|#

I dunno about the government doing R&D badly. Industry benefits a great deal from all the R&D being done on the public dime at universities and such. And look at the spillover from Defense R&D.

kinnath|8.19.08 @ 9:53AM|#

"Breakthrough technologies come from clever people's garages. The vast majority of those people fail and are never heard from. The rare few that do succeed either create a new business or transform an existing one." Or some big company squashes them.

What a fucking idiot.

Big companies buy garage-outfits when they create something new. It's far easier and requires less R&D investment to let someone else do it, then buy it up when in pans out.

|8.19.08 @ 9:55AM|#

I'm sick of all of these meddlesome kids, myself.

But Pro - "we" can do it!
Don't you understand? If we all get behind every noble goal you can ever imagine and give control over all our resources to a central planner it will all happen because the people allocating the money can do so perfectly.

|8.19.08 @ 9:56AM|#

Buying people out is indeed one way big companies squash small ones. Often there is a guy with an idea but who cannot get the capital necessary to realize it and a big company provides the capital, on their terms of course (your family can't eat ideas).

|8.19.08 @ 9:57AM|#

Reinmoose,

1. "bigger" margins? Huh?

2. Think about the environmental and geo-political externalities. If not for those, nobody would be worrying about getting off fossil fuels.

kinnath,

joe, big companies do not innovate well...Breakthrough technologies come from clever people's garages. That's just not true. Bell Labs? IBM? MITRE? Heck, the oil companies have been innovative as hell in developing extraction and exploration technologies. GE? Boeing? Everyone loves the story about the little guy in his garage, but the big companies' R&D is a potent force. How many new pharmaceuticals are cooked up in people's garages? (Legal one, I mean).

It's a question of incentives, like this: In fact, my company has an entire department established to hunt down innovators and smoother them with a wet blanket before they can do any real damage. Your company has no incentive to foster innovation, because it's at the top of the market and doesn't want it to change - sort of like the oil companies. This proposal is an effort to change the incentive structure.

Nigel, you speak in vague generalities "the market has 150 years to back it up," "refute supply and demand" because you think in vague generalities. You have these little doctrines that help you make sense of the world, and your only intellectual activity when encountering a new idea is to make a superficial assay to determine if it fits your dogma.

Elemenope|8.19.08 @ 9:57AM|#

kinnath --

You are neglecting the very real history of industrial espionage and strong arming of little firms by big ones.

There was a famous case of the intermittent windshield wiper, a guy in his garage, and General Motors.

Any word on Obama's "short list" for Minister of Resource Allocation? It seems as if T Boonedoggle Pickens is angling for the job.

|8.19.08 @ 9:59AM|#

But Pro - "we" can do it!
Don't you understand? If we all get behind every noble goal you can ever imagine and give control over all our resources to a central planner it will all happen because the people allocating the money can do so perfectly.

It must be nice not to have to consider ideas in order to have an opinion about them.

joe,

I expect nothing better from presidential candidates, but I'm still annoyed by it. I particularly don't like this kind of divisive pandering, because it makes vaguely or even completely innocent parties into the bad guys. I'm tempted to go Godwin here, but I'll resist ☺

P Brooks,

Nah, GE would've just developed a fusion reactor in 1950 ☢

One question I have is what kind of barriers are there to entry for new energy companies? I bet there are some big ones, despite appearances otherwise (e.g., various subsidies and tax breaks for solar, etc.). That goes for smaller oil and related businesses, as well, though I'm really thinking about more alternative alternatives, if you know what I mean. Big companies can and do innovate, but small(er) companies help apply the pressure on those big companies to spend on R&D.

|8.19.08 @ 10:03AM|#

Pro Lib,

I expect nothing better from presidential candidates, but I'm still annoyed by it. I'd rather live in a world where a presidential candidate could get as much mileage out of discussing a proposal like this in terms of incentives and the merits of the idea, instead of starting out with "Get 'em!" too. Believe me, I'm from the pointy-headed end of the pointy-headed party. But whaddyagonna do?

|8.19.08 @ 10:05AM|#

"You are neglecting the very real history of industrial espionage and strong arming of little firms by big ones."

It's not so much neglect as closing ones eyes, covering ones ears with ones hands and going LALALA to any empirical reality that does'nt fit with the libertarian mythology.

kinnath|8.19.08 @ 10:06AM|#

A handful of big companies have excelled at innovation. We all study them. They are not common.

In fact, my company has an entire department established to hunt down innovators and smoother them with a wet blanket before they can do any real damage. Your company has no incentive to foster innovation, because it's at the top of the market and doesn't want it to change - sort of like the oil companies.

Do I really need to add a smiley face on top of a cynical comment like that.

I'm filing 10 patents this year. We do innovate, continuously. However, this is evolution, not revolution. I don't think you're ever going to see a Fortune 500 company release a new technology that essentially dismantles it current market and creates a new one.

There was a famous case of the intermittent windshield wiper, a guy in his garage, and General Motors.

He didn't exactly transform the transportation market, did he?

kinnath|8.19.08 @ 10:10AM|#

There was a famous case of the intermittent windshield wiper, a guy in his garage, and General Motors.

Off the top of my head, without bothering to google it, someone stole his concept and he spent a couple of decades fighting to defend his patent.

Not equal to "squash" his technology.

|8.19.08 @ 10:10AM|#

Not that it matters, but I'm pretty sure it was Ford who fucked that guy on the intermittent wiper.

GM bought the two-hundred-mpg carburetor and deep-sixed it.

|8.19.08 @ 10:12AM|#

I think he brought it to Ford and attempted to sell it, and they reverse-engineered it from what they learned at the presentation, and claimed they had been working on it all along.

kinnath|8.19.08 @ 10:12AM|#

There was a famous case of the intermittent windshield wiper, a guy in his garage, and General Motors.

Throwing another turd into the punch bowl . . . All those libertarians that say IP does not exist are basically saying this is the way it should be.

Rhywun|8.19.08 @ 10:14AM|#

The easy answer is to win votes. The better answer is that Washington can't handle not having control....elected officials want their hands on all of the economy's levers, all of the time...

The easy answer is the right one. The "better" answer is a libertarian strawman. Yes, Washington likes to control a lot of things, but prices is not generally one of them. This isn't Communist Russia yet.

|8.19.08 @ 10:14AM|#

Maybe we could impose a windfall prpofits tax on intermittent wipers, and subsidize research into nanobots who will keep your windshield clean and dry, under any conditions.

kinnath|8.19.08 @ 10:15AM|#

GM bought the two-hundred-mpg carburetor and deep-sixed it.

Provide a link. I've never believe this bullshit.

Basic physics, there is a certain amount of energy in a gallon of gas and the limits on the efficieny of any engine determined from the delta between the temperature of combustion and the temperature of exhaust.

Nigel Watt|8.19.08 @ 10:24AM|#

Yes, joe, because you're an economic expert. None, or at least very few, of us are experts in the topics discussed here. However, I have the intellectual honesty to say that a democracy shouldn't control something most people don't understand.

|8.19.08 @ 10:26AM|#

Provide a link. I've never believe this bullshit.

Gotcha- I was just checking to see if you were paying attention.

And, speaking of basic physics, it's (pretty much) all about weight. But small, lightweight cars are scary.

|8.19.08 @ 10:27AM|#

"I think there is some definite pander in Obama's proposal, but there is some sense to it too. The idea is to "correct" the market, to create incentives for some public good (more alternative sources of energy) that the market may not be providing. The pander is to frame it as sticking it to the oil companies, whom everyone hates."

There is no sense to this proposal at all, given the fact that it failed miserably the first time it was tried in the 70's. Companies just moved profits to offshore entities (where, BTW, they pay a lower corporate tax rate). The gov't ended up collecting less revenue in taxes , due to the the new tax.

Exxon Mobil, Shell, etc. have a duty to their shareholders to pass along a profit - millions of which are ordinary Americans. It would make far more sense to just end the tax loopholes, incentive plans, etc. that the gov't already gives energy companies than to resurrect the windfall tax monstrosity. In fact, it's plain idiotic.

The goal of this is to nationalize the energy companies, no matter what the Dems say, even if most of them (and I doubt Barry has thought this through) are ignorant of it. It's about control, people, and nothing else.

kinnath|8.19.08 @ 10:29AM|#

And, speaking of basic physics, it's (pretty much) all about weight. But small, lightweight cars are scary.

I'd beleive you could push a bicycle with one person on it about 200 miles with a single gallon of gas.

|8.19.08 @ 10:31AM|#

1. "bigger" margins? Huh?

I suppose they wouldn't need bigger margins, but in general the whole point of spending money on R&D of alternative energy sources is that one day they will prove more profitable than oil.

It must be nice not to have to consider ideas in order to have an opinion about them.

Unsolicited - NICE!

|8.19.08 @ 10:34AM|#

kinnath,

However, this is evolution, not revolution. As are, at this point, research into wind, solar, and geothermal power, as well as battery technology and other aspects of alternative energy.

Which is where P Brooks' examples fail - solar power isn't "nanobots keeping your windshield clean and dry." Solar, wind, and other alternatives are deployed right now; it's just matter of making them better.

Haven't you people heard that ExxonMobil invented a membrane that will vastly improve the performance of the batteries in hybrid engines?

Elemenope|8.19.08 @ 10:35AM|#

Throwing another turd into the punch bowl . . . All those libertarians that say IP does not exist are basically saying this is the way it should be.

Only if you give in to the notion that all intellectual property is the same.

kinnath|8.19.08 @ 10:36AM|#

Haven't you people heard that ExxonMobil invented a membrane that will vastly improve the performance of the batteries in hybrid engines?

Impossible, we haven't imposed a windfall profits tax yet.

|8.19.08 @ 10:37AM|#

Reinmoose,

I suppose they wouldn't need bigger margins, but in general the whole point of spending money on R&D of alternative energy sources is that one day they will prove more profitable than oil.

Ok, gotcha. That's not the "whole point," at least not from a public policy perspective.

|8.19.08 @ 10:38AM|#

That's not the "whole point," at least not from a public policy perspective.

If your goal is reduced carbon emissions - sure. But if your goal is "cheaper than oil" then it is the whole point.

|8.19.08 @ 10:39AM|#

Impossible, we haven't imposed a windfall profits tax yet.

smartass. And to think, I thought people unfamiliar with the concept of margins were going to chime in!

|8.19.08 @ 10:42AM|#

Reinmoose,

In the medium term, the goal is to reduce carbon emissions and entanglements with nasty governments that control oil fields.

In the long term, the goal is to have affordable energy sources to replace oil as it becomes scarcer while energy demand simultaneously grows.

kinnath|8.19.08 @ 10:45AM|#

However, this is evolution, not revolution. As are, at this point, research into wind, solar, and geothermal power, as well as battery technology and other aspects of alternative energy.

But these technologies probably aren't going to be viable without a revolutionary change in the distribution grid (physically and business model). Turning the Mojave desert into a field of mirrors, then transmitting the electricity somewhere else just isn't going to be viable in the long term.

Wind, solar, and geothermal are going to require a model where "production" is distributed across all users. Temporary excess production in one place will require flow of electricity to locations of temporary shortage someplace else. A few hours later, production will shift to a new configuration.

Until this happens, these technologies are going to remain boutique operations.

|8.19.08 @ 10:53AM|#

Taking one's profit and giving them to another is theft,pure and simple.It's socialism .The one's that get shafted are the stock holders,who made choice to invest a company for their well being.It seems some would rather talk around the edges instead of facing this truth.That's what socialist do,they call theft "investment".They also lead people to think their taking from a evil corp. instead of millions of stockholders.

|8.19.08 @ 10:54AM|#

I dunno about the government doing R&D badly. Industry benefits a great deal from all the R&D being done on the public dime at universities and such. And look at the spillover from Defense R&D.

This is a good point, but I suspect you will find that commercialising the technology/research is generally not done well by any type of organisation that isn't a corporation (large or start-up).

|8.19.08 @ 11:00AM|#

kinnath,

One solution to that problem is to use the Mojave plant and whatnot to power hydrogen production, then distribute it like gasoline.

I saw another proposal recently to use wind power to electrify the rail network. The Rockies are known for both their wind resources and their steep grades.

It's a problem that has solutions.

|8.19.08 @ 11:08AM|#

GM bought the two-hundred-mpg carburetor and deep-sixed it.

kinnath

Back in the sixties just about everybody knew someone whose cousin had met a guy whose Dad knew some guy whose cousin knew a guy who invent a two-hundred-mpg* carburetor only to have GM/Esso**/Amoco buy the plans and lock them in a vault.

Nobody stopped to wonder why GM didn't pull the plans out of the vault in 1974.

It was pretty much the equivalent of the "we'd have solar powered perpetual motion machines by now if it wasn't for Bushhitler Mcchimplerton Cheney and his pals suppressing it so that they can perpetuate the use of their preferred fuels***."

*mileage varied, but you get the point. There must have been hundreds of these wonderetors because I lost count of the number of people who told me this yarn between about 1965 and 1973.

**that's what we called Exon back in the days when everyone wore an onion on his belt.

***which as near as I can tell are derived from putting baby pandas through a grinding mill.

:-/|8.19.08 @ 11:12AM|#

All those libertarians that say IP does not exist...

They usually confine their arguments to "intangible" digital property like MP3s.
It's all their tiny brains can handle.

kinnath|8.19.08 @ 11:19AM|#

They usually confine their arguments to "intangible" digital property like MP3s.
It's all their tiny brains can handle.

The most vocal advocates of trashing IP want to trash it all, and the fully understand what that means.

Mike J. Nelson|8.19.08 @ 11:21AM|#

President David Wolk, Castleton State College

Castleton snob.

kinnath|8.19.08 @ 11:26AM|#

One solution to that problem is to use the Mojave plant and whatnot to power hydrogen production, then distribute it like gasoline.

Making hydrogen is easy. Figuring out how to prevent toyotas from becoming hindenburgs is not Exxon's problem, nor to I want them sticking their fingers into this pie.

I saw another proposal recently to use wind power to electrify the rail network. The Rockies are known for both their wind resources and their steep grades.

Novel, but what does Exxon have to do with this? I assume that whoever owns the tracks today needs to figure out how where to install generators and how to electrify the tracks. Of course, then someone needs to update the trains to utilize the electricty . . etc.

You have yet to show why taxing Exxon is useful in solving the worlds energy production and consumption problems.

Mike J. Nelson|8.19.08 @ 11:30AM|#

Dammit, wrong thread. Curse you Firefox, and your tabbed browsing!

|8.19.08 @ 11:36AM|#

You have yet to show why taxing Exxon is useful in solving the worlds energy production and consumption problems.

Robert Reich and Paul Krugman will explain it all to you, next spring. It'll be great, so don't worry about a thing.

|8.19.08 @ 11:48AM|#

Figuring out how to prevent toyotas from becoming hindenburgs is not Exxon's problem, nor to I want them sticking their fingers into this pie

Honda and Toyota are on it, and close.

Novel, but what does Exxon have to do with this? Nothing. You'd changed the subject to the viability of alternatives overall, so I was following you.

You have yet to show why taxing Exxon is useful in solving the worlds energy production and consumption problems. Yes I did, almost three hours ago: It's intended to fund alternative energy investment. Or, rather, get the oil companies to fund alternative energy investment, since money invested that way wouldn't be taxed.

I guess I assumed that the idea of private companies finding solutions by innovating in response to economic incentives was widely understood among Hit & Run readers.

kinnath|8.19.08 @ 11:59AM|#

Yes I did, almost three hours ago: It's intended to fund alternative energy investment. Or, rather, get the oil companies to fund alternative energy investment, since money invested that way wouldn't be taxed.

And I challeged this point.

I've never understood this logic.

1) If you want to spur development, lay out a big prize for whoever gets there first.

2) Why would you want the entity that has a stranglehold on the current technology to take the lead in developing the replacement technology. If you want better prices, you need an independet group to create the next technology to provide competition to the incumbant.

General Tax Breaks for R&D -- an arguably good idea. Targeted windfall profits tax that you then take back to spur R&D -- a convoluted threat/promise concept that a wife-beater could get behind.

I don't what the largest companies on earth expanding their reach into my life anymore than they already are.

|8.19.08 @ 12:01PM|#

joe,private companies finding solutions are something we all understand.Taking the profits from one company and giving them to others to do it is what most of us are against.You can hide between big words and explanations all you want.This is theft.It's socialism.

|8.19.08 @ 12:03PM|#

I guess I assumed that the idea of private companies finding solutions by innovating in response to economic incentives was widely understood among Hit & Run readers.

Yes, but I'm not quite sure I understand what finding only the solutions that the ruling clique approves of has to do with that.

|8.19.08 @ 12:08PM|#

General Tax Breaks for R&D -- an arguably good idea. Targeted windfall profits tax that you then take back to spur R&D -- a convoluted threat/promise concept that a wife-beater could get behind.

Money is money. If doing A gets $10,000,000 into Exxon's solar R&D labs, the details of the tax code don't matter. As you "wife-beater" quip makes perfectly clear, you aren't arguing about money, but about an ethical point: you think tax breaks are ethical and avoidable tax hikes are not. Well, to each his own, but Exxon putting an extra $10,000,000 or whatever into Project A is going to do the same thing for Project A regardless of the tax code.

Michael, I agree: Taking the profits from one company and giving them to others to do it is what most of us are against.You can hide between big words and explanations all you want.This is theft.It's socialism. I know that is what most of you are against, and I know why. I wish other commenters were as forthright as you, and didn't try to hide behind implausible economics arguments.

|8.19.08 @ 12:09PM|#

Mr. Pack - you are entirely correct. I have Exxon in my portfolio. While I expect the landscape of gov't regulations to change now and then. I also expect these changes to apply across the board, not to target a specific industry that is currently out of favor.

Didn't Harlan Ellison have a short story addressing this theme?

|8.19.08 @ 12:10PM|#

Isaac,

Ruling clique?

OK, let's put it to a vote. American people, do you want to coerce Big Oil into investing in clean energy?

I'm thinking 70-30, maybe 80-20.

Don't reach for the elitist argument when your position is supported by a plutocratic minority.

kinnath|8.19.08 @ 12:19PM|#

If doing A gets $10,000,000 into Exxon's solar R&D labs, the details of the tax code don't matter.

Best Solution: Streamline the tax system, tax everyone at roughly the same rate to cover only those functions expressly authorized by the constitution.

Acceptable Solution: Streamline the tax system to eliminate a huge, non-value added burden on every indivdiual and business in the country.

Sort-of-acceptable Solution: Government support of innovation by giving every business a break on R&D.

Standard Democratic Bullshit Solution: Create a complex and convoluted tax system to punish some people and reward others. Social engineering by taxation.

The details mean everything joe. The ends do not justify the means.

|8.19.08 @ 12:21PM|#

joe, the 70 or 80 (whatever) don't have a fucking clue what the solutions should be. Nor does Obama. And nor do you.

The 70 or 80 (whatever) will not pick the solution by voting for it in an election they will pick it when it finally arrives in the marketplace.

If I knew what it was I'd be on my way to becoming a billionaire. I'm not making any plans on what I'll spend all that money on yet.

adrian|8.19.08 @ 12:22PM|#

Isn't mob rule wonderful? This is why socialism will gain ground until its inevitable demise.

Why don't we do the morally correct thing and not steal from one group of people to give to another.

|8.19.08 @ 12:23PM|#

That's a perfectly fine ethical system, kinnath. If one accepts your propositions of what is ethical.

It's not an economic argument. My point throughout this has been that supporting a tax system that incentivizes Big Oil to invest in alternatives - their research, and their deployment - is not evidence of "economic illiteracy," and it is only by misrepresenting Obama's proposal as something that it is not that one can make that claim.

The Hillary/McCain gas tax holiday, on the other hand - that's some economic illiteracy right there.

|8.19.08 @ 12:24PM|#

Oh, joe, on the off chance that you actually do know the "solution" just get to work on it.

|8.19.08 @ 12:25PM|#

joe, the 70 or 80 (whatever) don't have a fucking clue what the solutions should be. Nor does Obama. And nor do you.

Someone with such an elitist disposition should not be making arguments about proposals being supported by "the ruling clique."

|8.19.08 @ 12:26PM|#

Oh, joe, on the off chance that you actually do know the "solution" just get to work on it.

Done. I'm voting for the guy who will make it worth the while of the energy industry to embrace innovation.

|8.19.08 @ 12:29PM|#

Done. I'm voting for the guy who will make it worth the while of the energy industry to embrace innovation.

Holy crap, joe, did that sound as stupid in your head as it looks on my screen?

Apparently not.

Innovation....seriously.

The ends do not justify the means.

The *means* are the end. We must punish those rapacious evildoers at BigOil.

We can ~~tax~~ steal their profits, and give them to the people who will create nanobots to pull us around in rickshaws. And fan us when it's hot.

Oh, joe, on the off chance that you actually do know the "solution" just get to work on it.

See, this is what I mean when I complain about people who don't need to know anything about a proposals to have an opinion about it.

Have I ever suggested, anywhere, that I personally have the technological know-how to solve the problem? No. If I did, why would I want to see large sums of money spend on research and development, and describe those problems as requiring innovation to be solved?

But if you just pretend not to understand the difference between saying "Do X" and "Incentivize research into technical solutions to the problem," you can write a sentence like the above.

|8.19.08 @ 12:30PM|#

Wow, I've turned everybody into dumb shits already?

That was quick.

|8.19.08 @ 12:33PM|#

joe, it is not an elitist position to recognize that people with little or no knowledge of the science or economics involved (ie the vast majority of us) have a clue about how to solve these problems.

Voting makes for a feel good act and nothing more.

|8.19.08 @ 12:34PM|#

joe,

I think Isaac was talking about what R&D the private sector would do on its own, in contrast to R&D the government would push with its largely political motivations (which often don't coincide with technological or economic goals). Like promoting corn as the solution. What the majority of the people want has nothing to do with what we should do, or what individual businesses should do. Most people would like a free, 90" LCD TV, too.

kinnath|8.19.08 @ 12:34PM|#

My point throughout this has been that supporting a tax system that incentivizes Big Oil to invest in alternatives - their research, and their deployment - is not evidence of "economic illiteracy," and it is only by misrepresenting Obama's proposal as something that it is not that one can make that claim.

My bad, I thought you were saying it's a good idea.

I assume that lots of PhD economists can explain why Obama's idea is good for the county.

I argue that it's inefficient and therefore wasteful.

I argue that using taxes to force oil companies to develop non-oil products is short-sighted and will only further heighten our dependency on a handful of large companies.

I argue the whole damn idea is inherently in conflict with ideals ecapsulated in the constitution.

I never argued that it was illiterate.

ckr|8.19.08 @ 12:35PM|#

I ask in all seriousness:

joe | August 19, 2008, 12:30pm | #
Wow, I've turned everybody into dumb shits already?

That was quick.

Don't you get tired of doing the same schtick every day? And don't get me wrong -- schtick is fine! That's human nature, to pretend to be something that's easy or attractive or fun. It's just that picking one that's not particular appealing and doesn't seem like fun and sticking so hard to it, that's a bit mystifying and can only, I think, say bad things about some underlying personality trait.

|8.19.08 @ 12:36PM|#

What I've learned from libertarians:

Businesses can be counted on to pursue the profit motive.

The private sector, in the pursuit of the profit motive, excels at innovation.

Businesses will choose the most profitable course of action, whether it is more profitable because of underlying market conditions, or because of public policy.

And, only an economic illiterate would think that businesses would invest in alternative energy in response to government policies that make such an investment more profitable than the alternative. That's just nuts, joe, you need to take Econ 101.

Also, I'm a terrible, terrible person, but I already knew that one.

supporting a tax system that incentivizes Big Oil to invest in alternatives

If you absolutely MUST think in terms of "tax systems" why don't we incentivize (what a stupid word!) end users of gasoline to seek alternatives, by taxing the shit out of it? Why doesn't Obamalama get up and say, "I propose a tax which will put a floor under gas prices, in order to encourage conservation."?

|8.19.08 @ 12:38PM|#

ckr,

Oddly enough, I don't get tired of arguing with libertarians.

I do get irritated when I'm repeatedly subjected to personal insults, but the substantive discussions make up for that.

|8.19.08 @ 12:41PM|#

I don't understand where the notion that the proposition isn't to simply discount energy prices comes from. Obama's site itself says that the idea behind taxing oil money that's already been taxed is to provide a $1000 "short term relief" payment to citizens. He also wants to make people pay for research he supports, but the prime directive seems to be to play a short term Robin Hood role.

John Wright|8.19.08 @ 12:41PM|#

There's no right to cheap oil, but the government isn't blameless either. I've responded to this article here:

http://www.john-wright.net/2008/08/19/no-right-to-cheap-oil-but-government-not-blameless/

|8.19.08 @ 12:42PM|#

P Brooks,

Because large corporations with considerable resources at their disposal have the power to bring about significant accomplishments, while each individual would just be jerry-rigging some solution.

You might as well ask, why pay for General Dynamics to invent an F-22, instead of giving private citizens an extra $127 to spend on air defense?

|8.19.08 @ 12:45PM|#

Matthew,

Right you are. Obama recently came out with a "rebate check" proposal, which I oppose. He's been talking about this as a spur to investment for a lot longer than that though.

There's another thing to remember.Do you think EXXON isn't going to change their behavior when these taxes are levied?History shows ,the more you tax a thing,the less you have of it.Unless of course it's some thing the black market can supply.Profits will go down,and so will the tax take.It's not only theft but it's bad economics.

|8.19.08 @ 12:50PM|#

Have I ever suggested, anywhere, that I personally have the technological know-how to solve the problem? No. If I did, why would I want to see large sums of money spend on research and development, and describe those problems as requiring innovation to be solved?

I was kidding, forgot the smiley-face. Sorry.

joe, not only have you not suggested that you have the technological know-how you have not suggested you actually have any knowledge at all about where to direct the "large sums of money" you want to see someone "spend on research." But you seem to be willing to assign the right to take other peoples money to make those decisions.

The fact of the matter is that "large sums of money" will be wasted in pursuing research that leads nowhere near a solution.

What exactly makes you believe that Obama (or his Energy Czar) knows better where to make these investments?

There are plenty of areas to complain about with respect to tax policy towards the oil industry but the lack of a "windfall profits" tax is not one of them.

|8.19.08 @ 12:53PM|#

Pro Libertate | August 19, 2008, 12:34pm groks.

I've been wanting to use that word ever since I recently reread Stranger in a Strange land.

|8.19.08 @ 12:55PM|#

I do get irritated when I'm repeatedly subjected to personal insults,...

Kettle, have you met Pot?

robc|8.19.08 @ 12:58PM|#

I guess we can ignore the whole boom and bust cycles that used to be frequent in more laissez-faire days?

Boom and bust cycles are a positive, not a negative. They just suck for the short term bit of the bust cycle, but they are long term healthy for the economy.*

*This is a theory of mine with absolutely nothing to back it up. Im convinced that slow and steady growth leads to long term stagnation. Chaos is good. Hail Eris! Etc, etc.

|8.19.08 @ 1:04PM|#

*This is a theory of mine with absolutely nothing to back it up. Im convinced that slow and steady growth leads to long term stagnation. Chaos is good. Hail Eris! Etc, etc.

As a Schumpeterian, I concur; destruction, chaos, opportunity!

|8.19.08 @ 1:09PM|#

Isaac Bertram,

how you have not suggested you actually have any knowledge at all about where to direct the "large sums of money" you want to see someone "spend on research." But you seem to be willing to assign the right to take other peoples money to make those decisions.

But this is exactly the opposite of allowing Exxon to fund what it considers to be the most promising alternative-energy fields and thereby avoid the tax. Spurring research this way, instead of just collecting the money and doling it out to government labs, is precisely why this is a better idea.

What exactly makes you believe that Obama (or his Energy Czar) knows better where to make these investments? Nothing. That's why I think it's a better idea to put that decision in the hands of the would-be-taxpayers, and let them pursue the most promising ends. They're the experts. Unless you're retreating all the way to arguing that the decision of wind/solar/geothermal/tidal/whatever vs. more dirt burning is, itself, not something a layman can hold an educated opinion about.

There are plenty of areas to complain about with respect to tax policy towards the oil industry but the lack of a "windfall profits" tax is not one of them. Well, that's just packaging.

|8.19.08 @ 1:31PM|#

Joe,I must say,I don't understand why the oil companies should fund things like solar or wind.They produce oil,not 'energy'.Your talking electricity.That is a whole other industry that oil companies are not set up to for.Companies like G.E. are much better suited for the tasks you lay out.

Gilbert Martin|8.19.08 @ 1:32PM|#

Just where does the idea come from that it is somehow the responsibilty of Exxon, Chevron and the rest of the so-called "big oil" companies to finance a bunch of alternative energy sources to begin with?

These companies are in the oil and gas business - not the "any type of energy anyone wants to dream up" business.

What companies in other industries are obligated to fund the competetion?

Coke isn't required to finance Pepsi.

Microsoft isn't required to finance Apple.

Dupont isn't required to finance Dow Chemical.

And so on.

The boosters of various alternative energy technologies should get off of their butts and get out and raise the capital investment for it on their own. If the technology is all that promising, they shouldn't have that much trouble doing so.

And if they aren't able to do so, that should tell them something about the viability of it to begin with.

Kolohe|8.19.08 @ 2:27PM|#

I'd beleive you could push a bicycle with one person on it about 200 miles with a single gallon of gas.

How fast to do want to do it?

And how many hills?

Most importantly, how much do you want to spend.

Because we're about halfway there.

|8.19.08 @ 3:54PM|#

I was reading a review the other day of the SmartForTwo. The writer was amazed it doesn't get particularly impressive mileage.

No kidding; it's got the drag coefficient of a fucking barn door; it's an outhouse on wheels. My 1.5l (90 cubic inches) Honda CRX (I still kick myself for selling it) would get 53 mpg at 85mph, and I suspect you could get three times as much stuff in it as in the SmartyCart.

|8.19.08 @ 4:43PM|#

Businesses will choose the most profitable course of action, whether it is more profitable because of underlying market conditions, or because of public policy.

Ah, yes. Industrial Policy. Some people just can't learn from history.

Sure, you can have the government increasingly micromanage various sectors of the economy. The results always disappoint.

Yeah, P., the CRX was one great, great little car. I still miss mine, too.

|8.19.08 @ 5:47PM|#

Big companies buy garage-outfits when they create something new. It's far easier and requires less R&D investment to let someone else do it, then buy it up when in pans out.

You're wrong Kinath. There was this guy who made a car that ran on just water, but GM had him killed. It true, I heard about it before the internet.

Chad|8.19.08 @ 8:57PM|#

"kinnath | August 19, 2008, 9:17am | #

Exxon makes big dollars because we burn so much fucking gasoline. Exxon is not gouging Americans at the pump, there is no "windfall"."

Profit margins are irrelevant as a measure of anything other than how a particular business is doing quarter-to-quarter or how it is doing to very similar companies in the same industry. Walmart has a tiny profit margin. Apple has a tremendous profit margin. Does that tell us anything about which company is doing better or worth more? Not really.

The oil companies are making tremendous profits right now...mostly in their American divisions. Why? Not because taxes are too low, but because we sold them oil rights for a ridiculous 15% royalty, far below what other countries have been charging. When oil was $30/barrel and profits pretty thin, taking a $4.50/barrel cut left oil companies just enough to justify drilling. When oil is $120/barrel, our $18 cut looks pathetic.

Yes, we should open up ANWR and OCS...but we should charge them through the teeth for the leases and keep sure they don't make such obscene profits off our mistake ever again.

Eatin Some Pez|8.19.08 @ 9:58PM|#

Equally gaseous? Maybe. Equally offensive to a libertarian? Not in this case. I'll take a guy offering to cut a tax any day over a guy promising to raise a tax on evil, evil profits.

Chad|8.19.08 @ 10:15PM|#

Gilbert Martin | August 19, 2008, 1:32pm | #

Just where does the idea come from that it is somehow the responsibilty of Exxon, Chevron and the rest of the so-called "big oil" companies to finance a bunch of alternative energy sources to begin with? These companies are in the oil and gas business - not the "any type of energy anyone wants to dream up" business.

You are right, it is definitely not their responsibility, nor even their specialty. Solar, for example, is being led by the semiconductor and electronics industry, which have mastered similar processes and technology. Likewise, wind turbines are a good match for the technologies of a company like GE. The oil companies simply do not have strong competencies in anything related to most renewables. They are wisely using any excess money to buy back stock, thereby returning money to their investors so that THEY can choose where to invest it.

The boosters of various alternative energy technologies should get off of their butts and get out and raise the capital investment for it on their own. If the technology is all that promising, they shouldn't have that much trouble doing so.

Cleantech is raking in the venture capital. However, it should be able to compete on a fair playing field. Coal receives literally hundreds of billions of subsidies each year in the form of free rights to dump its garbage into public property (the atmosphere). Remove this subsidy, and watch coal get is rear handed to it.

robc|8.19.08 @ 10:38PM|#

Chad,

I believe that solar has the same subsidy as coal, the fact that they dont take advantage of it is beside the point.

Gilbert Martin|8.19.08 @ 11:29PM|#

"Coal receives literally hundreds of billions of subsidies each year in the form of free rights to dump its garbage into public property (the atmosphere). Remove this subsidy, and watch coal get is rear handed to it."

I don't accept your definintion of a "subsidy" - or youru claim that the atmosphere is "public property".

Observer|8.19.08 @ 11:41PM|#

Wind-fall taxes:

The intention is good, however like all things it will fall victim to political obligations. Lets discuss the law of unintended consequences.

First - It is not only an investment in the most promising alternative energy, but also a $1,000 cash hand-out to each tax payer or household. So regardless of how Exxon (et al) invest their profits to avoid the tax, revenue will need to be raised to pay for this "oil prince" style handout. My guess is that it will ultimately fall on us, or be another empty promise.

Second - This once again increases pols' dependencies on the oil giants who are firmly entrenched in the current, past, and future administrations and congresses. So to fund the new technology pet projects the oil giants will need to remain in windfall profit tax territory (without the taxes or incentives towards economic distortion). The pols will need this revenue to fund their pet projects, further entrenching the current puppet masters in Washington. While creating a new set who brought the new president and congress to power.

Third - This tax (causing economic distortion) will increase the opportunities for such green-minded hypocrites such as Google (Who oddly enough just had an economic summit with Obama, and is starting a new venture capital firm). This will again bring in more aristocrats to Washington in their custom-made 767.

Fourth - I think we can all agree that the concept of wind-fall profits is extremely ridiculous in a commodity industry (Google has more of a wind-fall profit). The only people I see making a wind-fall profit are: the oil sheiks for whom the cost has remained the same to extract and sell the oil (Through their state-owned cartel oil companies), the governments to whom big oil pays taxes, and the rest of the world that lives under subsidized oil and gas prices.

In the end - no matter how well intentioned the policy - it is extremely difficult to escape market forces, simply because individuals are selfish (Including Obama, McCain, Bush, Clinton(s), grandma Nancy, you, Mother Theresa, and me). Simply put I DON'T believe that either candidate has my or anyone's best interests in mind. At the end of the day the only reason people get involved in politics, is to justify their existence and how they chose to live, by forcing it on other people.

Chad|8.20.08 @ 6:36AM|#

Gilbert Martin | August 19, 2008, 11:29pm | #

"Coal receives literally hundreds of billions of subsidies each year in the form of free rights to dump its garbage into public property (the atmosphere). Remove this subsidy, and watch coal get is rear handed to it."

I don't accept your definintion of a "subsidy" - or youru claim that the atmosphere is "public property".

You can take your argument up with common sense and the dictionary. Why you can't grasp the concept behind the world's most classic market failure is beyond me, and if you haven't figured it out by now, it can only be via willful ignorance.

Gilbert Martin|8.20.08 @ 8:08AM|#

"You can take your argument up with common sense and the dictionary."

You're no authority on what "common sense" is.

"Why you can't grasp the concept behind the world's most classic market failure is beyond me, and if you haven't figured it out by now, it can only be via willful ignorance."

There has never been any such thing as "market failure".

|8.21.08 @ 7:12AM|#

McCain isn't "much better" than Obama whose answer is to use punitive taxation against corporations?! Most of those "windfall profits" already go to pay ... taxes.

REASON is a farce. Good luck finding any analysis of Obama's disastrous, anti-corporate tax and economic policies on this site--liberaltarian Reason goes out of its way to either avoid or endorse them. Any real social AND economic libertarians should go over to CATO.

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