Crime Inc - Cap And Trade

[Rikeln]

Really?

You see no conflict of interest in the actions of these *public servants*?

You see no lies in their claims about the cost of Cap And Trade?

As for the socialist "thing", who do you think helped write the Cap and Trade Bill? An organization called the Apollo Alliance. They've admitted this. So did Harry Reid. And what is the Apollo Alliance? A coalition of unions (like SEIU), social justice groups (like ACORN) and environmentalists. The founder of the Alliance is Van Jones ... the self admitted communist that Obama appointed as his Green Jobs Czar. Ron Bloom, who Obama named his Manufacturing Czar is on the Apollo Board, and Bloom has spent a lot of time around DSA (Democratic Socialists of America) members and contributing to DSA publications. Another Apollo Alliance board member is Joel Rogers, founder of the socialist New Party. Frankly, TB, I have to question the eyesight of anyone who doesn't see a surprising number of socialists around Obama and his agenda.

Yeah it's pretty interesting I have to say. This new wave Socialist movement is kind of scary. They snuck their man Obama in under our noses promising change lol.

 

[WildCat]

Cap and trade uses the free market to set the price of CO2 emissions. It is therefore the least “socialist” solution on the table.

A carbon tax uses a government derived price for CO2 emissions. It is without doubt less free market orientated then Cap and Trade, though it’s no more “socialist” then any other system of government regulation.

A straight carbon tax is far simpler and much more efficient.

Cap and trade is wide open to abuse and accounting gimmicks and requires a tremendous amount of overhead for all the oversight such a program requires.

I bet Goldman Sachs can't wait to turn things around by selling carbon credits though. Money doesn't get any easier than that.

 

[Beerina]

A straight carbon tax is far simpler and much more efficient.

Cap and trade is wide open to abuse and accounting gimmicks and requires a tremendous amount of overhead for all the oversight such a program requires.

I bet Goldman Sachs can't wait to turn things around by selling carbon credits though. Money doesn't get any easier than that.

Of course, then sob stories about how this or that little precious thing can't afford to keep up with the big boys in buying credits, so Congress will, of course, have to set aside some, or let some things get a pass, in exchange for campaign donations blah blah blah.


It's almost like that's what the real purpose is.


Nah, couldn't be! Pay no attention to the little man behind the curtain.

 

[lomiller]

A straight carbon tax is far simpler and much more efficient.

Cap and trade is wide open to abuse and accounting gimmicks and requires a tremendous amount of overhead for all the oversight such a program requires.

For emissions, cap and trade doesn’t require any more oversight then a carbon tax. Both require you to verify actual emissions.

For a carbon tax to work you would need to literally tax some CO2 emitting industries to death to get them to stop emitting. What cap and trade allows that a carbon tax does not is the operation of for profit business opportunities removing CO2 from the atmosphere. I guess this could entail slightly more oversight to verify the CO2 is actually removed, but allowing businesses to pay for the cleanup of their CO2 rather then shutting down altogether is more then worth it.

 

[MikeMangum]

I couldn't prove everything you post is nonsense. After all, you do agree that the free market failed in the Gulf coast. Your demand of better government oversight is quite refreshing.

The market would have handled it just fine without government intervention, thank you very much. The Federal government passed a law that limited financial liability for economic damages in the event of an event like this to $75 million, on the theory that full accountability would make it essentially impossible for smaller oil companies to compete with the big ones. That cap prevented oil companies from properly pricing in risk. If BP (and all the other other oil companies) had to fear the full economic consequences of a potential catatrophe, they would be substantially more careful in their practices.

http://reason.com/blog/2010/06/03/gulf-oil-crisis-case-for-gover

BP is worth about $250B, and current estimate are the spill will cost them $1B. So damages after the fact can actually work. I think the $1B number is very low, but even if it is off by two orders of magnitude, they could afford to pay $100B in damages.

Unfortunately, there are laws which limit the liability of oil companies for disasters, and thus prevent them from having the proper incentive. (Krugman blames libertarians for these laws, which is ridiculous, libertarianism != crony capitalism, and there is nothing libertarian about limiting damage liability). So BP can't legally be charged the full cost of the cleanup - which is a government failure, not a market failure. Government implemented a policy which benefits special interests - big surprise.

Now, this idea of damages after the fact doesn't hold for all disasters - it just happens that the oil industry has the largest companies in the world, so they can pay damages even for very large disasters. In other industries, where potential damages exceed company assets, I think the answer is to require liability insurance with amounts large enough to cover worst-case damages. Then you get a free-market price put on the risks (by the insurance market), which gives companies the right incentive to avoid risky behavior even if the damages are to large for them to pay.

The role of the government in this sort of situation is to:

1) make money from selling the lease!
2) protect property rights by implementing and maintaining a civil court system in which suits for compensation of damages can be brought
3) protect the commons (the environment) via imposing cleanup costs on the responsible party
4) protect the commons (the environment) by imposing punitive damages on the responsible party, assuming there were regulatory violations (and not just an accident)

 

[lomiller]

The market would have handled it just fine without government intervention, thank you very much. The Federal government passed a law that limited financial liability for economic damages in the event of an event like this to $75 million, on the theory that full accountability would make it essentially impossible for smaller oil companies to compete with the big ones. That cap prevented oil companies from properly pricing in risk. If BP (and all the other other oil companies) had to fear the full economic consequences of a potential catatrophe, they would be substantially more careful in their practices.

Proper pricing of risk would mean there would be no drilling at all in the gulf.

 

[MikeMangum]

Proper pricing of risk would mean there would be no drilling at all in the gulf.

It would almost surely stop the most hazardous wells, the ones where the potential benefit is outweighed by the risks. That's pretty much exactly the outcome we want, is it?

 

[lomiller]

It would almost surely stop the most hazardous wells, the ones where the potential benefit is outweighed by the risks. That's pretty much exactly the outcome we want, is it?

there is no "more dangerous well" there is only the worst case scenario which can never be ruled out for any well.

The potential cost of this worst case scenario exceeds the value of any oil company so the risk would end up absorbed by the public anyway. From the investor standpoint it's not a question of if this worst case scenario happens and you lose your entire investment, it's when.

 

[MikeMangum]

there is no "more dangerous well" there is only the worst case scenario which can never be ruled out for any well.

Yes, and no. The potential damage is basically the same for each well, but the chance of a catastrophe happening are not the same for each well. The damage done to 2 seperates houses by a 10 foot flood would be the same, but the house on top of the hill has a substantially lower chance of being flooded and as a consequence has a lower risk premium.

The potential cost of this worst case scenario exceeds the value of any oil company so the risk would end up absorbed by the public anyway. From the investor standpoint it's not a question of if this worst case scenario happens and you lose your entire investment, it's when.

BP has total assets worth over $200 billion. Shell has ~$300 billion in total assets. Exxon has total assets close to $250 billion. Chevron has close to $175 billion.

 

[lomiller]

Yes, and no. The potential damage is basically the same for each well, but the chance of a catastrophe happening are not the same for each well. The damage done to 2 seperates houses by a 10 foot flood would be the same, but the house on top of the hill has a substantially lower chance of being flooded and as a consequence has a lower risk premium.

I guess the potential for damage is lower with a lower producing well, but how are they supposed to know ahead of time which wells only have a limited supply of oil that could potentiality spill and more importantly why would they target low production wells rather then high production wells? Even if they did target lower production wells they would need to drill more of them increasing the likelihood of a problem.

BP has total assets worth over $200 billion. Shell has ~$300 billion in total assets. Exxon has total assets close to $250 billion. Chevron has close to $175 billion.

Economic activity in the Gulf States from tourism and fishing revenue exceeds $250 billion per year. Over the 20+ years it will take the gulf to fully recover the potential losses could be in the trillions

 

[joobz]

The market would have handled it just fine without government intervention, thank you very much.

And santa claus is real.
There is no reason to assume this.
In fact, we have multiple past experiences which demonstrate quite the opposite. Otherwise Superfund would never have needed to exist.

The Federal government passed a law that limited financial liability for economic damages in the event of an event like this to $75 million, on the theory that full accountability would make it essentially impossible for smaller oil companies to compete with the big ones. That cap prevented oil companies from properly pricing in risk. If BP (and all the other other oil companies) had to fear the full economic consequences of a potential catatrophe, they would be substantially more careful in their practices.

This is a nice fantasy, but simply that.

The problem is that you are assuming the oil industry would seek to minimize their risk through honest means. However, why couldn't they simply have bought insurance against catastrophe and minimized their risk that way? If a catastrophe happened, they could simply wash their hands of it. Or at least create a scenario that could be held up in courts indefinitely.

What mechanism in the free market would allow them to actually act purely honestly?

 

[bit_pattern]

Fox News, WSJ, Glenn Beck, Heritage... 'Nuff said

 

[mhaze]

Fox News, WSJ, Glenn Beck, Heritage... 'Nuff said

Yes, dear. Would you like to go to beddy by now? Some warm milk and cookies too?

 

[leftysergeant]

Delete double post.

 

[leftysergeant]

The market would have handled it just fine without government intervention, thank you very much.

Why haven't they? I can think of no case where a lack of regulations did more good than the "harm" caused by restrictive regulation. The fishing industry is a good example of how wise it is to let the industry guide federal regulations.

About as wise as palying Russian Roulette with a TT33.

The Federal government passed a law that limited financial liability for economic damages in the event of an event like this to $75 million, on the theory that full accountability would make it essentially impossible for smaller oil companies to compete with the big ones.

Yeah, right, that's what oil company toadies pushing the legislation wanted you to believe.

That cap prevented oil companies from properly pricing in risk. If BP (and all the other other oil companies) had to fear the full economic consequences of a potential catatrophe, they would be substantially more careful in their practices.

Well, duh! That's why the oil maggots wanted their boys in Congress to pass that law.

The role of the government in this sort of situation is to:

1) make money from selling the lease!
2) protect property rights by implementing and maintaining a civil court system in which suits for compensation of damages can be brought
3) protect the commons (the environment) via imposing cleanup costs on the responsible party
4) protect the commons (the environment) by imposing punitive damages on the responsible party, assuming there were regulatory violations (and not just an accident)[/QUOTE]

You missed the biggest one. The government needs to set the standards for safety based on available scientific data and shut down those operations that do not comform.

Suing after the fact does not fix a mass extinction.