Free Markets, Free People


Krugman: Half-truths and logical fallacies litter his denouncement of drilling for oil

But that shouldn’t come as a particular surprise for anyone who has watched this economist turn into a political hack over the years.

He starts with this:

To be a modern Republican in good standing, you have to believe — or pretend to believe — in two miracle cures for whatever ails the economy: more tax cuts for the rich and more drilling for oil. And with prices at the pump on the rise, so is the chant of “Drill, baby, drill.” More and more, Republicans are telling us that gasoline would be cheap and jobs plentiful if only we would stop protecting the environment and let energy companies do whatever they want.

You’ll not see such a broad field of strawmen erected in such a short paragraph for quite some time.

Anyone know any Republicans who are calling for “more tax cuts for the rich” (as I recall, Republicans are saying no tax increases for anyone)?  That’s the first strawman.

Second? Not a single “Republican” I know is claiming that we should “stop protecting the environment” and “let energy companies do whatever they want”.  I defy Krugman to produce them.  Instead what I see are those that want more drilling point out that the technology exists to do it safely and in an environmentally friendly way and thus there’s no real reason to stop it other than ideology.  Nor do I know of any who oppose the pursuit of alternative fuels.  They just are realistic about the fact that none of those being pursued are anywhere yet ready for prime time, unlike our President.  So they naturally look to what we have as the main staple of our economy’s energy demand now and in the near future. 

It’s called “common sense” for the Krugman’s of the world who seem to have not been blessed with much of it.

As for jobs and cheaper gas, you should be able to ask an economist if increased supply of a commodity would have the effect of downward pressure on cost and expect to get an honest answer – unless it’s this guy.

Oh, and you’d also expect an economist to understand that if you expand production of any such commodity which is labor intensive, you’re going to create a lot of jobs.  You may expect that, but you too can read this so-called economist’s words.  When the choice is between political hackery and economic integrity, guess which he chooses?

Charles Krauthammer lays out a little ground truth about why “drill, baby, drill” hasn’t been able to have the effect it might have had if allowed.  Yes, “allowed”:

President Obama incessantly claims energy open-mindedness, insisting that his policy is “all of the above.” Except, of course, for drilling:

●off the Mid-Atlantic coast (as Virginia, for example, wants);

●off the Florida Gulf Coast (instead, the Castro brothers will drill near there);

●in the broader Gulf of Mexico (where drilling in 2012 is expected to drop 30 percent below pre-moratorium forecasts);

●in the Arctic National Wildlife Refuge (more than half the size of England, the drilling footprint being the size of Dulles International Airport);

●on federal lands in the Rockies (where leases are down 70 percent since Obama took office).

But the event that drove home the extent of Obama’s antipathy to nearby, abundant, available oil was his veto of the Keystone pipeline, after the most extensive environmental vetting of any pipeline in U.S. history. It gave the game away because the case for Keystone is so obvious and overwhelming. Vetoing it gratuitously prolongs our dependence on outside powers, kills thousands of shovel-ready jobs, forfeits a major strategic resource to China, damages relations with our closest ally, and sends billions of oil dollars to Hugo Chavez, Vladimir Putin and already obscenely wealthy sheiks.

The opportunity to see gas at a lower price, plentiful jobs created and supply increased have been squandered by this administration and Krugman, as if channeling our President, is trying to pass this failure off on the GOP. He’s essentially trying too claim the laws of supply and demand have been suspended.

The irony here is that these claims come just as events are confirming what everyone who did the math already knew, namely, that U.S. energy policy has very little effect either on oil prices or on overall U.S. employment. For the truth is that we’re already having a hydrocarbon boom, with U.S. oil and gas production rising and U.S. fuel imports dropping. If there were any truth to drill-here-drill-now, this boom should have yielded substantially lower gasoline prices and lots of new jobs. Predictably, however, it has done neither.

Again, a half-truth.  The boom is a boomlet compared to what it might have been had Obama and his merry permit slow-walkers gotten out of the way.  The only thing that has saved Obama is the boom on state and private land.  What Krugman won’t say is it is most likely true that had that boom not materialized on non-Federal land, gas prices would be even higher.  And so would unemployment.  Don’t forget the tens of thousands of jobs lost due to the Obama administration’s Gulf “permatorium”.

Krauthammer points out what should have been obvious to an economist but are inconvenient truths to a political hack:

“The American people aren’t stupid,” Obama said (Feb. 23), mocking “Drill, baby, drill.” The “only solution,” he averred in yet another major energy speech last week, is that “we start using less — that lowers the demand, prices come down.” Yet five paragraphs later he claimed that regardless of “how much oil we produce at home . . .that’s not going to set the price of gas worldwide.”

So: Decreasing U.S. demand will lower oil prices, but increasing U.S. supply will not? This is ridiculous. Either both do or neither does. Does Obama read his own speeches?

Obama says of drilling: “That’s not a plan.” Of course it’s a plan. We import nearly half of our oil, thereby exporting enormous amounts of U.S. wealth. Almost 60 percent of our trade deficit — $332 billion out of $560 billion — is shipped overseas to buy crude.

Drill here and you stanch the hemorrhage. You keep those dollars within the U.S. economy, repatriating not just wealth but jobs and denying them to foreign unfriendlies. Drilling is the single most important thing we can do to spur growth at home while strengthening our hand abroad.

It is truly wondrous to me how poorly Krugman comes off in these sorts of debates.  He concludes his hack job with:

And intellectual bankruptcy, I’m sorry to say, is a problem that no amount of drilling and fracking can solve.

The irony is so thick you could cut it with a knife.

~McQ

Twitter: @McQandO

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11 Responses to Krugman: Half-truths and logical fallacies litter his denouncement of drilling for oil

  • And intellectual bankruptcy, I’m sorry to say, is a problem that no amount of drilling and fracking can solve.——————

    In Krugman’s case, I am afraid that is true. Otherwise, I’d be in favor or drilling and fracking him ’til his attitude improved. Unfortunately, he would think it a reward.

    • hhhmmm Drilling and Fracking does sound awfully like a porn site name.

      • @kyle8 In the oil field, we speak of “poling up” and “spudding in”. And that’s the clean stuff…

  • “And intellectual bankruptcy, I’m sorry to say, is a problem that no amount of drilling and fracking can solve.” You know, he’s right! But the “intellectual bankruptcy” lies within the Obama Administration and those who support it with their idiocy. You can’t fix stupid – but you can vote them the hell out of office come November!

  • Let’s start at the beginning … “more tax cuts for the rich and more drilling for oil.” I don’t necessarily believe in more tax cuts for just the rich or the poor. Frankly, I believe more in “less spending” which I guess put me in with the Tea Party.
    Once we exhaust all the possible spending cuts that can be done, then we could address taxation (or maybe more spending cuts). There really isn’t much room for more taxes to be paid by anybody, rich or poor. On the rich side, I’m sure we could tax the hell out of Hollywood and I’m sure there is enough “sin” on Wall Street to squeeze out a few bucks, but frankly, there just aren’t enough “rich” folks to pay for all the current spending.

  • The Keystone pipeline is a “weird bird” (full disclosure: I know somebody working on Keystone). TransCanada has announced that they intend to build the pipeline from Texas up to Montana. Obama even tried to take credit for the Texas to Oklahoma portion the other day. The only part is the Montana to Canada portion is subject to State Department approval.

    Given that Obama knows this (I’m sure he does), once the pipeline is completed to Montana, exactly what basis will anybody have to stop the border crossing ?

  • Bruce, thanks for taking on Krugman. As you pointed out, he regularly ignores the inconvenient truths and suspends the laws of supply and demand. In reality, the oil and natural gas industry is about American jobs, American ingenuity, American technology, American science, American-made energy, American efficiency and American productivity. However, instead of embracing the opportunity for new jobs and increased energy security, the United States is sending very different market signals — like reducing production on federal lands, placing 87% of offshore acreage off-limits, blocking 800,000 barrels a day from Canada and lagging onshore and offshore permits, among others. The best possible market signal would be for the United States to do everything in its power to help itself. Despite Krugman’s best efforts to make us think otherwise, we are not powerless: http://energytomorrow.org/blog/a-paucity-of-scarcity/#/type/all

    Mark, EnergyTomorrow.org