Gushers Come from Somewhere

Tuesday, March 25, 2008

Via Arts and Letters Daily, I have come across a book review that any commentator on environmentalism will want to consider, "Heard the One about the Farmer's Ethanol", by William Grimes, who reviews Robert Bryce's Gusher of Lies.

The book's subtitle, "The Dangerous Delusions of Energy Independence", seems to speak to one of my biggest annoyances with environmentalism: How it is now being sold as good for our economy and self-defense. (It is neither.)

But, as I said, it seems to. (More on that in a moment.) The book nevertheless might be worthwhile, as Grimes indicates, for its close examination of the specific types of arguments used to advance the causes of the various specific "alternative" fuels, as well as its bringing to light facts that their various advocates happily sweep under the rug. Take ethanol:

... Ethanol, in particular, drives [Bryce] wild. Fuel derived from corn has channeled billions in subsidies to Midwestern farmers and agribusiness, he writes, despite glaring shortcomings. It is expensive to produce and requires enormous amounts of water when irrigation comes into play. It produces much less energy than gasoline while emitting more pollutants into the air.

Detroit loves ethanol because it can use it to inflate fuel-efficiency ratings on their cars artificially. The mammoth Chevy Suburban, produced as a flex-fuel vehicle capable of burning both ethanol and gasoline, magically boosted its fuel efficiency to 29 miles per gallon from 15, since under federal rules only a vehicle's gasoline consumption need be factored into the equation. Ethanol, in other words, has allowed American car manufacturers to produce more gas guzzlers and contribute to increased imports of foreign oil.

The problem with corn and other alternative fuel sources boils down to cost and output. Fuel made from switch grass, another potential solution to the energy problem, costs a lot to produce, delivers a lot less energy than petroleum and would require, like corn, vast areas of farmland to meet a meaningful percentage of current energy needs. [bold added]
Yes. The problem with many fuels is their high cost, and this is why oil remains the best of the alternatives. (I'd love it if the petroleum industry had enough moral backbone to begin a huge PR campaign against ethanol and called oil something like "the alternative of choice".... Please, oil executives, use this idea! It's free.)

But that's the problem with most of these fuels, except nuclear power (which the Greens are using to go after coal). I fear, based on Bryce's reported advocacy of the federal government steering scientific research towards building a "superbattery" for solar power, that he may remain blind to the source of all this lying: Government interference in the economy.

Would Detroit be so eager to build cars that burn ethanol were it not for the government's silly rules on how to report fuel efficiency? Would so many farmers devote so much acreage to corn for ethanol without government "incentives"? Would promoters of ethanol get caught in such transparent lies even as their industry mushrooms if they didn't get so much help from the government in their pursuit of money? (I was about to say "energy profits", but that would have been at least two mistakes.)

No. One further question indicates why: Did oil become so big in the first place because the government, in its infinite wisdom, finally jawboned enough people into giving up their "addiction" to other fuels? Of course not.

I suspect that Bryce's book might be an invaluable resource concerning the relative merits of the various fuels touted as "alternatives" to the so-called fossil fuels, but that it suffers from a similar malady that many books focused on economics do -- a failure to consider the proper purpose of government.

A proper government does no more and no less than protect the individual rights of its citizens, which means that it allows each one of them to exercise his own judgement regarding the various choices -- including the economic ones -- he is confronted with throughout his life.

Such a government would do nothing to promote or retard any industry, allowing each to rise (as oil did) or fall (as fuel ethanol should) on its own merits as measured by how well it serves the needs of its customers. Individual customers would judge service by price, which ultimately reflects "cost and output", and thus saves every Tom, Dick, and Harry from having to become an energy expert.

But our government has taken up the immoral and quixotic crusade of setting the world's thermostat (HT: HBL) by artificially influencing or dictating how we judge the sources of the energy that we need to live our daily lives. On top of interfering with our ordinary method of making decisions by cost, this crusade demands of us, as voters, levels of expertise we don't and can't have about energy. This is where all the lies are ultimately coming from. Any con man worth his salt preys on ignorance.

In the short run, knowing that many overhyped fuels are actually lousy alternatives to oil and coal will be valuable in stalling the progress of government controls over our economic lives. But in the long run, plugging up gushing holes in the dike will not solve the real problem, which is that we face drowning in a flood of government regulation. To save ourselves, we must reinforce that dike in the only way possible -- by insisting that our government protect individual rights consistently.

-- CAV


C. August said...

You made some very good insights in this post. I particularly liked your defense of the oil industry and the following comment:

Did oil become so big in the first place because the government, in its infinite wisdom, finally jawboned enough people into giving up their "addiction" to other fuels? Of course not.

I actually just yesterday had a long discussion with some non-Objectivist friends about the issue of farm subsidies -- specifically corn -- in the context of the CEO of Nestle saying that the biofuel boom is threatening food supplies in Europe.

I was rather surprised that I had to go into so much detail explaining how completely government subsidies muck up the functioning of the market, creating artificial demand, causing gluts in some markets and scarcity in others, and wreaking havoc on prices. I didn't even get into the issues of regulation you bring up.

I suppose it's because of my principled objection to government interference in the market that I have tried to learn more about it, and have been particularly aware of its impact. But I really was surprised that otherwise well-educated and bright people would have so little understanding of bigger picture of the mixed economy. Perhaps because they don't have a fundamental objection to government involvement, they don't think to question their assumptions?

I'm off on a tangent here, but I just had the thought that in many cases, they default to blaming big business in these issues. Because they already have a preferred target, they completely ignore the influence of the government.

Gus Van Horn said...

I think the lack of principled opposition and the predominant "preferred target" explain a lot of the poor appreciation of the free market you describe. Poor training in economics helps, too.

There is, also, a sort of mistaking the man-made for the metaphysical that happens by default. A mixed economy mistakenly called "capitalism" is all most people know. Imagining an economy without massive government control or a "safety" net is beyond the ability of many to really conceive of.

On my own tangent, my dad wasn't an Objectivist nor had he, until I encountered Rand in college, known about her writings. And yet, a distinctive moment in my intellectual development was when he explained to me as a young child that bridges were _man-made_.

That seems a trivial thing, but I always had the concept that man is responsible even for some things that seem too big for that to be possible ever since I was a kid. I generalized this to social institutions long before I knew of Rand.

Scott said...

One of the biggest problems with oil, regardless of what you think about it in terms of carbon output when processed, refined and burned as gasoline, is the "hidden" costs.

The cost to transport it from the middle east, the cost to provide secure escort via our coast guard, the cost to maintain a military presence in the gulf states and carrier battlegroups in the Persian Gulf and Straits of Hormuz, all add up to the cost of our oil addiction.

The late Milton Copulus, in testimony before congress, estimated that the cost would be upwards of $150 billion per year. At current gasoline prices, the actual cost of a gallon of gasoline, when these factors are taken into consideration, is about $10 per gallon.

Even corn based ethanol can compete with that hands down. When cellulosic ethanol is factored into the mix, its a no-brainer.

Gus Van Horn said...

Good points, Scott, except that you mischaracterize these costs as being the "cost of our oil addiction".

I agree with Alex Epstein, who holds to the contrary that such costs are really the costs of our "allergy to self-assertion":

"One means of ending the Iranian and Saudi threat would be to issue an ultimatum to these regimes: cease all anti-American aggression immediately, or be destroyed. Many, witnessing the Iraqi quagmire, might scoff at this option. But such a course is eminently practical if America's unsurpassed military forces are committed to the task, not of 'rebuilding' or 'liberating' these states, but of making their inhabitants fear threatening America ever again.

"Another means of addressing the threat would be to remove Middle Eastern oil fields from Iranian and Saudi control, put them in the hands of private companies, and then employ surveillance and troops to secure that oil supply. Contrary to popular assumption, Middle Eastern dictatorships have no right to their nationalized oil fields, which should be private property--the property of individuals who work to find and extract the oil."

The price we are paying for failing to defend the right of Western corporation to the oil wealth THEY, not desert tribesmen or Latin American dictators, wrested from the earth goes beyond the monetary. We are also gradually losing our will to defend freedom, which is ultimately what terrorists and hostile regimes around the world are sensing, just like wild animals smell fear.

Burgess Laughlin said...

I have a technical question: Does the USA or any other free (or semi-free) nation have a long-term need for Middle-Eastern oil that cannot be met by liberating its own economy?

Specifically, if the USA were to privatize all governmental lands, abolish controls on off-shore drilling, privatize ocean lands, abolish regulations on nuclear power, and take similar steps elsewhere in the economy--would the USA need Middle-Eastern oil?

If not, rather than send troops to Arabia for the purpose of protecting private oil companies, why not liberate the USA first?

(I support Total War against aggressive Islamofascist states for the purpose of smashing them into exhaustion, so my proposal is in addition to that.)

Gus Van Horn said...


To answer you would require much more knowledge than I have and more analysis than I've time for, but that is a very good question.

At the very minimum, freeing ourselves would make us better able to take care of whatever military action we would most need to take.