August 06, 2008
Drill Now, For the Children

My suggestion on how to get Dems to allow more offshore drilling is below the fold.

In 1995, Robert M. Goldberg penned a Wall Street Journal article called “When in trouble, unleash the urchins.” In the article, Goldberg explains how “War on Poverty holdovers are now using children to shield every social program from any spending controls” and he calls the rhetorical exploitation of children a “cause for genuine embarrassment.”

More than a decade later, children play a prominent role in this year’s presidential campaign rhetoric. Sen. Obama calls for having “our children … inherit a planet that’s a little cleaner and safer” and bemoans “crumbling schools that are stealing the future of black children and white children and Asian children and Hispanic children and Native American children." Talk about no child left behind.

Sen. Clinton urges us to “lift the threat of global warming from our children’s future,” advocates making “college affordable again for the young people,” and indicates that she ran for president in order to “leave all children brighter tomorrows.” Of course, Sen. Clinton’s fondness for urchin rhetoric is hardly a surprise since the Clinton Administration’s Vaccines for Children program (yes, its real name) motivated Goldberg’s article.

Not to be outdone, Sen. McCain makes children a bipartisan cause. He asks, in the wake of a Baghdad bombing, “what are they [terrorists] willing to do to our children?” Indeed, he raises the ante with some grandchildren straight talk: “We and the other nations of the world must get serious about substantially reducing greenhouse gas emissions in the coming years or we will hand off a much-diminished world to our grandchildren.”

Of course, it’s true that education, national security, and the environment are all issues that will affect our children, my young son included. It’s just as true that our children’s quality of life will be affected by the availability of energy at affordable prices. And this issue, specifically motivating Congressional Democrats to join President Bush in lifting the moratorium on offshore oil exploration, is ripe for some “for the children” advocacy.

Liberals in Congress oppose drilling. Typical is California Sen. Dianne Feinstein, ''Even if new offshore drilling were allowed … along the outer continental shelf, which I wholly and resolutely oppose, it won't produce oil in time to solve the gas price emergency American consumers are facing right now.''

Maybe Sen. Feinstein is right that drilling would have little immediate effect on prices; after all, oil exploration is an expensive and time consuming process. Then again, futures markets—exchanges inhabited by scapegoats called speculators—react not only to current conditions but also to expectations about the future.

Regardless of any effect increased drilling may have on current prices, it is still worthwhile policy. Even if it takes five or ten years for new drilling to expand the flow of available oil, the increased supply of oil will make future prices lower than they would otherwise be. (We’d now be observing the price lowering effects of drilling but for Pres. Clinton’s 1996 veto of legislation opening ANWR.) How much lower is, of course, impossible to forecast with any reasonable degree of certainty. But a reduction of, say, 50 cents per gallon of gasoline below the price that would otherwise prevail would translate into savings of $250 per year for a consumer who logs 15,000 miles per year in a car getting 30 mpg.

Moreover, there would also be reductions—again difficult to quantify but certainly nontrivial--in the cost of producing and transporting goods. Everything from airfares to supermarket produce to plastics would be a bit cheaper than if we continue with the moratorium on drilling offshore and in ANWR. (A bit of perspective: The ANWR drilling footprint would be less than 10% of the size of my college’s campus.) These savings would not move someone from poverty to opulence, but they are substantial nonetheless.

Advocating drilling is not claiming we can “drill our way out” of higher energy market prices; future generations may still face higher prices arising from increased demand for oil in China, India, and other developing countries. Nor does advocating drilling mean that future generations would not adopt more fuel efficient lifestyles. Higher gas prices lead people—almost as if they are guided by an invisible hand--to drive less, to buy more fuel efficient vehicles, and to make a myriad of other changes. Even if drilling is permitted, the strong possibility of higher future prices is likely to provide an incentive for continued fuel conservation and for the development of new technologies.

It’s also worth noting that drilling, to the extent it replaces imported oil, would offset carbon emissions from tankers and may well produce less spillage than tankers. Hence, it’s far from a forgone conclusion that increased drilling would leave future generations a dirtier environment.

Besides advocating policies for the children, another favorite Democrat nostrum is “targeted tax cuts.” By promising to lower the future price of products derived from oil, lifting the ban on drilling amounts to a targeted tax cut for future generations, aka children. Congressional Democrats should drill now, for the children.

Posted by E. Frank Stephenson at 01:03 AM in Economics

The statesman who should attempt to direct private people in what manner they ought to employ their capitals would not only load himself with a most unnecessary attention, but assume an authority which could safely be trusted, not only to no single person, but to no council or senate whatever, and which would nowhere be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it. -Adam Smith

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