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We could afford to ditch fossil fuels if only gas prices weren't so high

08 Jun 2022 | News Roundup

Many have observed that President Biden is cancelling domestic drilling leases while calling for more production. And begging Saudi Arabia to pump more oil in return but won’t approve a pipeline from Canada even if his midterms depended on it. And we note his enthusing that high gas prices are part of “an incredible transition that is taking place that, God willing, when it’s over, we’ll be stronger.” Yet none of the world leaders who have pushed said transition are looking particularly strong themselves. Such as here in Ontario in which the pro-energy transition opposition parties just got wiped off the map. Even though the leader of the provincial socialist party, the NDP’s Andrea Horwath complained about high gas prices. So what’s her climate plan? To get rid of fossil fuels, of course. And to solve the problems of life, the universe and everything… but not those of supply and demand. It didn’t work; after a dismal election performance she resigned as leader. But the ideas carry on undaunted.

That Horwath wanted the government to regulate gas prices to bring relief at the pump was evidence that she knows nothing of economics. As is her party’s advocacy of rent control, something Ontario had disastrous experience with last time voters let the NDP run the place. But she is not alone. In fact under a succession of conservative administrations the provincial government… kept rent control, and inexplicably has a housing shortage.

This sort of mush would be uninteresting if it were just them. Although it’s worth noting that in this frankly rather flaccid election, voters’ priorities were the cost of living, the cost of living, the foundering health care system, keeping taxes down and “growing the economy and creating good jobs” not pricing gasoline out of sight and changing the weather. But Horwath’s approach is typical of the people who do not think through the consequences of their actions. As Henry Hazlitt wrote in Economics in One Lesson a discouraging 76 years ago now: “the whole of economics can be reduced to a single sentence. The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups.”

Unless you do so, you’re going to do dumb stuff like raise the price of gas to discourage its use then send the money back to people so they can afford it anyway, or try to make it scarce then complain that it’s expensive, or something else pathetic in principle and painful in practice.

So we’re not being partisan in highlighting the gaping flaws in her plan. Or the fact that her view of the world is remarkably simple, and nasty. On high gas prices:

“We hear from people all the time that they don’t like the gouging that happens at the pumps, so for us that’s important. We are coming up to the Victoria Day weekend and we know that even though gas prices are high, the likelihood is that they’re going higher in an opportunistic gouge by Big Oil and Gas… It has nothing to do with what’s going on in the world and it just rots people’s socks.”

So whether she would increase carbon taxes, lower them, do both, raise and suspend them is not the sort of question to ask her. The point is, high taxes to fuel the insatiable appetite of governments for cash don’t raise prices. Only corporate greed does.

Referring to soaring gas prices some hapless candidate in the recent Ontario election said:

“Maybe that’s a silver lining and that may allow people to think outside the box and say maybe I better look at seeing if I can ride a bike to work or buy an electric car”.

But he did not win so he can now bicycle to whatever his day job is, which turns out to be municipal politician anyway.

On the other side of the country in British Columbia, where the NDP regularly does better, it currently holds power and Premier John Horgan is moving to eliminate “subsidies” to fossil fuels. It’s a complicated topic, because the main issue is the royalties the government charges firms to extract publicly owned resources from publicly owned lands, and it’s far from obvious what the “market price” of such things is or how you’d go about determining it. But he’s convinced the royalty rates have to go up. So raising the cost of energy production will help people pay less for their heating costs? We’d ask what economics text gave him that idea, but we’re afraid he’d answer.

And if you think this policy will mollify the activists, you don’t know those people like we do. “Peter McCartney of the Wilderness Committee, a non-profit environmental group, said the new royalty system eliminates the province’s worst fossil fuel subsidies while creating a new one and fails to meet the moment of climate emergency.” But Horgan has bigger problems than that one because he thinks raising the price will lower the price. Which is a pretty deep well to try to climb out of mentally.

Especially as the price of gas continues to rise relentlessly. It’s due partly to geopolitical shocks, to be sure. But those shocks hit a Western world whose elites have been doing their darndest to make gas scarce by making it expensive and vice versa, however cluelessly. In Canada, for instance, taxes make up roughly 40% of the price, partly due to an insatiable thirst for revenue but also as part of a deliberate plan to make people ride electric bikes or something. And as a Fraser Institute study author just warned,

“The current energy crisis in Europe predates Russia’s invasion of Ukraine, and is largely the result of self-inflicted wounds brought about by unsound energy policies – policies that the Canadian federal government is also pursuing, which could lead to similarly disastrous results in Canada.”

It might seem mean to go back to picking on Horwath, who just resigned as Ontario NDP leader after yet another electoral disaster. But it’s suggestive that her climate plan started: “The reality of climate change is already here. Ontarians need to know that our children and grandchildren will be able to enjoy the clean air, drinking water, and beautiful natural spaces of previous generations.” And clean air, drinking water and natural spaces are important issues that… have nothing to do with climate change.

Of course the plan also said “Scientists are clear that we must limit global temperature increases to 1.5 degrees Celsius to avoid the consequences of catastrophic climate change.” But what isn’t clear is which scientists have ever said such a thing. But then the plan contradicted itself, touting as entirely adequate measures with even less chance of holding global temperature increases to 1.5° than Horwath has of suddenly becoming premier. It claimed:

“We’ll reduce Ontario’s GHG emissions by at least 50 per cent below 2005 levels by 2030 and achieve net-zero emissions by 2050… We’ll enshrine our GHG reduction targets into law and use a carbon budgeting process to ensure we reach them, consulting with climate scientists, workers, industry and other experts.”

Which will accomplish the square root of bupkis. As always the plan is to develop a plan. And what about pricing? Yeah, but not on you nice people. As with Horgan, higher prices on bad oil companies mean cheaper oil for good voters. “Carbon pricing is an important tool to fight climate change. Liberal and Conservative governments have failed to implement a carbon pricing model that actually works for Ontarians. The Ontario NDP has a detailed plan to ensure corporate polluters, not regular Ontarians, pay for emissions.”

Naturally raising costs and lowering profits for “corporate polluters” will have no effect on the wages, prices or pensions of “regular Ontarians”, just irregular ones. Thus “Ensure at least 25 per cent of cap-and-trade revenue goes to supports for rural, Northern, and low-income families disproportionately impacted by carbon pricing” because “Action on the climate crisis should not come at the cost of jobs, or an affordable life, for everyday Ontarians.” So cheap affordable gas for all, just um uh down with our partisan enemies.

2 comments on “We could afford to ditch fossil fuels if only gas prices weren't so high”

  1. I don’t need any convincing of the absolute incompetence of the alarmists and their inability to string together 2 logical thoughts. Horgan famously said he would ban ICE vehicles by a certain date then publicly eondered why evil oil companies won’t build a refinery in BC to help lower gas prices.

    Yes, he really is that stupid.

  2. Horgan and his party actually represent the hospice economy of the West Coast where retirees and white collar labour cohabit the mildest climate, with the most theologically green and economically disengaged populace in the deranged dominion. If there were any remaining doubts about the NDP and the "working class", they should have been dispelled when he recently put a moratorium on old growth harvesting which will soon un-employ 15 to 20,000 mostly loyal and (automatons?) NDP voters. The West Coast hospice economy can easily afford higher energy costs as they don't need to drive anywhere or worry about minus 30 degree winters.

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