Thursday, June 23, 2011

Six Reasons the SPR Release is Stupid

The globally coordinated release of petroleum reserves is the latest evidence that the Obama administration simply doesn't understand markets.

1 - The justification (or "cover") for the SPR release is the loss of North African (especially Libyan) output. However, the Libyan situation is a disruption of indeterminate length, and the SPR release is scheduled to last 30 days.

2 - The price of oil was already headed down in response to market feedback.

3 - A significant percentage of major stock market indices are populated by energy companies, which are hit especially hard by this action, thus exacerbating the ongoing stock market decline.

4 - A suggested alternate motivation for the SPR release is to shake speculators out of their positions, and introduce an element of uncertainty in order to deter future speculation. To the extent that this is successful, the world oil market will be unable to correctly determine the correct price premium corresponding to supply uncertainty. The global market will be less capable of absorbing future supply disruptions.

4a - To the extent that the expectation of future scarcity is successfully driven from the oil market, oil companies will not be given the correct price signal to drill for more oil, and future oil price shocks will be more severe due to a lack of spare capacity that was never developed.

4b - To the extent that the expectation of future scarcity is successfully driven from the oil market, consumers will not be given the correct price signal to conserve energy and buy more energy efficient vehicles, magnifying the impact of future price shocks on consumers.

5 - Impairment of marginal supply development will hit North American exploration disproportionately, deterring the creation of high-paying energy sector jobs in the US and Canada.

6 - An SPR release diminishes our ability to respond to a legitimate use of the SPR such as a natural disaster or terrorist attack.

Monday, June 20, 2011

Somebody Should Focus Group This Video

Paul Ryan ably defended his entitlement plan on CNBC's Squawk Box against Jared Bernstein.  Folks, this is just about as good as it gets, so if this doesn't work, then we're pretty boned.

Here's a small-ish clip:

The full video (14+ minutes) can be viewed here.

The bottom line on Medicare is that there are going to be cuts. The question is whether voters want to have some input on where those cuts get made, or whether they want the IPAD (Independent Payment Advisory Board) -- the unelected, unaccountable bureaucrats Congressman Ryan spoke about -- to make all of those decisions for everybody.

QOTD: Asterisk

Jack Kelly at RCP quotes Glenn Kessler:
And what Mr. Obama said at the Jeep plant "is one of the most misleading collections of assertions we have found in a short presidential speech," wrote The Washington Post's fact checker, Glenn Kessler. "Virtually every claim made by the president concerning the auto industry deserves an asterisk, just like the fine print in that too-good-to-be-true car loan."

Saturday, June 18, 2011

Quote of the Day: Indefensible

Bill Daley, White House Chief of Staff:
“Sometimes you can’t defend the indefensible,”

(via Dave at AoSHQ)

Daley couldn’t answer basic questions and continually faced criticism from the executives in the room. The business leaders even applauded each other’s criticism of the administration. “At one point, the room erupted in applause when Massachusetts utility executive Doug Starrett, his voice shaking with emotion, accused the administration of blocking construction on one of his facilities to protect fish, saying government ‘throws sand into the gears of progress,’” wrote Peter Wallsten and Jia Lynn Yang in the Washington Post.

Sunday, June 12, 2011

Kathleen Parker Missing The Flipping Forest For The Trees

The former Spitzer co-host* once again woefully laments the perceived ideological rigidity of her conservative would-be-brethren. This time she's defending the “flip-flop”, with particular emphasis on Mitt Romney. Oddly, Romney is most recently in trouble for not flipping on global warming, which makes me wonder whether Kathleen Parker finished her bottle of wine before or after submitting her work this week.

* - (No, we will never let you live that down.)

But the problem is not merely that somebody change his or her mind, as Parker would have us believe. The Republican Party is filled with folks who changed their minds on issues large and small. Reagan made George H.W. Bush change his professed position on abortion in order to join the 1980 ticket. Dubya was against nation building before he tried to nation-build in Iraq. Pawlenty has reneged on his previous support of carbon cap-and-trade. Old-hand Republicans everywhere who once supported an individual health insurance mandate in the early 1990s have largely come to denounce the idea in the present. Rick Perry, who according to many liberal opinion writers seems to be the impossible love child of Barry Goldwater, Hitler, and Yosemite Sam, actually voted for Jimmy Carter in 1976 and supported Al Gore's presidential ambitions in 1988. If Texas can forgive Perry for these political sins, then so shall I.

Rather, the problems with flip-flopping are those of quantity and convenience. We can tolerate the occasional flip-flop of convenience, so long as it is rare. And we can stomach a large number of changed positions, so long as the changes are credible, as in the case of an ideological conversion or epiphany. But forgive us, oh wise Kathleen, for questioning the intellectual integrity of a politician whose positions change with great frequency and during awfully convenient circumstances.

Parker seems to empathize with John Kerry and his episode of “[voting] for the $87 billion, before [he] voted against it”. She calls these remarks, “unhelpful”. But Kerry's problem was not merely that he didn't explain himself, it was that his remarks betrayed what was at best a wishy-washyness to his support of the war effort, and at worst a cynical calculation to manipulate the domestic tax policy process by withholding critical funding for the war. Kerry's entire 2004 campaign was marked by his inability to convey clear policy messages. Even as he was on the cusp of receiving the Democratic nomination, The Washington Post complained about Kerry's “fuzziness on issues ranging from Iraq to gay marriage”.

The issue about flip-flopping is not that a politician might change his beliefs in light of new facts, but the concern that the politician has no real beliefs to begin with.

Kathleen, ask yourself what you suppose Mitt Romney really thinks about gay marriage. If your answer is anything other than an unhesitating confirmation of his stated position (-opposed), then perhaps you should reflect upon that.

Saturday, June 11, 2011

Wreck-overy-dot-gov: Porkulus Still Only 83% Spent

Yeah, that's right. The Obama "stimulus" bill, after over two years since enactment, is only 82.73 % spent.

Screen-cap from

259.9 + 207.3 + 183.9 = $651.1 billion

651.1 / 787 = 82.73%

Recall that the entire point of a Keynesian stimulus is to spend it, and to spend it quickly.  Obama couldn't even get that much right.