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Reality, What a Concept!
Posted by: Dale Franks on Friday, June 20, 2008

We have a problem, and it's serious. It's not a particularly new problem, but it does seem to be getting noticeably worse. The problem is that, in a number of areas, our politicians, and sadly, a great number of our people, no longer seem to be able to recognize reality. They simply believe things that cannot possibly be true. The recent wrangling over oil prices, and policy responses epitomize this unhinged mindset.

I wish I could believe this irrationality was confined to energy policy, because that is one area where an inability to moor policy to reality has a long-standing tradition. I happen to work with a person who, back in the 1970s was employed in the oil fields of Kansas. At that time, we were suffering from a big oil price shock as well. One of the "solutions" the Carter Administration came up with was a regulation that said essentially the following to the oil companies:

"The price of oil is too high. We need to control it, so that consumers pay a more reasonable price for oil. So, if you have a drilling lease that produces, on average, more than 100 barrrels a day of oil per well, then you have to sell that oil at no more than $3.50 per barrel. It doesn't matter if the wells are injection or extraction wells. It doesn't matter if most of the wells are capped. At any rate of extraction that averages more than 100 barrels per day per well, you can only sell oil from that lease for $3.50 a barrel. On the other hand, the stripper price for oil, i.e., the actual market price, is significantly higher than $3.50. So, if your lease averages 100 barrels of oil per well every day or less, you can sell that oil for the stripper price, and make a reasonable profit."

What do you suppose happened?

If you are a logical thinker, you'll realize immediately that what happened was that the oil companies did everything possible to ensure that every lease produced an average of less than 100 barrels per rig per day. They capped wells. They turned other wells into injection wells. If they had to, on a 10-well lease, they capped seven, used two others for injection, and produced 99 barrels from a remaining single extraction well.

The end result, of course, was a reduction in the totals amount of available oil, and a particular shortage of price-controlled oil. How can any other result have been reasonably expected?

Now, we're seeking to repeat that same sort of mistake in a number of different ways.

For instance, that Obama supporter on the Cavuto show earlier this week. She declared, with perfect sincerity, that if the government nationalized the oil refineries, and took control of them, that the government could set prices. As if prices bore no relationship to any real-world factors. The government can disguise the price by selling it at a price lower than the cost of production—as long as the remainder of costs are recovered in some other way, i.e., through general taxation. But the cost of production is what it is, and if it isn't paid, then oil won't be produced. No one can "set" prices. It is, literally, impossibility. The price of a good must at least cover the cost of production.

Obama himself weighed in with a few gems.
Opening our coastlines to offshore drilling would take at least a decade to produce any oil at all, and the effect on gasoline prices would be negligible at best since America only has 3 percent of the world's oil," Obama said in a statement that did not explicitly distinguish between oil and gas drilling.
Well, now that I've had Mr. Obama explain this to me, I've decided there's no reason to save for retirement. After all, it'll take at least 30 years for that saved money to add up to any significant amount, and by then, I could be so rich I won't even need it.

Of course, in the real world, we actually have 1.2 trillion barrels of oil sitting in oil shale under Colorado, of which about 800 billion barrels are technically recoverable today. That's enough oil to fulfill all of America's energy needs for about 40 years. And, while we're on the subject, we've got about 23 trillion ft3 of natural gas, which could motor us along for another century or so.

But why drill for it? Bit of a waste of time, apparerently.

But, wait, it gets better. In the same speech, he said:
We will have spent by the time this thing is over well over a trillion dollars, one trillion dollars. Think about what we could have done with a trillion dollars. Think about, think about what we could have done if we had invested even half of that even a quarter of that into research into clean energy, developing new ways of transporting people, if we had tried to look at how are we going to create a new engine that doesn't run on fossil fuels. Imagine that. Over the last five years, we could be in a position now where we could have perhaps sliced our energy consumption by a third, and if we had done that gas prices would be low because people wouldn't be using gas.
So, let's see if I got this straight. If we start drilling for oil, it won't make any difference, but if we'ed spent a quarter trillion bucks five years ago, we'd all have replicators, transporters, and the warp drive engine today?

I think someone's been sneaking into the Jeffries tube for illicit nips of Arcturan brandy a few times too often. Because it's fairly likely that we'd've poured that quarter-trillion down a black hole for no return at all.

Oh, and by the way, who is this "we" Mr. Obama is talking about here? It isn't the government. It's all of us, individually, buying gas, paying electric bills, etc. That trillion dollars didn't come out of some central fund overseen by the government. It was each of us, making voluntary purchases that spent it.

So, five years ago, there wasn't any quarter trillion dollars to be spent on antimatter and dilithium crystals, because we had another use for it, namely, driving to work, heating our homes, and cooking our food. And the only way there'll be a quarter-billion dollars available to do it in the future is if Mr. Obama hikes taxes to take it away from us by force.

I guess Mr. Obama's answer is to spend the next trillion dollars on research into warp drive, which will magically pay off in a ten years, instead of in drilling, which won't accomplish jack.

That is, quite literally, fantastic thinking. It is so divorced from reality—from the way the real world actually works—that it defies description. It is one of the stupidest intellectual positions I have ever heard.

And I have no doubt he believes it with religious fervor.

It's no different with health care, either. The same divorce from fact and reality applies there, too.

Sure, the method of providing health insurance sucks in this country. It sucks primarily because it is a system designed by government to ensure that employers, of all people, provide health insurance for employees. It has the practical effect of ensuring that the people who actually consume health care are not the people who purchase insurance. And the people who consume health care have no choice in the insurance plan they receive. That's the system designed by FDR's administration, and the fact that it works in a less than satisfactory manner is presumed to be the fault of "the market".

And what "market" would that be, precisely?

It's as if there's a determined effort to ignore the way the world actually works and substitute a fantasy for it in order to accomplish some favored political goal.

It's not just liberals who do this, of course. Right now, LA governor Bobby Jindal has a new bill sitting on his desk from the legislature that would require the teaching of Intelligent Design in the science curriculum of public schools. But, Intelligent Design, whatever else it may be—and it may even be true, for all we know—isn't science. If it isn't testable, repeatable, predictive, and falsifiable, it just isn't science, and doesn't be deserved to be taught as such. Yes, science is materialistic, but matter is the only thing we can access. Talk of the Designer, however useful it may be in other areas, has nothing whatever to do with science.

If you want to believe the Baby Jesus created the world at 9:06 am on April 21st, 4004 BC, you're perfectly free to do so. But if you can't prove it by reference to the physical world, it isn't science. Oh, while we're talking about it, maybe the Baby Jesus should've put a little more thought into how much oil we needed when he slapped the whole thing together.

This kind of resistance to reality doesn't bode well for us. It's all part and parcel of the decline of the republic, and the civilization that produced it. Whatever is, is. And no amount of wishful thinking, or policy built on fantasy will make things other than what they are. All that you can accomplish by doing so is simply to make things worse for everyone.
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Previous Comments to this Post 

Given that yesterday’s decision to forego public funding shows that Obama’s word is as good as a Nigerian e-mail, there is no reality to deal with when it come to the man.
Written By: Neo
URL: http://
I agree 100%.

About three years I started to notice this irrationality and its’ spreading .. deep and wide quickly.

I’m quite disturbed by it. What is it? Is it a critical mass of being brainwashed in anti-religious Muli-cultural Marxism?

Sometimes I’ll watch a video of a conservative giving a lecture at a University and my jaw drops because I can’t believe how belligerently stupid the college Lefties are who insist on making sure the entire world hears their indignation that a conservative was allowed to speak.

Then there’s WashingtonDC which I conclude is just hopeless.

Like Sowell once mused... I wonder when we’ll be begging for a military coup in this country.
Written By: Vince P
"Of course, in the real world, we actually have 1.2 trillion barrels of oil sitting in oil shale under Colorado, of which about 800 billion barrels are technically recoverable today."

Don’t know what "real world" you are talking about, but it certainly is not the physical one in which I live and in which the kerogen in the shale of Colorado exists. Recommend you do some research in the kerogen shale, why kerogen is not oil, the long history of the attempt to exploit such a resource, why a few countries burn it (rather than use it in automobiles), the history of the US Synfuels Corporation, and the history of such companies as Shell who have attempted to make a useful product out of the stuff.

Then get back to us with an essay based on the real "real world".
Written By: greentoe99
URL: http://
Don’t have to. Already know it. I know that natural gas makes a poor lubricant, too.

Oh, and, as far as the layman is concerned, it is oil. It just isn’t the same as crude oil.

But, I’m no Greenie whack-job who objects to its use because it’s "too hard" to process and convert, contains too much sulfur, etc., etc., etc. so the better answer is to sink research into some unspecified form of alternate energy.

Way to completely miss the point, there, cowboy.
Written By: Dale Franks
Dear Sir,

I have heard many times that ID is not science. It is not repeatable, not falsifiable and makes no predictions. It seems to me that evolution as taught is fraught with the same difficulties.

Written By: Roy Lofquist
URL: http://
I have been flying oil field support in the GOM for over 36 years and it DOES NOT take 10 years to develop an oil field.From the time the well is drilled,proven,and a production platform is put in place,it takes about SIX MONTHS,may be sooner.If a pipeline isn’t close,the oil is moved by barge,until the pipeline is connected.Ten years is B*** S***.
Some of the smaller oil companies break even cost to produce a barrel of oil is between $8.00&$10.00.The larger oil companies have a higher cost because of larger overhead,but not much more.
It won’t matter how much oil is produced if we can’t get it refined.With only a hundred plus refineries,each at 100% capacity,what do we expect?
Written By: Harry B. Robinette
URL: http://
haha keep drinking the cool that anwr will solve your problems.

"Last month the Department of Energy produced a report titled, “Analysis of Crude Oil Production in the Arctic National Wildlife Refuge.” (Hat tip, Menzie Chinn) The report makes two points that indicate that drilling in ANWR won’t do much to decrease energy prices any time soon. First, the report states that drilling wouldn’t add to domestic production for at least 10 years, and peak production can’t be expected until the 2020s. Meanwhile, under the middle-of-the-road estimate for output oil prices would be expected to decline by only 75 cents per barrel in 2025. If there’s less oil than expected in ANWR the reduction in prices would be 41 cents per barrel in 2026, and if there’s more than expected the drop in prices is seen around $1.44 per barrel in 2027. That would translate into a reduction in gas prices between just one cent and four cents, according to an analysis prepared by Congress’s Joint Economic Committee.

At current prices even the high-end estimate would trim just about 1% from the cost of a barrel of oil, and even that reduction can’t be expected for almost 20 years."

i guess if you repeat something that rush and hannity says enough times it must be true?
Written By: slntax
URL: http://
There isn’t a single person here who believes "ANWR will solve your problems".

If that’s what you’ve gotten out of this, you need remedial reading help and a whole bunch of it to boot.
Written By: McQ

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