Wednesday, November 30, 2005

Oil: Shortages, Technology and Economics

Throughout the history of the petroleum industry, there have been alarmists crying that the world was running out of oil. In 1920, experts predicted that only 7 billion barrels of oil remained in the United States. By 1943 four times that amount had been consumed, and there were 20 billion barrels of proven reserves. Meanwhile, vast oil deposits were discovered in Saudi Arabia and, within few short years, elsewhere in the Middle East.

The trend continued: we continued to use more oil—and reserves continued to expand faster than consumption. Major oil deposits were discovered in Venezuela, Nigeria, Norway, Indonesia, Mexico, the Gulf of Mexico, and Alaska.

The temporary shortages in the 1970s brought on by the OPEC oil embargo renewed fears of shortages. Dismal scenarios were put forth of the “inevitable” exhaustion of the world's oil resources. Yet the trend continued: in the decade of the 1980s the world consumed 200 billion barrels of oil, but at the end of the decade world reserves were 50 percent greater than at the beginning. Since 1980, despite growing worldwide consumption, proven oil reserves have more than doubled and estimated reserves have more than tripled. And the end is nowhere in sight.

Where will the new oil come from? There will probably be some sources we can't envision any better than previous generations could envision our current sources of supply. But there are others that we can already see developing. It wasn't so long ago that the idea of obtaining oil from beneath the sea was regarded as an impractical fantasy. It was only in 1947 that the first oil well out of sight of land was drilled. As recently as the late 1970s, the “frontier” for drilling was 600 feet of water. Today it is 10,000 feet. This means a billion-dollar-plus platform where workers can guide a steerable drilling apparatus through 10,000 feet of water—almost two miles—and then through 20,000 feet of rock below. With three-fourths of the earth's surface covered by water, there is a lot of unexplored territory beneath the oceans.

Then there's the potential on land. Canada's Athabascan tar sands contain huge potential. These deposits have been known for many decades, but the cost of refining usable petroleum products from them has long delayed their development. Now, however, economics and technology have come together to make it profitable to exploit them. The 180 billion barrel petroleum reserve here is second only to Saudi Arabia's.

An even larger future resource is shale oil, which is abundant all over the world. This oil is in the pores of rocks and difficult and expensive to extract. At present there is no demand for developing it while so much other oil is available so cheaply, but it is a resource that is available when economics and technology come together. The marketplace will tell us when that time arrives. And, as I point out in my book MAKERS AND TAKERS, this is a resource which, at the world's current rate of petroleum consumption, would last for 40,000 years.

My book also points out that there are huge deposits of natural gas in gas shale. What may be the largest reserves of gas in the world are found not in the Middle East but in eastern United States. The deposit may contain as much as 460 quadrillion cubic feet of natural gas, of which 285 trillion cubic feet are already recoverable. (Annual U.S. consumption is about 22 trillion cubic feet.)

A source of natural gas with far greater economic potential is the “geopressurized” zones underlying the Gulf coast regions, both on and offshore. These may contain 60,000 to 80,000 trillion cubic feet of natural gas dissolved in water and as free gas above the water zone. “This is an almost incomprehensibly large number,” said Dr. V. E. McKelvey, former director of the U.S. Geological Survey. He noted that even the lower figure “represents about ten times the energy value of all the oil, gas, and coal reserves in the United States combined.”

The discovery of oil at great depths leads to the question of whether the traditional “fossil fuel” explanation is adequate to explain the world oil deposits. Oil has been found at depths and places in the world where the geological record indicates there never were any living forms or organic matter to be transformed into oil deposits. And some depleted oil wells are known to be refilling from below. This raises the prospect that oil is being produced by a combination of chemical reactions from heat deep within the earth and the biological actions of bacteria that produce the same effect as organic matter that is transformed into crude oil. If that is the case, the supply of oil is virtually inexhaustible.

In the same way that the alarmists fail to see the historical trend of continuous success in increasing oil supplies, they are blind to the trend of continuous failure of government actions they favor to remedy “shortages.” Ten years ago, John A. Hill, former deputy administrator for the Federal Energy Agency (predecessor of the U.S. Dept. of Energy) stated that over the previous 35 years the federal government had spent more than $100,000,000,000 on synthetic fuels, solar energy and other alternative fuels without adding one viable technology to the commercial marketplace.

The government's experience with synthetic fuels is instructive—but one which the proponents of government interventionism would like to forget. Following the Arab oil embargo, the federal government set up Synfuels Corporation to show that government could provide a synthetic fuel where the private sector could not. After losing billions upon billions of dollars, the government gave up on Synfuels, sold its assets at a fraction of what they had cost the taxpayers, and went out of the business. But some people never learn. Now the government claims to have the answer to future shortages and high gasoline prices: hydrogen cars and ethanol. (For my views on ethanol, see my posting August 10, 2005 "Ethanol and Biodiesel Fuels.")

According to Business Week, January 24, 2005, a fuel cell system powerful enough for a car would add $100,000 to the sticker price of today's automobiles. The most efficient prototype fuel cells generate electricity at a cost of $800 to $1,000 per kilowatt hour. To be affordable, the cost needs to be closer to $12.

The government's propensity for throwing money at the problem—thus showing it has learned nothing from its own Synfuels experience—is matched only by its propensity for throwing regulations at the problem. That doesn't work either. Recently Rep. Gil Gutknecht introduced a bill requiring 10 percent ethanol in all gasoline sold in the U.S., thus misdirecting human efforts and investments to less beneficial, less profitable enterprise than would result from marketplace actions. Politicians can no more rewrite the laws of economics than they can rewrite the laws of physics or mathematics. But they keep trying. If ethanol or hydrogen were economic, they wouldn't require regulations forcing their use or government money (i.e., subsidies) to produce them. As the Nobel Prize-winning economist Friedrich Hayek points out, society is always worse off when government tries to substitute its economic choices for those of the marketplace. When it diverts money to hydrogen cars, ethanol, or anything else, it is always necessarily displacing economic choices that are more beneficial to society. Spending money on hydrogen cars may, for example, divert money that could be used to make today's cars burn cleaner or more efficiently or to develop the oil and gas resources mentioned above. Or it may divert money from cancer research, education, retirement, clothing or other consumer needs, or many other worthwhile causes. Society is always worse off. Hayek called it “the fatal conceit” that political leaders can make economic decisions more beneficial to society than the choices people voluntarily make in the marketplace.

If the government really wanted to be helpful, it would REDUCE its regulations. It would remove the moratorium on oil drilling on the 85 percent of our Outer Continental Shelves, with 400 trillion cubic feet of natural gas, which would make gas more abundant and cheaper—instead of blaming the industry for higher gas prices and “windfall profits.” It would permit drilling in the ANWAR reserve in Alaska—at least in areas where scenic and wildlife assets are not threatened. It would repeal the laws that have prevented construction of even a single oil refinery in this country for 29 years. See my October 7 posting “E=HGP (Environmentalism=higher gas prices).” And it would eliminate the regulations that for a quarter of a century have prevented building a single new generating plant for world's safest form of energy. This is the only energy industry that has never had a fatalities in the U.S., emits no greenhouse gases, and for which fuel is inexhaustible. It is the nuclear power industry.

Tuesday, November 15, 2005

Why Vaccine Shortages?—a Political “Virus”

Concerns are being voiced that vaccines may not be available if there is an epidemic of avian influenza, transmitted from birds to humans. This latest chapter about vaccine shortages is yet to be written, but there have already been eight major shortages of vaccines just since the year 2000. These include shortages of vaccines for diphtheria, tetanus, whooping cough, chicken pox, measles, and three years of shortages of flu vaccine. The Wall Street Journal has noted that the supply disruptions “result from government policies that treat vaccine makers as a branch of socialized medicine—to the point that many have stopped making vaccines.” For 30 years the politicians have been driving the industry out of business with regulations, price controls, litigation—including opportunities for frivolous lawsuits—and intellectual-property abuse.

In 1967 there were 37 vaccine manufacturers in the U.S. By 2001 there were only ten. Today there are only three large vaccine makers in the U.S. In 2004 there were only two makers of flu vaccine. After one of these shut down, there was a severe shortage of flu vaccine. The remaining one was a Swiss company (Roche)—and it is the only one the U.S. is counting on for a vaccine that would potentially protect against bird flu.

Under a new crackdown by the FDA on vaccine manufacturers, the FDA in October 2000 fined Wyeth-Ayerst $30 million for manufacturing problems even though the agency admitted it never found any contaminated products. A few months later, Wyeth got out of the market for tetanus, leaving just one manufacturer. Wyeth and Baxter both got out of the vaccine market for diphtheria and pertussis. These exits created major shortages.

The FDA’s crackdown also escalated the costs of vaccine approval. The manufacturers used to be allowed to perform their test on hundred of patients. Now they need tens of thousands, and approval normally takes six to seven years. Vaccine makers also contend that the FDA has an unscientific approach to risk, which derails production and exposes companies to lawsuits. The industry also has revolutionary technologies (reverse genetics and mammalian cell culture) that would dramatically cut time and development costs. Europe is moving forward on these, but the FDA has refused to do so.

The manufacturers cannot recover the escalating costs by raising prices, because the government buys more than half of all the vaccines in the country—thanks to Hillary Clinton’s Vaccines for Children’s Program—and uses its clout to keep prices low. The program offers free vaccines to uninsured children under 18 or to those who are eligible for Medicaid or care from federally qualified health centers. The Centers for Disease Control in many cases pays less than half of what the private sector pays. So, if it is no longer profitable to manufacture vaccines, the companies quit making them. There is no point in investing huge amounts of money in extensive research when that investment cannot be recovered in the sale of products. When Wyeth spent more than a decade on a revolutionary new childhood vaccine against pneumonia and meningitis, it asked for $58 per dose. So-called public health advocates went ballistic, and the CDC paid only $46.

In 2003 a report by the Institute of Medicine, an arm of the National Academy of Sciences, noted that the price squeeze and a heavy regulatory burden have driven companies out of the vaccine business. It also noted, “reimbursements [to health-care providers such as doctors and clinics] for vaccines and administrative fees barely cover the costs of vaccine purchase. In many cases, providers lose money on immunization.”

Politicians want companies to take the risk of developing vaccines, but they don’t want them to make any money from taking those risks. This includes not only the pricing of the products but protection of the companies’ intellectual property—their patents. Private companies developed the AIDS drugs that have extended millions of lives, but countries like Brazil and South Africa--and "do-gooders" everywhere--want the drugs given away at cost. And UN Secretary General Kofi Annan said he hoped concern for “intellectual property” would not “get into the way” of distributing avian flu vaccine.

When politicians try to manipulate the market (for vaccines or anything else) in their efforts to benefit some some people at the expense of industry or taxpayers—the socialism model—consumers should expect disastrous consequences. Childhood vaccines that cost $10 in 1975 by 2001 cost $385. And we have shortages.

Sunday, October 30, 2005

Government Officials Looking Out For Us

A person was checking in at the gate when an airport employee asked, "Has anyone put anything in your baggage without your knowledge? To which the person replied, "If it was without my knowledge, how would I know?" The employee smiled knowingly and nodded, "That's why we ask."
Happened in Birmingham, Ala.

The stoplight on the corner buzzes when it's safe to cross the street. Two people were crossing when one asked what the buzzer was for. The other explained that it signals blind people when the light is red. Appalled, the first one responded, "What on earth are blind people doing driving?!" She was a probation officer in Wichita, KS

Then there is the individual who plugged her power strip back into itself and for the life of her couldn't understand why her system would not turn on. A deputy with the Dallas County Sheriff's office no less.

Friday, October 21, 2005

Schools: Educational Choice or Coercion

One by one, the alleged needs and benefits of public education are being exposed as false by ever-growing evidence of the superiority of free choice. It has been claimed that public schools are necessary to ensure integration, toleration of minorities, and fostering social concern and interest in public issues—but private schools have proven superior in all of these. And it is claimed that school voucher programs, which allow people to choose the schools to which they will send their children, will lure the most easily educated children from poor public schools and worsen the plight of the disadvantaged, mostly black students, remaining in the poorer schools. But John Brandl, a professor at the University of Minnesota and St. John’s University, writes: “Recent research is finding that when choice enables some children to leave a public school, the academic performance of those left behind actually picks up. (Apparently the existence of competition nudges the schools to improve.)

“On average, private schools, almost all of which are religious, are better integrated by race than are public schools. Children attending private schools are more apt to tolerate anti-religious activities, more willing to favor members of their least-liked group being permitted to participate in public affairs, more inclined to speak and write on public issues, more involved in volunteer work. This is accomplished at not much more than half the cost—not just tuition but full cost—of the public schools.”

Consumer satisfaction is what drives decisions in economic markets. It also drives improvement in the quality of goods and services. When government tries to replace consumer choice with its own views of what consumers should receive, it must come up with some other yardstick than consumer satisfaction for judging performance. So statistical measurements abound. There include measures of increased government spending for education, mandatory testing of student performance, increasing teacher qualifications, and reducing class sizes. These are all poor substitutes for consumer satisfaction with the quality of the educational product—and would be unnecessary if consumers were allowed full free choice in the educational marketplace. The substitutes have done little to improve education. For example, on the issue of class size, the student-to-teacher ratio dropped from 22.3 in 1970 to 16.1 in 2002; yet during these thirty-two years there was no improvement in student achievement at the national level. Massive increases in government spending, and other measures too, have failed to produce improvement. Yet we still hear more about such things as the necessity of reducing class size in order to improve education than about the role of customer satisfaction and marketplace competition for improving educational quality.

Friday, October 07, 2005

E = HGP (Environmentalism=higher gas prices)

As noted in a previous posting, environmental lobbyists obstructed measures that would have minimized environmental damage from hurricanes Katrina and Rita. But the environmental efforts also had another unwanted effect: higher gasoline prices.

No new refineries have been built in the United States for 29 years, due largely to regulatory barriers promoted by environmentalists. In 1981 the U.S. had 325 refineries with a capacity of 18.6 million barrels per day. Today we have 148, with a capacity of 17 mb/d—despite a demand that is 20 percent greater than in 1981. So when a major portion of our refining capacity becomes a hurricane casualty, it is unavoidable that prices of petroleum products will escalate.

Existing refineries have had to pay more than $47 billion over the last 12 years to comply with, among others, the Clean Air Act, the Clean Water Act, the Toxic Substances Control Act, the Safe Drinking Water Act, the Oil Pollution Act, the Resource Conservation and Recovery Act, and the Comprehensive Environmental Response, Compensation and Liability Act. Naturally, the cost of complying with these regulations must be passed on to the consumers in the form of higher prices. And from 2006 to 2012, fourteen new major environmental programs will force additional costs on refineries.

One company, Arizona Clean Fuels, has been trying to build a refinery for sixteen years. It needs several federal and state permits. An environmental group headed by Steve Brittle has been fighting the project since 1992. Brittle figures if he can prolong the process for another 18 months, the permit from the state environmental agency will expire, and the company will have to start all over again.

Why was 47 percent of our refining capacity concentrated in such a geographically risky area as the Gulf of Mexico, particularly around New Orleans? Because federal policies effectively prohibited it from being anywhere else. “Government policies have largely limited offshore exploration and development to the Central and Western Gulf…. Unfortunately, offshore oil and gas development has been barred elsewhere—including the eastern half of the Gulf and the entire Atlantic and Pacific Coasts,” says Red Cavaney, president and CEO of the American Petroleum Institute. He might also have mentioned the prohibition on drilling in the ANWAR area of Alaska.

In the same way that environmental lobbyists prevented the construction of new oil refineries for 29 years, they also prevented the construction of nuclear power plants for a quarter of a century. During this time, France built 58 new nuclear plants—with complete safety—which now provide a whopping 79 percent of the nation’s energy needs. Had we built nuclear plants as the French did, our usage of fossil fuels would have been reduced, resulting in a better supply-demand balance for petroleum and lower prices at the gas pump.

Lastly, consider the federal requirement for a “boutique” variety of gasoline blends to meet a variety of emission standards in various parts of the country. It has little air-quality benefit yet imposes still another cost on refineries that is passed along to consumers. In addition, gasoline formulated for one area of the country can’t be transported for use in another. Thus areas of the country where gasoline shortages occur, such as from Katrina, cannot benefit from available supplies elsewhere.

Monday, September 19, 2005

Important Scientific Discovery

A major research institution has recently announced the discovery of the heaviest chemical yet known to science. This new element has been tentatively named "Governmentium".

Governmentium has one neutron, 12 assistant neutrons, 75 deputy neutrons, and 224 assistant deputy neutrons, giving it an atomic mass of 312.

These 312 particles are held together by forces called morons, which are surrounded by vast quantities of lepton-like particles called peons. Since Governmentium has no electrons, it is inert. However, it can be detected as it impedes every reaction with which it comes into contact. A tiny amount of Governmentium causes one reaction to take over four days to complete when it would normally take less than a second.

Governmentium has a normal half-life of four years; it does not decay but instead, it undergoes a reorganization in which a portion of the assistant neutrons and deputy neutrons exchange places. In fact, Governmentium's mass will actually increase over time since each reorganization will cause more morons to become neutrons, forming isodopes.

This characteristic of moron-promotion leads some scientists to speculate that Governmentium is formed whenever morons reach a certain quantity in concentration. This hypocritical quantity is referred to as "Critical Morass." You will know it when you see it.

When catalyzed with money, Governmentium becomes Administratium, an element which radiates just as much energy since it has half as many peons but twice as many morons.

Wednesday, September 14, 2005

New Orleans: Death by Environmentalism

Preventing the disastrous flood in New Orleans would have required a massive construction project necessitating many years to complete. Recent cuts in the Corps of Engineers budget had nothing to do with the disaster. Even if funded by the Bush administration, the work could not have been completed in time, nor would the planned levee measures have been adequate. However, the enormous damage and loss of life that occurred could have been prevented but for environmentalists who successfully blocked other flood protection measures for over two decades. The U.S. Army Corps of Engineers’ Lake Pontchartrain and Vicinity Hurricane Barrier Project proposed to build fortifications at two strategic locations to keep massive storms on the Gulf of Mexico from causing Lake Pontchartrain to flood the city. The New Orleans Times-Picayune May 28, 2005 stated, “Under the original plan, floodgate-type structures would have been built at the Rigolets and Chef Menteur passes to block storm surges from moving from the Gulf into Lake Pontchartrain.” At a minimum, the plan would have greatly reduced the scale of the disaster.

But, “Those plans were abandoned after environmental advocates successfully sued to stop the projects as too damaging to the wetlands and the lake's eco-system,” said the Times-Picayune. An environmental group, Save Our Wetlands (SOWL) sued to have the court block the project. On December 30, 1977, U.S. District Judge Charles Schwartz Jr. issued an injunction, saying that because of the environmental impacts “all persons in this area, will be irreparably harmed if the barrier project based upon the August, 1974 FEIS [federal environmental impact statement] is allowed to continue.” So the project was aborted in favor of building up existing levees. The levee program as contemplated would have been effective only against a level three hurricane, not a level five storm such as Katrina.

There can be no question that the environment that Judge Schwartz was so concerned about protecting is much worse for his judicial action—to say nothing of the loss of life, personal hardship, and damage to property from the flood. Katrina pushed Lake Pontchartrain over the flood walls, and the water undermined and toppled them. The flood water then mixed with sewage and other pollutants and left a layer of sludge over the whole area—the precious wetlands as well as everything else. Even without the hurricane, the levee program was bad for the wetlands. Ivor van Heerden, Deputy Director of the Lousiana State University Hurricane Center and Director of the Center for the Study of Public Health Impacts by Hurricanes said, “The levees have literally starved our wetlands to death by directing all of that precious silt out into the Gulf of Mexico.”

The lesson: valuing the environment ahead of people is bad for both in the long run. People must come first. The human rights of some people must not be sacrificed to the special interests of advocacy groups, whether for the environment or any other high-sounding cause.

Monday, August 29, 2005

Government Versus Economic Reality

This past week the government announced new fuel efficiency standards for automobiles. These will apply to the 2008 to 2011 model years and will mark six straight years of higher fuel requirements. The new Corporate Average Fuel Economy (CAFÉ) regulations will ratchet up standards for the entire industry, but the biggest changes will be for light trucks. This category, which represents half of all vehicles sold, includes sport utility vehicles, minivans and pickups. These “gas guzzlers” are particular targets in a time of rising gas prices. The government says the new regulations will save 10 billion gallons of gas over the lives of vehicles bought 2008 to 2011. Environmentalists claimed that wasn’t good enough and demanded stricter standards to conserve even more gasoline. This is just one more example of people believing government is superior to the free market in determining what people should buy and sell. And it won’t be the first time they’re proven wrong and the results turn out opposite to predictions. History offers no reason to expect the result will be any different this time around. When political policy clashes with economic reality, bet on reality.

The entire policy of energy conservation has been based on ignorance of basic economics, let alone the history of energy resources. When a product or resource becomes cheaper or is used more efficiently, consumption increases! Instead of “conserving,” people use it more readily—and even find new uses for it. When James Watt’s steam engine was more efficient than its predecessor, the Newcomen engine, demand soared. People found alls sorts of new uses for steam power. When computers declined in price to where practically everyone could afford them, demand soared and people found all sorts of new uses for them. The same thing happened earlier with electricity. And when automobiles became smaller and more energy efficient because of the Arab oil embargo in 1973, people drove MORE—not less—because they could go further with the same amount of gasoline. Gasoline consumption rose for two decades as energy efficient cars flooded the roads.

Energy conservation was a total bust—but that was irrelevant because the government and environmental alarmists were dead wrong about the resource. Instead of the predicted oil shortage, there was abundance. From 1970 to 1991, the world’s proven oil reserves (that is, known to be in the ground, not just estimated) nearly doubled, from 523.5 billion barrels to 1,003.3 billion barrels. And estimates beyond the proven reserves tripled, from 1 trillion to 3 trillion barrels. They have since increased further. Another “crisis” was averted not by the “far-sighted vision” of government officials and alarmists looking out for our future but by the quiet actions of the marketplace.

It is tempting to say that the Big Government advocates have learned nothing from our experience over the last 35 years. But their ignorance extends far beyond that. In 1865 the English economist Stanley Jevons wrote: “It is wholly a confusion of ideas to suppose that the economic use of fuel is equivalent to diminished consumption. The very contrary is the truth….It is the very economy of its use which leads to extensive consumption. It has been so in the past and it will be so in the future.”

For more on the futility of government automobile regulations, see my 3,000-word booklet on the subject, available from American Liberty Publishers.

Saturday, August 13, 2005

No Politician Left Behind

The $286.4 billion federal transportation bill that became law this week is the largest public works appropriation in history. It’s the new high-water mark in incumbent congressmen’s efforts to buy their re-elections by spending taxpayers’ money on local projects. The vote-for-my-project-and-I’ll-vote-for-yours mentality has resulted in 6,371 “special projects” for which spending is earmarked. The previous highway bill contained 1,850 of these. In 1987 the number was only 152. The 6,371 new projects in the 1,752-page bill insure that no politician is left behind in dishing out favors to ingratiate himself with the electorate.

The projects help congressmen not only to perpetuate themselves in office but to create monuments to themselves. A $231 million bridge in Anchorage is to be named “Don Young’s Way.” Alaska’s Don Young is chairman of the House Transportation Committee. Being chairman is a big advantage. Alaska is the third least-populated state but got the fourth most in earmarked special projects. These include a $223 million appropriation for another bridge, which will be larger than San Francisco’s Golden Gate Bridge. It will connect Ketchikan (population 8,000) with an island having a population of 50. Alaska also got $3 million—I’m serious, this is true—to produce a film on how Alaska spends its highway money.

In the free market, the basis of decisions is economic. Politicians, on the other hand, base even economic decisions on political considerations. Is it any wonder that government is so uneconomic and that the national debt continues to increase? It’s “tax and tax, spend and spend, elect and elect.”

Wednesday, August 10, 2005

Ethanol and biodiesel fuels

Liberty is not simply a political concept divorced from economic realities. It is no mere coincidence that countries with the greatest political freedom are the wealthiest and most progressive. Liberty means free markets. It means the absence of political interference in economics. It means that labor and capital are employed and distributed by people exercising their free choices in their pursuit of happiness—rather than by politicians diverting human actions to less profitable, less beneficial directions.

In a free market, people will always pursue the most efficient, most profitable way of doing things, because it is in their interest to do so. If a course of action is not profitable or efficient, the company will be driven out of business by the superior action of competitors. Society is better off when that happens. But it’s not happening with biofuels, because of government interference in the market.

If ethanol and biodiesel fuels made sense, they would be profitable to produce without the government subsidies of 50 to 71 cents per gallon, in the case of ethanol. No political action would be necessary. Politicians cannot revoke the laws of physics and mathematics; they can only force other people to pay the losses from the uneconomic schemes imposed upon them.

Ethanol, which in this country is made from corn, is more expensive to produce than gasoline and furnishes fewer miles per gallon. Furthermore, there have been many studies of ethanol, almost all of which show it is a net energy loser; that is, it takes more energy to grow the corn (for planting, fertilizer, pesticides, harvesting, transportation) and for distilling the corn than you can get from burning the fuel. A U.S. Dept. of Energy study found that “131,000 BTU [British Thermal Units] are needed to make 1 gallon of ethanol. One gallon of ethanol has an energy value of only 77,000 BTU….there is a net energy loss of 54,000 BTU.” However, the ethanol industry disputes this.

So, using the net gain figure claimed by the corn ethanol industry, Ted Lofstrom recently made some interesting calculations (See TWTW Aug. 6 on for details.) In 2004 there were record harvests of both corn and soybeans in the United States. (Biodiesel is made from soybeans.) If the entire 2004 U.S. harvests of corn and soybeans were devoted exclusively to producing biofuels to replace petroleum, they would account for just 12 days of U.S. petroleum consumption. This includes the 40 percent of petroleum usage that is produced domestically as well as the 60 percent that is imported. Of course, virtually all of our corn and soybean crops are already committed to other uses. Even if the politicians forced us to give up corn flakes, corn on the cob etc., biofuels still couldn’t make a significant dent in petroleum imports. And they certainly wouldn't reduce the cost of fueling the nation's automobiles.

A favorite study quoted by ethanol advocates is by Shapuri et al, who claim a 24 percent energy gain based on the best corn yield, least amount of energy used for fertilizer, pesticides, operating equipment etc., and, in general the most favorable (but still credible) numbers for all aspects of ethanol production. Without disputing Shapuri’s numbers, Prof. Howard Hayden, a physics professor at the University of Connecticut for 32 years, shows how puny even a 24 percent gain really is. He converts this to watts per square meter and shows that the net around-the-clock average power available from one acre of corn would be enough to continuously light one 60-watt light bulb. He concludes we would need “nearly seven times the land area of the U.S. devoted to ethanol production, using the most efficient methods on the planet, with no land set aside for cities or National Parks, to produce the energy used in the U.S. Maybe we can buy Russia, China, Canada, Brazil….”

“If we can prevent the government from wasting the labors of the people under the pretense of caring for them, they will be happy.”
—Thomas Jefferson

Sunday, July 31, 2005

Secondhand Smoke and Heart Disease

July 31, 2005

An article on Fox News website on 7/30/05 claims the effects of secondhand tobacco smoke (ETS—environmental tobacco smoke) on the heart are “rapid and large.” It says ETS increases the risk of heart disease by about 30 percent. That may be true, but 30 percent of almost nothing is still almost nothing.

A 30 percent increase means a relative risk (also known as risk ratio, or RR) of 1.3. (On the risk scale, zero risk is set at 1.0, not 0.0.) Actually, the American Heart Association website lists the following RRs: 1.25 for cardiovascular heart disease, 1.18 for ischemic heart disease, and 1.13 for arrhythmic heart failure or coronary arrest mortality. The risk of getting cancer from drinking municipal tap water that tens of millions of Americans drink every day is 2.0 to 4.0. So why be concerned about a relative risk of 1.3 to the heart from ETS? It so happens that 1.3 is the exact RR for shortening your life by drinking three cups of coffee per WEEK. That will give you some perspective on the severity of the alleged heart “danger.”

Both the World Health Organization and the American Cancer Society have clearly stated that RRs below 2.0 are too low to be relied upon. And a report by the independent health consulting firm Littlewood and Fennell characterized RRs less than 2.0 as “dancing on the tiny pinhead of statistical insignificance.” Compare this to the claim of “rapid and large” harmful effects from an RR of 1.3. A wealth of published literature dismisses relative risks less than 2.0 (100%) as being insignificant. And Dr. Eugenia Calle, Director of Analytic Epidemiology at the American Cancer Society, has stated the RRs below 1.3 are too low even to be realistically identified, much less be dangerous.

Why aren’t RRs less than 2.0 significant when they can represent impressive sounding percentage increases? The main reason is confounding variables. There are more than 20 of these that have been identified for ETS and heart disease, including: heredity, consumption of fat, consumption of fruits and vegetables, exercise and physical activity, type of employment, ethnic background, cholesterol, socio-economic class, etc. Any one of these could account for an impressive percentage increase in disease, yet no study of ETS has ever come close to controlling for even a large share of these variables. And there could be others that haven’t yet been identified.

It is no wonder, therefore, that Dr. Marcia Angell, editor of the New England Journal of Medicine, one of the world’s leading medical journals, says, “As a general rule, we are looking for a relative risk of 3.0 or more.” Dr. Robt. Temple, director of drug evaluation for the FDA, says, “My basic rule is if the relative risk isn’t at least 3 or 4, forget it.” And the EPA declined to regulate high-voltage power lines because it said the RRs seldom exceeded 3.0.

So how did we go from regarding RRs of 3.0 to 4.0 as the bare minimum for even potential concern to where anything 1.0 to 2.0—which was formerly regarded as insignificant—is now claimed to be a health risk? It goes back to EPA’s classification of ETS as a carcinogen. The agency publicly declared ETS a carcinogen before it even began any research. But its subsequent efforts failed to find evidence to back its position—despite fudging its analyses with statistical contortions that evoked condemnation from the Congressional Research Service, the General Accounting Office, an investigation by the U.S. House of Representatives, and America’s best known scientific journal, Science. Rather than admit it was wrong about ETS being a carcinogen and had wasted taxpayers money for two years trying to prove it, EPA simply “deviated from generally accepted scientific standards” and “deliberately abused and manipulated the scientific data,” as the U.S. Congressional Investigation put it. EPA now claimed that ETS had a RR of 1.19 and said that was health danger. How many cases of lung cancer do you think would be associated with this 19 percent risk increase among 100,000 nonsmokers exposed to ETS? The answer is 1.9 cases. Fewer than 2 cases in 100,000 people! That’s two-thousandths of one percent! You can scare a lot more people by shouting “the risk increases 19 percent!” than by saying this corresponds to an increase in the number of cancer cases of two-thousandths of one percent. But they mean the same thing. Now, do you think differences is heredity, diet, exercise, type of employment etc. could account for 1.9 cases of lung cancer among 100,000 people? You're darn right they could. They could account for a lot more than that.

Also, the standard for biological studies is a 95% Confidence Level, meaning the possibility that the outcome results from pure chance is no more than 5%. EPA could not achieve this with its RR of 1.19 for ETS. So it moved the goal posts, so to speak, to make it easier for ETS to “score” as a carcinogen. It doubled the possibility of a chance outcome to 10%. It had never done this before or since. (For more on EPA and secondhand smoke, see the posting of my testimony to Meeker County below.)

Other government agencies were quick to note the success of EPA’s scientific corruption and to imitate it. The Surgeon General’s reports, NIOSH and other government agencies reiterated EPA’s fraudulent figure of 3,000 deaths from lung cancer due to ETS and adopted the degraded statistical standards and corrupt practices that EPA used to produce it. Now the American Heart Association and other once highly respected medical organizations are doing the same thing. They have deviated from the generally accepted scientific standards to which they so long adhered.

Deaths estimated from adverse health conditions are derived from their risk ratios. If the risk ratios aren’t meaningful, calculations of the numbers of deaths are meaningless. A risk ratio tells you that there is a statistical association between a risk factor and a disease—and that’s all it tells you. It does NOT tell you there is a cause and effect relationship. The higher the risk ratio, the more likely it is that there is a causal relationship, but further research is needed to establish that. Suppose a study shows a statistical association between, say, lung cancer and people being lefthanded—which could happen. Does that mean being lefthanded causes lung cancer? Of course not. We would be jumping to conclusion if we said that. Similarly, we would be jumping to conclusion if we said that municipal water supplies or drinking coffee daily causes hundreds of thousands of deaths annually based on calculations from their risk ratios. But that is exactly what many “researchers” are doing regarding secondhand smoke and many diseases or health conditions. They have jumped to the conclusion that statistical associations—and very weak ones (even statistically insignificant ones)—are proof of cause and effect. That is irresponsible. But it is effective in scaring the public who has no understanding of how meaningless these numbers are, and it provides cover for the political advocate/activists.

“Results of chemical analysis, animal experiments, and human studies are…found not to support claims of an association between workers exposed to environmental tobacco smoke and occupational coronary heart disease.”—Toxicological Pathology, Vol 57, No. 3.

“According to the scientific method, the only justifiable conclusion is that available data continue to falsify the hypothesis that ETS is a CHD [coronary heart disease] factor.”—Environmental Tobacco Smoke and Coronary Heart Syndrome: Absence of an Association, Regulatory Toxicology and Pharmacology 21, 281-295

Friday, July 22, 2005

Supreme Court nominee John Roberts

July 22, 2005

Following Judge John Roberts nomination for the Supreme Court, Senator Charles Schumer of New York held a press conference. He said that Supreme Court nominees are different and deserve a higher level of scrutiny than other judicial appointments because they MAKE laws. Someone ought to tell the senator that making laws is a function of the legislative branch, not the judicial branch. A judge who is going to legislate from the bench is precisely the kind of person who shouldn't be there. And a senator who apparently is looking for a Supreme Court justice who will do that (for causes the senator favors, of course)--rather than adhere to the Constitution--isn't fit to be a senator. Senators are supposed to honor and defend the Consitution, not seek appointments who will undermine it to advance their own agendas.

Wednesday, July 20, 2005

Danger in Africa

July 20, 2005

Having just arrived in Johannesburg, President Clinton addressed a throng of young South Africans. He spoke of the great danger ahead. What was it? Was it the threat of AIDS, which is rampant throughout South Africa? Was it the threat of world terrorism? Was it the nation’s poverty and the need for young people to pursue education in order to escape poverty? None of these. He warned them about global warming! He said if trends continue, Africa would be under water because of the earth's ice melting.

When the global warming scare appeared in the 1980s, it was said if all the planet’s ice melted, ocean levels would rise 20 feet. But the world’s oceans have risen 350 feet in the last 18,000 years without any help from factories and automobiles burning fossil fuels and emitting carbon dioxide. The mean elevation of Africa is 1,900 feet, compared to 980 feet for Europe and 1,000 feet for Australia. So for Africa to be under water, Europe and Australia would have to be 900 feet under water.

Ocean levels have been rising ever since the end of the last Ice Age, about 12,000 years ago. For the last several centuries the rise has been 4 to 6 inches per century. And it would take a temperature rise of 55 degrees F. for a thousand years to melt the Antarctic ice cap.

Furthermore, the world’s largest ice masses, in Antarctica and Greenland, have been growing, not melting. The Greenland ice sheet has thickened by seven feet since it was first measured by laser altimetry from satellites in 1980.

For 95 percent of the past 100 million years the earth has been warmer than it is now. It was warmer 1,000, 3,000 and 6,000 years ago. We’re even below the average for the last 3,000 years.
So where is the “global warming”? It’s in the minds of the scaremongers and in invalid computer models that cannot be reconciled with actual temperature measurements, geologic records, and other physical evidence. For more on global warming, get my 3,000-word booklet on the subject from American Liberty Publishing.

Sunday, July 17, 2005

Smoking Ban of Meeker County, Minnesota

On July 12th, Meeker County became the fifth county in Minnesota to enact a prohibition on smoking in bars and restaurants, effective October 1. It’s another example of individual rights being trampled by politicians and highly vocal do-gooders determined to dictate how everyone else should live. Their good intentions are deemed superior to facts, science, reality—and liberty. If it’s necessary to fudge the truth, fake the science, ignore reality and deny individual rights, so be it.

The nation’s first experience with "prohibition" was for alcoholic beverages. The government decided it had to protect people for their own good. Everyone knew that drinking alcohol could result in health problems. It was argued that any amount of alcohol was bad for you and should be prohibited. Medical science has since documented the role of alcohol in heart disease, stroke and several other diseases. But what wasn’t known during the Prohibition Era—but has since been proven by numerous research studies—is that small amounts of alcohol (1 or 2 drinks a day) are actually good for you. They help prevent the very same diseases for which larger amounts of alcohol are implicated.

Now, there is no question smoking can cause lung cancer—I have never been a smoker and don’t recommend it—but secondhand smoke is another matter. It is 100,000 times more dilute than the smoke from which it is derived. And, just as with alcohol, it has been shown that small amounts of this smoke are not only harmless but actually beneficial. They provide a protective effect against the same diseases for which smoking is implicated.

People are surprised to learn that the huge volume of research studies on secondhand smoke (environmental tobacco smoke—ETS) does not support claims that it is a health hazard. Just the opposite. The independent health research firm of Littlewood and Fennell surveyed all available studies and reported to the National Toxicology Program’s Board of Scientific Counselors on Carcinogens that the overwhelming majority (over 75 percent) of these studies showed no association between secondhand smoke and lung cancer and the remainder showed very weak associations and substantial problems with unacceptable methodology, misrepresentation of risk, and other problems. An international symposium on ETS at a Canadian University included 29 epidemiologists from all over the world and concluded that the “weak and inconsistent associations seen in the epidemiological studies of ETS [plus other doubtful factor] all indicate that these data do not support a judgment of a causal relationship between exposure to ETS and lung cancer.” Studies by the World Health Organization came to similar conclusions.

Interestingly, some of the studies vindicating ETS were done by organizations determined to prove it was a health hazard. When the results showed the opposite, the studies were hushed up. This was the case with at least three studies done by the American Cancer Society. Ditto a very important study by the prestigious Dr. Melvin W. First, Professor Emeritus of Environmental Science and Engineering at Harvard University, which was sponsored by the Massachusetts Lung Association and it Affiliates. This was a particularly important study because it was done in 1975 when smoking was much more prevalent and there were no non-smoking sections in bars and restaurants. But when it was unable to show any danger from ETS, the Mass. Lung Association “put our report in a drawer” and shut up about it, wrote Prof. First in 2003.

During the Prohibition Era, nobody knew that small amounts of alcohol were harmless or even beneficial. The Meeker County Commissioners cannot have the same excuse regarding secondhand smoke, because my testimony at their public hearing alerted them to scientific information they chose to ignore. (See my complete testimony.) Their decision to enact a smoking ban is one of “willful ignorance”—a refusal to face facts. They hid behind a deliberately deceitful claim of protecting people from a nonexistent “health hazard” in order to trample human liberty and run other people’s lives. The issue of whether to allow smoking in bars and restaurants should be a simple matter of property rights: the individuals owning bars and restaurants should determine whether they wish to allow smoking or not on their property, and individuals should decide for themselves whether to eat or drink there. The government shouldn’t have gotten involved at all—except to defend those individual rights.

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