Mr. Fuhrman gets it wrong
Brian December 29th, 2006
I realize Mr. Fuhrman gets up early and publishes a lot of posts each morning, however, I could not help but notice that he put very little objective thought and research into one of his latest entries.
Today, via the Southwest Virginia Blogs aggregator1, I happened to catch his post entitled “Boucher’s Big Plans,” in which he took some time to critique Congressman Boucher’s statements to the Coalfield Progress.
One of Mr. Fuhrman’s first points really caught my eye. He refers to Congressman Boucher’s statement regarding the economic benefits of a price floor on oil as “idocy.”
Mr. Fuhrman said:
A price floor. What that means is Boucher doesn’t ever want that gallon of gasoline you pay for to get too cheap. What’s with that? And, if he’s willing to set prices on gasoline at the pump, is he willing to set prices on milk? Aspirin? Diapers? PlayStation3’s? Water?
His averment that “Boucher doesn’t ever want that gallon of gasoline you pay for to get too cheap” is, of course, clearly and completely false.
In my opinion, the reason that Congressman Boucher would support a price floor on oil is the same reason that Republican Senator Lugar of Indiana does. They both – Boucher and Lugar – are concerned about our dependence on foreign oil and they want to improve the local economies of their constituents.
A price floor on oil, as Philip Gordon opined in this article for the Financial Times earlier this year, would be a “simple” way to get energy producers and consumers to “make long-term investment and consumption decisions in a way that makes little economic sense so long as price stability is not guaranteed.”
Gordon, I think, is on target when he says “Americans will not take long-term decisions to [invest in alternative energy sources (i.e., coal-to-liquid, ethanol)] unless they know that a future sharp fall in oil prices will not undercut them.”
In other words, Congressman Boucher, specifically, appears to looking for a way to reduce our dependence on imported oil while greatly improving the economy in the Coalfields of Southwest Virginia.
Sen. Lugar’s support for an oil price floor is based on the same reasoning, but his interest is in ethanol, as opposed to coal-to-liquid fuels.
Producers will not be able to attract the requisite investors necessary to develop and manufacture coal-to-liquid and ethanol fuels as long as there is still a chance the bottom will fall out of the oil market. A price floor would remove that concern.
As for what to do with the collected funds if the price per barrel actually ever fell below the floor, Gordon had some excellent ideas. Gordon suggested “[t]o make the proposal even more palatable politically, Washington could promise to spend the money on education, healthcare, homeland security and even tax cuts rather than use if for deficit reduction, a noble purpose but one that rarely excites voters.”
The reason I point this out is that, obviously, I am very concerned about the improvement of life here in the Coalfields. I do believe that the furtherance of coal-to-liquid transportation fuels will help our struggling economy. I further believe that a price floor on oil will be necessary if we want to see meaningful investments in coal-to-liquid development.
It would be very unfortunate if someone took Mr. Fuhrman’s post and knee-jerk reactions at face value, and used it as political fodder against Congressman Boucher’s efforts to improve the Coalfields of Southwest Virginia.
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1 No blog has ever been removed from the Southwest Virginia Blogs aggregator, but the offensive content, which has recently been discussed at length, would certainly be a basis for removal.
Capitalism has this thing called ’supply & demand’ which sets prices….
If oil became worthless, would the Left of Center Crowd be demanding a base price to keep those who still have some need for it paying a higher price?
Sure, because oil producers will lobby their congressman for it….
This year the crabbers had a huge harvest in the Chesapeake Bay, and the boats brought back so many crabs, that the crab harvesters went to who to limit the catch to prop up prices…. The VA govt.. and asked for a catch limit….
Govt, is necessary, but come on… We are talking about Congress here…
“Less government interference” is one of the main reasons areas such as Dickenson County are in such dispair, as large coal companies like Westmoreland were allowed to exploit the land and people to the max with minimal regulations. Then of course, when the coal ran out, they packed up their bags and left just as quickly as they cam in, leaving the workers and their families with nothing but scared landscapes that were unable to support the main industry prior to coal, which was agriculture.
When we spend money for oil we don’t have to spend blood for oil.
Jerry:
I think you are missing the point of this post, so let me try it again.
1. Price floor on oil will equal more use of coal-to-liquid fuels
2. More use of coal-to-liquid fuels will equal more jobs and better economy for SWVA.
The SWVA economy is largely based on coal. Putting a factory will give us a couple of hundred jobs. However, creating and building entire new industry - like coal-to-liquid fuels - that will be totally dependent on coal will make our economy grow by thousands of jobs.
I cannot imagine why you would doubt number 2, but that can certainly be your opinion. The truth, however, is that anything that would increase the demand for coal improves the Coalfields’ economy.
As for evidence of number one, I think you are failing to see that the burden is on you, Jerry, to rebut the undispute evidence cited in this post and a belief held by about every leading energy economist.
If you don’t want to believe Boucher, then that is fine. But, your statements are also in contradiction to Republican Senator Lugar, so is he wrong too?
[…] Mr. Fuhrman gets it wrongI realize Mr. Fuhrman gets up early and publishes a lot of posts each morning, however, I could not help but notice that he put very little objective thought and research into one of his latest entries. Today, via the Southwest Virginia Blogs aggregator1, I happened to catch his post entitled ?Bouch… […]
Your premise, Brian, is wrong. If there is a floor on the price of oil, by definition, that DOES mean that oil will not get too cheap. That’s what a floor is. If it costs less money to get the oil (from anywhere), then the price will not drop below the floor. If gas could be sold at $1.00 a gallon, it would not because of the floor causing a higher price. That’s what a “floor” price is: making sure the price doesn’t go too low.
[…] Other bloggers on the right, not surprisingly from areas outside the Coalfields, have continuously criticized Congressman Boucher’s plans to boost the economy in the Coalfields. This issue should not be about Republican vs. Democrat. […]
See my weblog for a response.
Can you point us to the specific post?
[…] This AP article says that Congressman Boucher has renewed his efforts to encourage investment in construction of coal-to-liquids conversion plants. […]