Modus Ponens With the GOP
Thus, it’s worth pointing out that at today’s version of the House GOP’s now-daily “Let’s Drill Everywhere!” press conference, Rep. John Shinkus (R-Il) observed that “if drilling is good, then drilling and mining is better.” And, indeed, it’s true that if we think we should give zero consequences to the environmental, economic, and public health harms caused by the resource-extraction activities of the fossil fuel industry then we really should go beyond mining in the Arctic Wildlife Refuge and all along America’s coastline — why not tear up as much of the country as possible looking for coal? In today’s Washington Times Republican Reps. Hoekstra and Shadegg argue that we should “Look at the extraordinary development in Dubai, the unfettered spending by Venezuela, and the vigorous economic boom in the Middle East.”
And it’s true, if we throw everything aside in the pursuit of fossil fuels we just might be able to transform America into a corrupt, resource-dependent autocracy! Of course if drilling isn’t good, then the rest of this doesn’t follow. Readers will, perhaps, have to draw their own conclusions about that.
44 Responses to “Modus Ponens With the GOP”
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August 18th, 2008 at 11:34 am
As Jared Diamond pointed out in Collapse oil extraction and mineral extraction are not equal.
August 18th, 2008 at 11:38 am
If drilling is good, then trepanation for GOP Reps is better. WIll John Shinkus volunteer?
August 18th, 2008 at 11:47 am
We’ve actually sort of been down this road during the late 19th Century. America’s oil and coal reserves, along with beef and other agricultural products, made it a corrupt and callous oligarchy in which business interests dominated the legislative branch on a day-to-day basis and had significant influence in the executive branch as well. Americans decided that was a bad road to go down and responded with progressivism, a movement that, at least in part, tried to revitalize democracy and human right. The Social Gospel movement arose at the same time as well.
You would think that America would be ready for some reform now given the epic economic concentration that has been occurring and the long-term damage that are energy policy (or lack of one) has produced. But maybe not so much.
August 18th, 2008 at 11:49 am
That’s a nice strawman you’ve built. How about you consider the notion that we do more exploration with environmental safeguards?
You seem to believe that the Washington Metro will keep running in the absence of new power development; It might come as a shock fr you to realize that your beloved trains do, in fact, require power.
August 18th, 2008 at 11:50 am
“…Readers will, perhaps, have to draw their own conclusions about that…”
the problem is that the electorate, and most of the press, is unable to draw their own conclusions about that. that’s why obama can have a thoughtful discusion with rev. warren while mccain throws out the same old red meat and everyone agrees that mccain “won” the event. drilling is a red-herring because the states that have already allowed it will continue to allow it and the others, like florida and california, won’t. ask mccain why he doesn’t want nuclear waste in his stae, or why he voted against wind energy. those are the answers i’d like to hear him avoid.
August 18th, 2008 at 11:51 am
Weird that they would cite Dubai as an example of resource extraction. Setting aside for a minute the tiny amount of actual fossil fuel reserves they have, Dubai is currently beefing up its labor and environmental standards while diversifying its economy as part of a post-oil strategy. If anything, the lesson from Dubai is to move away from extraction, not toward it!
August 18th, 2008 at 11:57 am
I’d actually be a little more inclined to support expanded drilling if such drilling were nationalized. If oil is expensive, and domestic drilling won’t help reduce the price of oil, we, the American people, might as well get rich off it and use the money to improve our public infrastructure and services.
As szr states, Dubai is an example of a country that realized that the oil-drilling gravy train wasn’t going to last forever and went in search of alternative industries and economic opportunities to keep itself prosperous.
August 18th, 2008 at 12:09 pm
Can someone explain how drilling will lower gas prices? All I see it doing is giving oil sellers more oil to sell. We export refined gasoline as it is now. Since we have enough supply to export the stuff why would having more of it lower gas prices?
August 18th, 2008 at 12:15 pm
Giving oil companies exclusive access rights to oil sites is not “drilling”.
They don’t have to drill just because you give them exclusive access rights.
They might have to if the Secretary of the Interior enforced the terms of those exclusive access rights, but he doesn’t, so ‘opening up for drilling’ does not equal ‘drilling’.
August 18th, 2008 at 12:16 pm
Unfortunately Matt’s dreams of a oil dependent autocracy can’t be achieved. We just don’t have huge quantities of cheaply extractable energy in this country. On a positive note we can emulate China. Beijing has inversions, but so does Boise Idaho. If we loosened our emissions standards and built some dirty coal power plants we could be choking in no time.
August 18th, 2008 at 12:16 pm
Tyro is right. Drilling so that we can have more oil is one thing. But in reality, why do we want to rip up our coastlines so that Exxon can sell oil at $150/barrel to China?
August 18th, 2008 at 12:16 pm
jg: drilling will have a profound “psychological impact.” Look, if you’re not going to pay attention…
August 18th, 2008 at 12:26 pm
I’d actually be a little more inclined to support expanded drilling if such drilling were nationalized. If oil is expensive, and domestic drilling won’t help reduce the price of oil, we, the American people, might as well get rich off it and use the money to improve our public infrastructure and services.
But of course, that’s basically what happens! 38% of Exxon’s profits come to the federal government in the form of corporate income tax! The rest goes to shareholders who are, by and large, US investors through their mutual funds and private investments! Exxon’s profit margins are around 16% — the other 84% of revenue goes to pay salaries — in the case of offshore drilling American salaries — to buy drilling equipment, to pay shipping companies to deliver the stuff, etc. And all these things are taxed.
We just don’t have huge quantities of cheaply extractable energy in this country.
That’s not true. We have tons and tons and tons of coal. Enough to supply all the US electricity needs for the next century. Of course, that wouldn’t be enough to turn us into a resource-dependent autocracy, given all the other vital sectors of the US economy, but it would be enough to give this global warming thing a good kick-start!
Can someone explain how drilling will lower gas prices? All I see it doing is giving oil sellers more oil to sell.
Did you ever study supply and demand?
August 18th, 2008 at 12:31 pm
right, a small improvement in Exxon’s bottom line is not really particularly interesting to me. I’m more interested in having the money from the oil go directly into the US treasury.
Look at it this way: if you have a backyard, would ytou be willing to allow drilling on your land in exchange for a nominal fee? I wouldn’t. On the other hand, if I got all of the profits from selling the oil drilled on my own land, I might be more willing to support such things.
We don’t have enough oil to do any more than marginally affect supply: the US just doesn’t have that much, and that’s the way it goes. However, if we want to make a lot of money, the USA should simply get into the oil business.
August 18th, 2008 at 12:38 pm
Yes. Let’s speak of supply and demand.
Right now oil companies are selling their product at maximal (in recent historic terms) profitability to a market with — according to their own figures — maximized demand.
In fact, Americans have driven less this year, driving oil consumption down, for the first time in generations.
Oil companies acting rationally, and not in accord with conservative fantasies, would be wisest to maintain supply tight, profitability at maximum, and maintain costs at their current relatively fixed amount.
Conversely, perhaps oil companies will act in accord with conservative fantasies: given further exclusive access rights, they will massively increase their costs with equipment purchases and extraordinary production-related manpower increases, all so that they can flood a market with saturated demand with increased production so that they can sell the same amount of product in the same market at a reduced profitability.
Sure, okay, why not? Of course they will. After all, various right wing politicians & media figures have assured us that’s what will happen.
Hey, why not some more of that right wing pseudo-economic snark? Maybe that will make the oil companies stop acting in their and their share-holders’ best interests.
August 18th, 2008 at 12:41 pm
Supply and demand? Did you read my question? We’re exporting supply.
Would you like to try again?
True. And getting to it is cheap and good for the environment. Those mountains are too tall anyway.
Where have you been? Corporations hardly pay taxes in a supply side economy. They wouldn’t work so hard remember? Plus we give them back billions in the form of subsidies (Go Cheney!). 84% of revenue goes to pay salaries? Are you kidding me? Do you believe that or are you just hoping I will?
August 18th, 2008 at 12:58 pm
To expand on El Cid’s comment.
Giving the exisiting Oil Companies exclsuivity on all potential sources of Oil is the opposite of an open market you Conservatives say you favor. What Congress wants to do is give the handfull of companies that currently control the Oil market complete control over all the potential supply.
Great gig if you can get it. It is like not just telling Microsoft that having a monopoly is A-Ok, it is going the extra step and makign it illegal for anyone else to sell an OS.
August 18th, 2008 at 1:03 pm
Uh, Shimkus was head guy in the House a few years back during the Mark Foley page scandal, so he’s probably not a person who should be talking about drilling.
August 18th, 2008 at 2:02 pm
Matt, all Republicans want to get on the gravy train that the Alaskan Republicans get. Why must you hate?
August 18th, 2008 at 2:44 pm
. . .if we think we should give zero consequences to the environmental, economic, and public health harms caused by the resource-extraction activities of the fossil fuel industry . . .
No one says this or thinks this.
August 18th, 2008 at 2:46 pm
84% of revenue goes to pay salaries? Are you kidding me?
jg, To paraphrase you, did you read his comment? 84% go to salaries, AND “to buy drilling equipment, to pay shipping companies to deliver the stuff, etc.”
August 18th, 2008 at 2:50 pm
Oil companies acting rationally, and not in accord with conservative fantasies, would be wisest to maintain supply tight, profitability at maximum, and maintain costs at their current relatively fixed amount.
The only way that is possibly true is if the oil companies have been colluding with each other. Given that every time gas prices rise Congress conducts a high profile investigation of competitive behavior in the industry and never finds anything, this is almost certainly incorrect.
The key aim of an oil company is to maximize its return on assets. Exxon Mobil, to take an example, has $40B in cash on its balance sheet, which is not generating any meaningful return. The CEO and senior management need to find the best uses for those funds — this is basically their entire job. One alternative would be to invest in the equipment, infrastructure, manpower, etc. necessary to drill for off-shore US oil. Given the high price of oil today, that would almost certainly be a very high return investment.
Now, on the margin, this would likely affect the price of oil a bit (there’s that supply and demand again!) lowering the price they can charge on oil from all their existing drilling operation. But Exxon can’t really control this — if they don’t drill offshore, Chevron will, or Shell will, or BP will. In those cases, Exxon will still suffer through lower prices, but will get none of the extra profit from the new drilling.
Supply and demand? Did you read my question? We’re exporting supply. Would you like to try again?
Well, first of all, crude oil and refined gasoline are two different things. We’re not talking about expanding refinery capacity here; we’re talking about drilling for oil.
Exporting doesn’t have anything to do with supply and demand; it’s a global market. If there is more supply, and constant demand, the market-clearing price will go down. We may wind up exporting all the incremental production–it’s irrelevant to what we’re talking about–but it will be at a lower price. If you don’t understand this, you clearly have not ever studied supply and demand, which answers my initial question.
Where have you been? Corporations hardly pay taxes in a supply side economy. They wouldn’t work so hard remember?
Exxon Mobil paid $35B in taxes in its last 12 months of reported financials on $80B of profit before tax. I’ll let you do the division.
84% of revenue goes to pay salaries? Are you kidding me?
That’s not what I wrote. Read more carefully.
August 18th, 2008 at 3:04 pm
So, your argument, “right”, is that since there seems to be no evidence of some sort of out-of-the-ordinary “collusion” between oil companies, oil companies will invest their resources into expanding their U.S.-based oil production and lowering the profitability of the product in the off-chance that they will significantly capture more oil market share than their competition (given that U.S. consumers do not purchase brands of oil) because otherwise oil companies couldn’t think of any other useful profitable things to do with their cash on hand?
This counts as an economic argument?
August 18th, 2008 at 3:16 pm
No hate for Nancy Pelosi for opening the debate on this topic?
August 18th, 2008 at 3:17 pm
So, your argument, “right”, is that since there seems to be no evidence of some sort of out-of-the-ordinary “collusion” between oil companies, oil companies will invest their resources into expanding their U.S.-based oil production and lowering the profitability of the product in the off-chance that they will significantly capture more oil market share than their competition (given that U.S. consumers do not purchase brands of oil) because otherwise oil companies couldn’t think of any other useful profitable things to do with their cash on hand?
Well that’s a roundabout paraphrase of my argument, yes. You’ve inserted a bunch of modifiers (like “out-of-the-ordinary” and “off-chance” and “significantly”) that aren’t right, but other than that you’ve got it.
This counts as an economic argument?
Why wouldn’t it count? You haven’t refuted any of it, despite your interesting use of scare quotes and a non-sequitur about branding.
August 18th, 2008 at 3:26 pm
“right”: I don’t need to “refute” what you suggested, because in and of itself it’s flatly unconvincing. You don’t get to present a terrible argument based on your own assumptions of economic ideology and then insist others refute it.
August 18th, 2008 at 3:35 pm
Ahh yes “right”, another conservative who’s taken some econ and thinks he understands the world! Ummm, “right” there has been a whole lot of economists who have looked at resource extraction problems and counter to your thoughts, it always comes out that maximizing current production is the wrong thing to do unless you expect steep falling prices.
And the fact that you bring up “Marekts uberalles!” about a government awarding drilling contracts pretty much means you don’t really understand anything.
August 18th, 2008 at 3:39 pm
You don’t get to present a terrible argument based on your own assumptions of economic ideology and then insist others refute it.
There is no “ideology” involved here. This is how businesses are actually run.
You can choose not to believe me, but the fact that you haven’t challenged any of my assumptions, pointed out any logical flaws in my reasoning, or presented an alternative model for firm behavior suggests to me that you don’t actually know anything about the topic.
August 18th, 2008 at 3:47 pm
Ahh yes “right”, another conservative who’s taken some econ and thinks he understands the world!
I am not a conservative nor do i think I understand the world. I have, in fact, taken some econ, yes. One out of three, not too bad for an MY commenter.
Ummm, “right” there has been a whole lot of economists who have looked at resource extraction problems and counter to your thoughts, it always comes out that maximizing current production is the wrong thing to do unless you expect steep falling prices.
If this is true, I would be interested in reading these findings. Can you point me to any references?
And the fact that you bring up “Marekts uberalles!” about a government awarding drilling contracts pretty much means you don’t really understand anything.
I didn’t say anything about “Marekts uberalles” and I wasn’t talking about the awarding of drilling contracts.
August 18th, 2008 at 3:51 pm
“right”: Well, you might have a point if you were describing reality. Instead, you are contrasting with current reality, in which oil companies (which actually exist) are sharply controlling production in the U.S. and have publicly stated for years that they are practicing cost controls on production and man power, are suddenly going to begin producing more because you have asserted economic ideology over why they should.
So, for example, you yourself contrast the reality of a cash-on-hand balance of Exxon with your suggested alternative for Exxon to invest that in U.S. production.
I presented not only a more reasonable alternative but one which parallels actual empirical reality, as opposed to instructional guide versions of free market ideology. I don’t know why you think that equates with you knowing ‘anything about the topic’, but apparently you are so convinced.
August 18th, 2008 at 4:53 pm
Unless I’m mistaken, your (Yglesias’) use of “modus ponens” in the title of the post is incorrect. “Modus ponens” is a form of simple inference: if A, then B; A; therefore B. A mistake in modus ponens reasoning would involve the concluding inference — it has nothing to do with the initial hypothetical, which is what you are describing here when you paraphrase GOP reasoning as “if drilling is good, then drilling and mining are good.” It may be that you are describing a fallacy of the a minore ad maius, a foriori type.
August 18th, 2008 at 5:07 pm
I asked someone to explain how more drilling will solve our high gas price problem. You replied that I should look into a concept called, what was it? supply and demand. I countered that we are exporting supply, implying that low supply is not the cause of high prices in this case. Instead of explaining your complete lack of an answer you reply that we’re talking about oil not gas?
Do you want to start over? I’m looking for an answer not an argument. Conservative or liberal I don’t care. I want to know why politicians think this is what we should do.
August 18th, 2008 at 6:48 pm
Modus ponens is the following type of argument:
If x then y,
x,
Therefor y.
The argument
If x then y,
Therefor if x and z then y (or f, or any variable)
is neither Modus ponens nor a valid argument nor a common fallacy as it is so obviously moronic.
This is not a criticism of Matt’s title as I think most GOP politicians do believe the above argument is valid; either that or they think most of their audience is as stupid as the press corps, which is a pretty big insult.
August 18th, 2008 at 9:48 pm
Is this guy trying to legitimize his annual Christmas present by suggesting that coal has a value?
Dude! Santa Clause hates your ass! That’s why you get coal in your stocking.
August 19th, 2008 at 7:03 am
We should start with drilling in his basement first and then ask him if we should go onto mining as well.
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