Baseball Crank
Covering the Front and Back Pages of the Newspaper
April 16, 2008
POLITICS: Lies About Money and Nonsense About The Economy

The Democratic Presidential Race Summarized In 31 Seconds

The latest Hillary Clinton ad pretty much summarizes the Democratic race in a nutshell. On the one hand, the ad throws a great punch at one of Barack Obama's more egregiously disingenuous attempts to pass himself off as Mr. New Politics, pointing out that his advertised claim not to take money from oil companies is bogus on two levels - nobody takes money from the companies themselves, since it's illegal, but Obama has received plenty of donations from oil company executives and employees:

Just when you are ready to (gag) cheer on Hillary, though, we get a rapid descent into utter nonsense, as she claims that "She'll make oil companies pay to create the new jobs ... America needs."

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So how, exactly, is Hillary supposed to make oil companies create new jobs in the United States?

Well, consider what oil companies actually do, using as an example ExxonMobil, the company that so personifies "Big Oil" that it might as well just change its name to "Standard Oil." ExxonMobil has approximately 80,800 corporate employees, according to its 2007 Annual Report, plus another 26,300 employed at "company-operated retail sites," i.e., gas stations. According to the company's 2006 Corporate Citizenship report, approximately 37% of the corporate employees are located in the U.S., and while a quick Google search didn't reveal a more reliable source for a further breakdown, Wikipedia claims that the company employs "4,000 employees in its Fairfax downstream headquarters and 27,000 people in its Houston upstream headquarters." The Annual Report defines these two lines of business (upstream and downstream) as follows:

The Corporation's principal business is energy, involving the worldwide exploration, production, transportation and sale of crude oil and natural gas (Upstream) and the manufacture, transportation and sale of petroleum products (Downstream). The Corporation is also a major worldwide manufacturer and marketer of petrochemicals (Chemical) and participates in electric power generation (Upstream).

So, I ask you this: precisely where are more U.S. jobs at ExxonMobil going to come from? As noted, the company's two main business lines already have their headquarters here, so it's not going to be management jobs. Let's start with the upstream business: "exploration, production, transportation and sale of crude oil and natural gas". Is Hillary planning to expand exploration and production in the U.S.? That can be done - the Teamsters would love to see more good drilling and refining jobs created here at home, from drilling in ANWR and off the Florida coast to building the new refineries we haven't had in three decades. But Hillary in the past has opposed such things (the very ad in question boasts that she has opposed even tepid energy bills proposed by the Bush Administration) - is she now going to change course and start drilling like John D. Rockefeller, over the shattered corpses of filthy Obama-supporting hippie environmentalists? That would be newsworthy, I'll say that much, but it's not in evidence in the ad.

Electric power generation? More nuclear plants, maybe? You aren't going to create a ton of jobs building wind farms, that's for sure. But if Hillary has proposed building new nuclear plants, I've missed it.

What about the downstream business? "[M]anufacture, transportation and sale of petroleum products"? To do that, you need to increase demand...is she really running on a platform of increasing demand for oil? As it happens, ExxonMobil reports growth in employment at company-operated retail sites from 17,400 in 2003 to 26,300 in 2007 - almost 9,000 new jobs, a 50% increase, though it's unclear how many of those are in the U.S. But that growth is only going to continue if the company keeps opening new gas stations. How exactly does she propose to compel the company to do that?

So, what is she proposing? Here's what her website says is the basis for the ad's claims:

Hillary introduced a bill that would create a strategic energy fund. "We need to reform our energy taxes so that large oil companies who reap huge benefits from unexpectedly high energy prices over the next two years will be required to pay a portion of their profits into the strategic energy fund." The fund would invest in renewable energy, accelerate the use of biofuels, utilize clean coal technology, and encourage the oil companies to invest in alternative energy. Hillary first introduced the bill that would create the Strategic Energy Fund on 5/23/06.

Supposedly, this "new strategic energy fund ... will create 5 million new jobs and bring down energy costs." If you actually try to plow through the bill itself, you will quickly recognize it for what it is: a marriage of central planning (a big fund of government-controlled money to be handed out as the government sees fit) to old-fashioned Washington special-interest tax breaks, tax incentives, tax expenditures, and other goodies to be earmarked and dispensed to ... well, to get us back to where we started, presumably to companies whose executives and employees donate to the right people in Washington.

Like so many things in Democratic orthodoxy, the promise of good new domestic jobs is basically at odds with the very things (higher taxes, more environmental regulations) Hillary proposes to do, and she proposes to square that circle by having the government take over the business. She's very good at one critical public service: explaining how Barack Obama is full of it. But when it comes to her own agenda, Hillary, too, is selling snake oil instead of the real thing.

Posted by Baseball Crank at 12:00 PM | Politics 2008 | Comments (9) | TrackBack (0)
Comments

Good review of the cognitive dissonance. Now McCain is not making such outlandish claims to my knowledge, but he too is opposed to increased exploration in the US, so it dosn't look likely that there will be any realistic help from the executive branch in this regard.

Here's hoping that whoever wins will understand that no new US exploration or new refinery construction is harmful to the economy. In 8 years, I bet I'll still be just hoping.

Posted by: NRA Life Member at April 16, 2008 1:10 PM

NRA Life Member: If Hillary or Obama are elected we won't need to increase domestic production; they have each promised to REPEAL the law of supply and demand.

Posted by: wd at April 16, 2008 1:49 PM

Thanks for the link to the actual bill she proposes - it's an interesting read. I can't say I like it that much either. It's a little disturbing that the fund created by the bill seems to favor one particular type of alternative energy - cellulosic biomass. Unless there is something buried in section 161 of the 2006 Energy Policy Act or I'm missing something, the fund doesn't seem to apply specifically to other sources of energy.

It's one thing to support alternative energy, but I don't like the idea of the government picking winners and losers, especially since I'm very skeptical of whether cellulosic biomass is the end-all be-all of energy solutions. Not to mention the unintended consequences, such as higher food prices, etc.

The tax credits don't bother me much, but that's not enough to save this bill.

Posted by: MVH at April 16, 2008 2:47 PM

Good point WD. I hope they don't ban single malt scotch whiskey. I'll need several belts a day just to help me to dissociate :)

Posted by: NRA Life Member at April 16, 2008 2:47 PM

Another great point MVH. Government does a poor job of picking winners and losers unless they legislate one or more of the competitors out of existence (such as they've done with conventional light bulbs).

I remember Congress and President Carter coming up with the Synfuels project in the 1970's. It was a boondoggle that ate tax revenues and produced no usable product. If they want innovation in regard to energy, they should just stay out of it entirely, and lower taxes on the profits in recognition of the financial risk taken by the investors. Yeah that will happen soon :) Well, I can dream can't I?

Posted by: NRA Life Member at April 16, 2008 2:55 PM

Well, there is a government solution actually that would be fairly effective at encouraging alternative energy and wouldn't pick winners and losers:

A national tax on fossil fuels.

It would raise the price of . . . well, just about everything . . . and it would make all alternative forms of energy more cost competitive.

That's all. You would just have to tolerate a serious recession and unemployment. Those are politically tolerable, aren't they?

Ok, now someone revive NRA, I'm sure he just had a heart attack reading that!

Posted by: MVH at April 16, 2008 3:10 PM

I'm suing you buddy. You'll hear from my lawyers (Nasty, Poor, Brutish & Short) this week.

Posted by: NRA Life Member at April 16, 2008 3:15 PM

Hurrah. Another post on policy, and another area where the Dems are tripping over themselves to see who has the more preposterous ideas!

Don't forget, Crank, that in addition to "making" the oil companies create more jobs, we're also supposed to increase our taxes on them and somehow cap their executive salaries.

There's some sort of voodoo in those economics, I'm just not sure where exactly.

I believe -- like most of us I suspect -- that CEO compensation is way too high, and I'd love to see some of them take a hit. But that a decision for the shareholders, not Congress (let alone the President!).

Posted by: Mike at April 17, 2008 6:54 AM

I have no problem taxing the oil companies, but there would be better uses than for the money than this scheme. How about using that money to reduce our enormous national debt, for example?

But again, if you are really serious about reducing oil consumption and encouraging alternative forms of energy, you have to work on the demand side, not on the supply side. In other words, let oil and gas prices go through the roof or tax them through the roof and stave off the demand. But for obvious reasons that would be political suicide for either party. Whenever oil and gas prices gets high, there are enormous pressure on both parties to "do something" about it.

So instead, we get half-baked policies like this one.

Posted by: MVH at April 17, 2008 7:36 AM
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