Tag Archives: Costs

News

Federal Reserve studies find that speculators are not causing gas prices to rise

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Are Barack Obama and Hugo Chavez very different?
Are Barack Obama and Hugo Chavez very different?

Just like Hugo Chavez, Obama is now blaming high gas prices on “speculators”. Is he right about the cause of the high gas prices?

The Heritage Foundation investigates, using studies from the Federal Reserve.

Excerpt:

Yet the allegations of speculators manipulating the market occur every time gas prices rise. They have been investigated numerous times by the Federal Trade Commission and others and found to be without merit, but few critics are ever convinced. Several Federal Reserve studies found no correlation between speculation and the price of any commodity. Yet President Obama remains unconvinced and seems to believe this time the speculators are getting away with something.

In fact, speculators can also help lower costs in the near term, and one way for that to happen is to increase supply, signaling lower future prices. As my colleague David Kreutzer points out, “A better solution is to increase access to new energy sources. If new sources of oil are allowed to be used, futures markets and speculators will lower the future cost of oil, which will translate into lower fuel prices at the pump.”

The reality is oil prices have been rising steadily for a year as the global economy is on the mend and countries are using and demanding more oil. A weak dollar is also playing a role. While “Drill Here, Drill Now” is not a panacea and won’t bring gas prices down dramatically, increasing access to oil reserves in the U.S.—both onshore and offshore—would help offset rising demand, increase jobs, and stimulate the economy. Unlike the President’s solutions of increasing biofuel production and bringing more electric vehicles into the market, drilling can be done without the taxpayer’s help. Subsidizing uneconomic sources of fuel and transportation is a bad deal for the consumer and the taxpayer and will do nothing to offset high gas prices.

Blaming speculators and creating unnecessary task forces is a good way for the Administration to signal it is “doing something” about high gas prices. But the truth is that the federal government is merely diverting attention away from its bad policies.

Obama’s anti-speculator speech is just a way of deflecting the blame to someone else, to make it look like he is doing something. But actually, he is causing the problem, because he is ignorant of the most basic rules of economics.

Director Blue notes that this is exactly the kind of anti-capitalism rant that the communist Hugo Chavez has given in the past – right before the onset of hyperinflation in Venezuela.

News

Obama to raise gas prices and inflation by raising taxes on oil companies

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Obama is now saying that he wants to cut subsidies to oil companies (H/T Lonely Conservative), which will just increase their costs for extracting and processing oil. They will pass those costs directly on to the consumer. Obama will then blame the oil companies, even though he is the cause of the higher costs in the first place.

Excerpt:

The White House has sent officials to the G20 summit in Seol, South Korea and part of the message those officials are carrying from the PResident is a promise to join “joint efforts to phase out fossil fuel subsidies.”

But, what subsidies to fossil fuels get? Mostly tax breaks, which are hardly subsidies at all. Letting people or companies keep more of their own money isn’t “subsidy.” It’s tax relief. America’s policies amount to tax breaks aimed at driving capital investment in the energy markets, and frankly these sort of tax breaks are available to a lot of industries.

[…]What’s going on here is a bit of sleight-of-hand. Obama and other world leaders are talking about “ending subsidies” for fossil fuels. What they really mean is raising taxes on fossil fuels so that the so-called “green energy” projects they’re all so drippy about are more competitive in world energy markets.

What this means for you and me is higher energy prices and, by extension, a higher cost of living across our entire economy as those higher energy prices translate into higher prices for goods and services (everyone has to pay their power/fuel bills).

And it won’t just be the taxes adding to our expenses. If higher taxes drive more fossil fuel producers out of the market (and that’s clearly the goal here), they will be replaced by much more expensive and much less reliable “green energy” producers. That, again, means a bigger hit to the wallets of Americans.

Meanwhile, this report concludes that cumulative US subsidies of biofuels could reach $1 trillion over the next two decades. And that’s just biofuels, not other initiatives like wind power or solar power.

In summary, these people want to hamstring cheap, reliable fossil fuels in order to promote heavily-subsidized, expensive, unreliable green power.

Next time, don’t vote for a Marxist community organizer to be President. Pick someone who actually has run a business and met payroll.

UPDATE: A commenter adds:

What the President is talking about when he mentions oil “subsidies” is not a “subsidy,” it’s fair accounting. The primary “subsidy” is the oil depletion allowance, which is simply proper accounting for depleting in-ground assets.

The oil depletion allowance is nothing more than how the oil company computes how much an oil well decreases in total value when they pump oil out of it. There’s a finite amount of oil in a well, but the total amount is really an estimate. When it drills the well, the oil company declares what the oil in the ground is worth. When it pumps the oil out of the ground, the company takes a “depletion allowance” to account for the reduced value of the oil in the ground, and subtracts that value from their profits, thus reducing the amount of profit they have to declare for tax purposes. This is no different from, say, a paper company subtracting the cost of the logs they used in making paper from the profit they earned selling the paper. It’s calculated something like depreciation because the actual amount of the oil in a well is impossible to measure.

What’s happening is that the President, in an attempt to create demons that his dupes can hate, is deliberately misleading people into thinking that oil companies get special treatment. Just using the word “subsidy” regarding the depletion allowance is a lie, plain and simple. Worse, even: it’s defamation, and a declaration that the government really owns everything.

News

Which health care system is better? Canada or the United States?

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Story from the Hoover Institute at Stanford University.

The article compares (pre-Obamacare) American health care to health care in other places like Canada, the UK and Europe.

The full article. I almost never cite the full article, but this is a must read. Men, pay close attention to the differences in prostate cancer treatment rates in a for-profit system versus a single-payer system, where bureaucrats decide who gets treatment.

MEDICINE AND HEALTH:

Here’s a Second Opinion

By Scott W. Atlas

Ten reasons why America’s health care system is in better condition than you might suppose. By Scott W. Atlas.

Medical care in the United States is derided as miserable compared to health care systems in the rest of the developed world. Economists, government officials, insurers, and academics beat the drum for a far larger government role in health care. Much of the public assumes that their arguments are sound because the calls for change are so ubiquitous and the topic so complex. Before we turn to government as the solution, however, we should consider some unheralded facts about America’s health care system.1. Americans have better survival rates than Europeans for common cancers.Breast cancer mortality is 52 percent higher in Germany than in the United States and 88 percent higher in the United Kingdom. Prostate cancer mortality is 604 percent higher in the United Kingdom and 457 percent higher in Norway. The mortality rate for colorectal cancer among British men and women is about 40 percent higher.2. Americans have lower cancer mortality rates than Canadians.Breast cancer mortality in Canada is 9 percent higher than in the United States, prostate cancer is 184 percent higher, and colon cancer among men is about 10 percent higher.3. Americans have better access to treatment for chronic diseases than patients in other developed countries. Some 56 percent of Americans who could benefit from statin drugs, which reduce cholesterol and protect against heart disease, are taking them. By comparison, of those patients who could benefit from these drugs, only 36 percent of the Dutch, 29 percent of the Swiss, 26 percent of Germans, 23 percent of Britons, and 17 percent of Italians receive them.

4. Americans have better access to preventive cancer screening than Canadians. Take the proportion of the appropriate-age population groups who have received recommended tests for breast, cervical, prostate, and colon cancer:

  • Nine out of ten middle-aged American women (89 percent) have had a mammogram, compared to fewer than three-fourths of Canadians (72 percent).
  • Nearly all American women (96 percent) have had a Pap smear, compared to fewer than 90 percent of Canadians.
  • More than half of American men (54 percent) have had a prostatespecific antigen (PSA) test, compared to fewer than one in six Canadians (16 percent).
  • Nearly one-third of Americans (30 percent) have had a colonoscopy, compared with fewer than one in twenty Canadians (5 percent).

5. Lower-income Americans are in better health than comparable Canadians. Twice as many American seniors with below-median incomes self-report “excellent” health (11.7 percent) compared to Canadian seniors (5.8 percent). Conversely, white, young Canadian adults with below-median incomes are 20 percent more likely than lower-income Americans to describe their health as “fair or poor.”

6. Americans spend less time waiting for care than patients in Canada and the United Kingdom. Canadian and British patients wait about twice as long—sometimes more than a year—to see a specialist, have elective surgery such as hip replacements, or get radiation treatment for cancer. All told, 827,429 people are waiting for some type of procedure in Canada. In Britain, nearly 1.8 million people are waiting for a hospital admission or outpatient treatment.

7. People in countries with more government control of health care are highly dissatisfied and believe reform is needed. More than 70 percent of German, Canadian, Australian, New Zealand, and British adults say their health system needs either “fundamental change” or “complete rebuilding.”

8. Americans are more satisfied with the care they receive than Canadians. When asked about their own health care instead of the “health care system,” more than half of Americans (51.3 percent) are very satisfied with their health care services, compared with only 41.5 percent of Canadians; a lower proportion of Americans are dissatisfied (6.8 percent) than Canadians (8.5 percent).

9. Americans have better access to important new technologies such as medical imaging than do patients in Canada or Britain. An overwhelming majority of leading American physicians identify computerized tomography (CT) and magnetic resonance imaging (MRI) as the most important medical innovations for improving patient care during the previous decade—even as economists and policy makers unfamiliar with actual medical practice decry these techniques as wasteful. The United States has thirty-four CT scanners per million Americans, compared to twelve in Canada and eight in Britain. The United States has almost twenty-seven MRI machines per million people compared to about six per million in Canada and Britain.

10. Americans are responsible for the vast majority of all health care innovations. The top five U.S. hospitals conduct more clinical trials than all the hospitals in any other developed country. Since the mid- 1970s, the Nobel Prize in medicine or physiology has gone to U.S. residents more often than recipients from all other countries combined. In only five of the past thirty-four years did a scientist living in the United States not win or share in the prize. Most important recent medical innovations were developed in the United States.

Despite serious challenges, such as escalating costs and care for the uninsured, the U.S. health care system compares favorably to those in other developed countries.

This essay appeared on the website of the National Center for Policy Analysis on March 24, 2009. An earlier version was published in the Washington Times.Available from the Hoover Press is Power to the Patient: Selected Health Care Issues and Policy Solutions, edited by Scott W. Atlas. To order, call 800.935.2882 or visit www.hooverpress.org.

Scott W. Atlas is a senior fellow at the Hoover Institution and a professor of radiology and chief of neuroradiology at Stanford University Medical School.

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