House Democrat calls for nationalized oil refineries
Posted on June 18th, 2008 by bile Categories and Tags: Uncategorized, Congress, Democratic Party, FoxNews, George W. Bush, House Appropriations Committee, House of Representives, Iraq, Maurice Hinchey, nationalization, new deal, offshore drilling, oil refineries, oil supply, Steny HoyerHouse Democrats responded to President’s Bush’s call for Congress to lift the moratorium on offshore drilling. This was at an on-camera press conference fed back live.
Among other things, the Democrats called for the government to own refineries so it could better control the flow of the oil supply.
They also reasserted that the reason the Appropriations Committee markup (where the vote on the amendment to lift the ban) was cancelled so they could focus on preparing the supplemental Iraq spending bill for tomorrow.
At an off-camera briefing, House Majority Leader Steny Hoyer (D-MD) said the same. And a senior Republican House Appropriations Committee aide adds that “there were multiple reasons for the postponement” including discussion on the supplemental. But the aide said there was the thought that Democrats may wish to avoid a debate today on energy amendments.
Here are the highlights from briefing
Rep. Maurice Hinchey (D-NY), member of the House Appropriations Committee and one of the most-ardent opponents of off-shore drilling
We (the government) should own the refineries. Then we can control how much gets out into the market.
Oh boy. I don’t see this going anywhere but if people are pinched hard enough at the pump they may actually let it happen. Someone recently was telling me how they could see a New Deal part II coming from this current mess. I’m afraid to agree.
6 Responses to “House Democrat calls for nationalized oil refineries”
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June 19th, 2008 at 8:45 am
In a similar vein, Mexico freezes prices on 150 food products.
Another question for bile: How do countries with less gov’t subsidies compete against those that do subsidize? For example, if China is willing to eat the cost of 50% of oil, how do American companies that buy oil compete against an opponent who essentially cheats? (Usage of China/America arbitrary here, as our country does its own industry subsidies.)
June 19th, 2008 at 9:32 am
You seem to imply that the eating of the cost is free. They are taxing their people in order to cover those costs (less so than the US government does in several instances.) The taxation game is negative sum as wealth creation is stunted and malinvested so in total their cost is greater. You simply can’t isolate one component of the market. The cost of oil alone isn’t the reason for higher processed oil product prices. You’ve got government not licensing new refineries for 30 odd years, corn ethanol subsidies, restricting domestic resource extraction, etc. So they could compete on processing and perhaps advancements in that would offset resource costs. If that doesn’t work they will be incentivized to find alternatives. People act as if large corporations sit around. In my company just yesterday we had a presentation on how they are shopping around for alternative energy source for electricity to run large offsite computing sites. That’s not directly related to oil per se but as a result of their desire to cut costs you get technology being looked into which could be used for transportation like plugin electric cars. Other industries, like air transportation, are looking at alternative fuels and engines. Even if that doesn’t work out you end up with retail customers with higher prices and therefore they create the incentive for transportation companies to find alternatives or their business shrinks. And in the final scenario… the American companies can’t compete and we buy from China cheaper. What’s the problem with that? “We become reliant on them!” How aren’t we now? That’s the cost of division of labor… less control. But we then spend our resources more efficiently and have more money to spend elsewhere. Our money buys more. If they won’t sell to us we are no worse off than currently. Our government can lower capital gains taxes, corporate taxes, etc to allow people and companies to have more money to invest in alternatives. It can stop with all the regulation which prohibits and/or raises the cost of doing business.
Human Action and other works by the Austrians economists go into great detail of the costs of socialism and centralized planning. They may not be obvious in the short term or from your perspective but the total cost in terms of wealth per person is going to be higher. Such as with this Mexican price freeze. They will feel that later. The article says that the industry acknowledges there will be a negative economic result because of the freeze. They may very well end up with shortages and hording along with no incentives locally to fix the issue.
June 19th, 2008 at 9:50 am
You seem to imply that the eating of the cost is free.
Sorry, if I did. It’s pretty obvious that they are spreading the cost in the form of taxation.
You simply can’t isolate one component of the market.
Ok. Country A subsidies industry X that hurts, but doesn’t kill, their own industries Y and Z. In the meantime, everyone in industry X goes out of business in countries B and C. Sure, in those countries industries Y and Z are doing better than before, but now country A has established complete dominance of market X. Worse yet, industry X has grown 400% while Y and Z only a small fraction. The startup costs for everyone else to now re-compete in industry X is non-zero, perhaps greater than the advantage they hold in industries Y and Z.
June 19th, 2008 at 10:10 am
The startup costs for everyone else to now re-compete in industry X is non-zero
When is it ever non-zero?
You aren’t explaining to me what’s wrong with the scenario. Why is it bad that B & C doesn’t product X anymore? In the longer term the subsidies will stop and A will likely be worse off than B & C because they malinvested their capital. You could bring up similar scenarios where country A finds a large source of X and now has lower overhead when producing something with X. Country B likely can’t compete if transportation costs don’t make the savings a wash. Should B get out of the business or be subsidized? They should get out of the business as to subsidize it would be an inefficient usage of their capital.
June 19th, 2008 at 10:36 am
In the longer term the subsidies will stop and A will likely be worse off than B & C because they malinvested their capital.
Did they? Country A watched their pet industry grow at a faster rate than what that their subsidy cost the neglected industries. All hypothetically anyway.
You aren’t explaining to me what’s wrong with the scenario. Why is it bad that B & C doesn’t product X anymore?
Are you’re assuming that every subsidy is a “mal-vestment”?
June 19th, 2008 at 12:41 pm
Did they?
And what says that B & C’s industries don’t grow just the same? Maybe they start industry W. You are being entirely too vague and simplistic. If you take capital from the people you’ve distorted their ability to invest, to purchase, etc. You pump that into industry X. Y and Z obviously won’t loose what X gained. You have no idea how directly it will effect them. What you do know is that the reduction in ability of consumers and entrepreneurs to invest in what they wish has been diminished, perhaps to the point where they can’t substitute for another venture, or can’t afford the risk, or can’t make a return worth the overhead. Therefore there is a loss of potential wealth. In addition. Market signals are screwed up leading to malinvestments and greater wastes of capital. Lets not forget that protectionist actions such as the subsidy come bundled almost always with tariffs and duties, regulations, money manipulation, etc. and lead to even greater economic distortions.
Are you’re assuming that every subsidy is a “mal-vestment”?
How could it not be? If the industry/product you subsidize was worth it you wouldn’t need the subsidy. People would be freely purchasing it at the face, natural cost. Even if you said that the exact amount extracted from the people and given to the product’s cost was the same as if they had no subsidies, which is impossible, it would be a malinvestment because the taxation process would be overhead to the transmission of capital.