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ChrisGraley (29.71)

What government should be... The Dept of Energy

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8

January 26, 2010 – Comments (7) | RELATED TICKERS: AM.DL2 , CRIS

Ok, you guys know the drill by now.

My Original "I'm mad as hell and I'm not gonna take it anymore!" post here 

Department of Education 

Department of Agriculture

Now on to the department of Energy!

Environmentalists stay tuned on this one because it will be an emotional roller coaster.

As of today the Department of Energy no longer exists. (Environmentalists say boo!)

All research programs are non-funded.  (Environmentalists say boo!)

Non-defense Clean-up and nuclear waste disposal will be transfered to the Environmental protection Agency.  (Environmentalists say yeah!)

Nuclear Security Administration will be transferred to the Dept of Defense.  (Environmentalists say yeah!)

Defense environmental clean-up and Uranium related activities will be transferred to the Department of Defense.  (Environmentalists say boo!)

Again a lot of this was stolen from Chris Edwards here

Now the reason that I can get rid of the Department of Energy is because of a few laws the we passed... 

The first law that is in 5 years we are adding a $5.00 tax on a gallon of Gasoline and in 10 years that tax goes on to be $10.00.  (Environmentalists say yeah!)

The second law is a $5.00 tax on on a gallon of Ethanol or Methanol derived from food crops and in 10 years that tax goes on to be $10.00.  (Environmentalists say boo!)

Ok so what gives? I stated in my manifesto that I didn't want a regressive tax and then I put a huge tax on oil which is regressive. Well in my defense, I'm hoping that the tax isn't relevant. I believe that we are close enough now on subverting oil that the free market can solve the problem with enough incentive before the tax hits.

I'm a firm believer that we can solve our other energy problems much easier if we can first break away from oil extortionists. It has an added advantage that when we break away that they try to recoup money from the next biggest buyer, which I believe would be China at this point.

Ok, so why tax Ethanol or Methanol? Well I'm not taxing all Ethanol or Methanol, just what's derived from food crops. Why? because if I didn't, the price of a box of cornflakes would hit $10 even before my tax on gasoline tax took effect. This is extremely regressive and most liberals don't really care about that fact either. The dream is more important than the details with them. Well, for me the only important thing is the details, so we aren't gonna starve Uncle Joe to make sure that we can pat ourselves on the back for energy independence. Also I have removed all subsidies from the Dept of Agriculture in the last blog post. This means that we need alternative crops! With the first 2 laws we may have opened up a chance for  switch grass farmers, algae farmers, and cellulose farmers.

Last we need to talk about the 3rd law. The 3rd law deals with the energy finances. I have $29.322 billion dollars every year that's committed to making the country energy independent. Once that happens that money will get diverted to making the states energy independent. We'll start with the smallest states first.and once all states are energy independent then all money goes back to research. I don't want to remove any money here, I just want to make it more effective.

Ok, guys I have put a lot of time in the last few posts and I get recs but no comments. I would really prefer the comments. Even if you hate the ideas, light me up! I really want to fix things and your opinion counts more than your admiration.

If you are really ambitious, pick apart my last few posts. Our forefathers counted on  discourse and not apathy.

7 Comments – Post Your Own

#1) On January 26, 2010 at 10:49 PM, russiangambit (29.40) wrote:

Chris, I'll comment when you get to the Department of Labor. Agriculture and Energy are really not my thing.

On the subject of Energy - can we have some public transportation , please? I really don't enjoy sitting in a truck ( well in my case SUV)  3 hours a day like the rest of texans.

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#2) On January 26, 2010 at 10:56 PM, ChrisGraley (29.71) wrote:

I totally agree russiangambit!

We are so poor on public transportation it's not funny! I'm hoping the threat of a big gas tax might spur the movement, but I'm not sure. The sad thing is that we don't know what we are missing! If more Americans traveled to Europe, they would see what public transportation should be like.

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#3) On January 26, 2010 at 11:22 PM, ElCid16 (97.15) wrote:

What?  No DOE?  Then how will Ford get free hand-outs to make the Ford Explorer more fuel efficient?

http://www.nytimes.com/gwire/2010/01/26/26greenwire-ford-will-use-doe-cash-to-make-explorer-more-f-34639.html

The '10 Explorer is projected to get 15 mpg city.  The $400M DOE "loan" (which is added on to the $5.9B that they've already received) will increase this to about 19 mpg city.  A four MPG difference...federal money well spent.

Mandating MPG increases by automanufacturers seems a little silly when the government provides them the money to make those increases...

Oh, and I agree about public transportation.  Nashville's public tranportation is horrible.

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#4) On January 27, 2010 at 12:33 AM, Tastylunch (29.40) wrote:

ChrisGraley 

We are so poor on public transportation it's not funny!

admittedly our state is unusually bad Chris even by American standards. As you may know Columbus is the largest metro in the US without any rail transit.

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#5) On January 27, 2010 at 1:42 AM, FreeMortal (29.41) wrote:

Hello Chris,

Some interesting ideas.  I'm one of the few liberals on this board and I hope that: first, you wont be a hater; and second, you might appreciate a different perspective on this exercise.  If not I'll leave.

First, to deal with the political realities of actually accomplishing any of this, we'll assume that you are -for all intents and purposes- dictator for 10 or so years.  That will simplify the exercise without having to deal with such pesky entities as congress, the corn and energy lobbies, or a fickle electorate. With these problems sidelined, we can now try to assemble this new reality. For the sake of discussion, what Chris says goes.

 

First, I'm all for the removal of corn subsidies.  You wouldn't even have to tax ethanol as, without subsidies, it would simply become uneconomical to produce for fuel. 

The problem that emerges is that corn farmers are going to be in for some tough times.  They cannot just start a new style of farming without some transition costs.  The poorest farmers will have to liquidate land and equipment at firesale prices and we will see a large transfer of wealth away from farmers as they are gobbled up.  To soften the industry shock, maybe you could offer low interest loans to retool?

Corn flakes will rise in price, along with a lot of other things that corn finds its way in like bread, chicken, cows, milk, etc.  There will be cost and price ripples throughout the food chain resulting in unemployment and higher food prices.  Producers and consumers will both have to go through a pain period. The food industry will go through another acquisition and consolidation phase producing an even bigger agribusiness on a TBTF scale.  Again, how about low interest loans?  One benefit to all this might be that corn syrup will no longer be in just about everything

With a promised $5 tax hike, oil prices will go up in short order as stocks and futures are forward looking.   Substitution energy such as coal and NG will go up along with oil.  These price hikes will quickly spread to other consumer goods, curtail spending, and retard growth.  Its possible that your (anticipated) lower tax policy will counteract some of this, but we'll need some data on it.

The big problem that remains here Chris is that I don't see where we actually become energy independent.  Are you just assuming that the market will just figure it out on its own?  That's a huge assumption.  If the market does not figure it out (and quick) the energy shock will push up CPI, limit growth, and create unemployment. 

All this is based on the ideological and (neo)liberal assumption that the markets will -eventually- figure all this out.  (For 95% of economic issues, I generally share this belief)  Now, assuming you can push through your entire agenda and, assuming that the market figures it all out eventually, the country may well come out of the pain period in much better shape. 

However (brace yourself for the bleeding heart part) we still haven't really addressed this pain period and what happens to all the people that would be displaced, unemployed, and facing higher food and energy costs.

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#6) On January 27, 2010 at 10:56 AM, ChrisGraley (29.71) wrote:

#5) On January 27, 2010 at 1:42 AM, FreeMortal (90.85) wrote:

First, I'm all for the removal of corn subsidies.  You wouldn't even have to tax ethanol as, without subsidies, it would simply become uneconomical to produce for fuel. 

I already removed the subsidies in the Dept of AG link. I agree, but he tax on Ethanol is too make sure that the tax on gasoline doesn't give it a revival.

The problem that emerges is that corn farmers are going to be in for some tough times.  They cannot just start a new style of farming without some transition costs.  The poorest farmers will have to liquidate land and equipment at firesale prices and we will see a large transfer of wealth away from farmers as they are gobbled up.  To soften the industry shock, maybe you could offer low interest loans to retool?

Not really, corn farmers can switch to several different crops (soy for example) without any transistion costs. The small farmer is actually in better shape than the large one in this case. A lot of large farmers have their own processing facilities that would need to be retooled. Small farmers are used to crop rotation. I have no problem with low interest loans if they are needed, but I don't think that they will be.

Corn flakes will rise in price, along with a lot of other things that corn finds its way in like bread, chicken, cows, milk, etc.  There will be cost and price ripples throughout the food chain resulting in unemployment and higher food prices.  Producers and consumers will both have to go through a pain period. The food industry will go through another acquisition and consolidation phase producing an even bigger agribusiness on a TBTF scale.  Again, how about low interest loans?  One benefit to all this might be that corn syrup will no longer be in just about everything. 

Actually the price of those things should plummet. As well as some other crops as farmers transistion from corn. Corn syrup will still be in everything, but I'll have to handle that when we get to the Dept of Health and Human services.

With a promised $5 tax hike, oil prices will go up in short order as stocks and futures are forward looking.   Substitution energy such as coal and NG will go up along with oil.  These price hikes will quickly spread to other consumer goods, curtail spending, and retard growth.  Its possible that your (anticipated) lower tax policy will counteract some of this, but we'll need some data on it.

Actually oil prices should plummet. Nat Gas and Coal would rise quickly though. I have a feeling that even with the tax reduction and prebates, that more help will be needed here, but I have $23 billion dollars a year for as long as it takes.

The big problem that remains here Chris is that I don't see where we actually become energy independent.  Are you just assuming that the market will just figure it out on its own?  That's a huge assumption.  If the market does not figure it out (and quick) the energy shock will push up CPI, limit growth, and create unemployment. 

That's exactly what will happen! We already have vehicles that don't run on gasoline. We have created a market where the only choice is to use them. I'll also have a huge tax revenue if the market is slow to figure it out to help speed up the process.

All this is based on the ideological and (neo)liberal assumption that the markets will -eventually- figure all this out.  (For 95% of economic issues, I generally share this belief)  Now, assuming you can push through your entire agenda and, assuming that the market figures it all out eventually, the country may well come out of the pain period in much better shape. 

However (brace yourself for the bleeding heart part) we still haven't really addressed this pain period and what happens to all the people that would be displaced, unemployed, and facing higher food and energy costs.

I don't think it will be as bad as you envision. Coal and gas will be higher, but everything else will be lower. Since most oil is imported, I'm betting on a net job creation.

Thanks for the comment, it was well thought out and I hope that I didn't come across as a hater.

 

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#7) On January 28, 2010 at 7:07 PM, FreeMortal (29.41) wrote:

Hi Chris,

I appreciate your cordial reply.  You have not come off as a hater at all and I wish there were more like you willing to discuss these things with a minimal amount of invective and hyperbole. Thanks.

 

Now on to the subject

Subsidies are keeping corn prices artificially low, not artificially high.  Farmers are paid to produce corn where the market would not otherwise support it.  This is why corn has wormed its way throughout our food supply.  Removal of the subsidy would make production less profitable and consequently cause corn prices to rise, not fall.  This would in turn cause the the production costs of foods produced from corn to rise as well.  This includes beef, chicken, turkey, milk, cheese, hot dogs, etc.  This is also why ending corn subsidies would cause ethanol to become less, rather than more, economical. 

 

As for non-gas cars,what exactly did you have in mind?  Perhaps you are referring to the much-hyped hydrogen fuel cell.  The problem here is that the chemical process to make hydrogen requires more energy than can be extracted from the same amount of hydroden in a fuel cell.  The end result is that the fuel cell really only serves as a store of energy.  The hydrogen must be created with electricity, which itself must be created by conventional means: coal, nuclear, etc. 

To make the electric car work (whether with a fuel cell battery or conventional battery) the electric grid must be significantly upgraded and many, many more power plants must be brought online.  This is not impossible, but it will cost much more than a couple dozen billion a year.

This liberal is very open to the idea of nuclear energy, however the supply of fuel for all the additional plants will be a problem and will make us further dependent on foreign powers. Coal is a much dirtier alternative, but contrary to what the little girl in the coal industry's commercial would have you believe, we do not have hundreds of year's with of fuel left. 

I'm sure, eventually, someone somewhere will finally figure out how to make cheap, clean energy, and this innovation may well be hastened by higher energy taxes, needs, and prices.  But is the solution to just step back until something happens?  Did you know that thirty years ago, there was a growing and profitable industry installing solar panels right here in the USA?  

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