Embrace the Green Revolution?

by Christian Rivera

We’ve heard it all before.  Things like “buying a hybrid car will save the planet and solve our energy crisis,” or “oil companies are just evil and greedy, that’s why gas prices are so high and they’re so rich.” 

Christian Rivera, author and concerned citizen.

Demagogues love to spew out lots of rhetoric and diatribe without intelligently examining an issue.  There are some who have been pushing the idea of renewable or “green” energy for years, expecting everyone to subscribe to the belief that things like hybrid cars, or wind farms, or solar panels are the answer to all of our problems.   Has it ever even occurred to these zealots that environmental concerns notwithstanding, the producers of these lovely technologies get filthy stinkin’ rich too?  After all, the billions of dollars the government spends on renewable energy each year go into somebody’s pocket.      

Facts always make a picture even more interesting.  An article in the Wall Street Journal found that “In 1981… about 7% of all U.S. energy came from renewable sources.  [In 2007] that number stood at 6.7%”.[1]  In other words, after 26 years and billions of tax dollars spent, the usage of renewable energies has actually shrunk!  Apparently, so-called “green technology” isn’t as efficient as we’re being led to believe.  Consider hybrid cars.  Touted as “the future of the auto industry,” hybrids account for a whopping 2% of auto sales in recent years—even with the help of factory rebates and tax credits.[2]  And the proof is in the pudding.  If these “green” alternatives were an efficient solution, the market would naturally allocate resources to their development and implementation.  Instead, the government manipulates the market with the use of artificial incentives like tax credits or deterrents like “cap and trade” legislation to achieve these ends.     

The green movement may have been started with the best intentions.  After all, we certainly have a moral obligation to protect the environment.  But good intentions do not always produce good results.  Unfortunately, over the years even the word “green” has been abused by many individuals and organizations looking to further their own agendas, profits and all.  It has gotten so out of hand, that even lawn mowers, hedge trimmers, chain saws, and leaf blowers have all been targeted by advocates of the green movement.[3]  After years of government interference and corruption, the green movement has regrettably mutated into what it is today: just another excuse for government to encroach on our liberty. 

The Other Side of Those Oil Profits

I’d like to preface this next section by telling you that I am not in any way advocating for “Big Oil.”  I’m only presenting facts to better inform you, dear reader, and to provide some balance.   After all, the oil industry has been vilified for years, and most media sources do not always provide both sides of the equation. 

It is acknowledged that the industry has profited considerably over the years; Exxon Mobil netted a historic $45.2 billion profit in 2008 alone.[4]  Economist, Dr. Robert Murphy explains why profits were so huge in the oil industry (and it has nothing to do with greed):

Part of the reason for giant oil profits is that the industry itself is huge.  But viewed in relative terms, oil and gas earnings are less impressive.  The industry’s net profit per dollar of revenue was just under 9 cents, compared to 13 cents for the S&P 500, meaning the “markup” for the oil and gas industry is below average.  Granted, total profits reported by these companies will be large, because the industry volume is enormous.  But why did the integrated oil majors do so well in 2007?  The answer is record oil prices, which are set by supply and demand on the world market.  The average price of crude was $72.30 per barrel in 2007, compared to a historical average of $25.95 during the period 1986 – 2006.  This explains why not only Exxon Mobil, but most of its competitors, had strong years: Royal Dutch Shell earned $31.3 billion, Chevron earned $18.7 billion, and ConocoPhillips came in with a respectable $11.9 billion annual profit.[5]

In other words, the industry is growing, which is something capitalism tends to encourage.  Developing countries like India and China have had a very high demand for oil in recent years.  Anyone who has even an elementary knowledge of economics knows what happens to the price of anything when demand for it increases.  The price will increase until either the supply increases, or the demand decreases.  Much like water, the market must reach equilibrium. 

Another thing to consider is the silent tax: inflation.  Consider the current situation.  The mainstream media, government cronies, et al., direct their diatribes toward the “greedy” oil companies.  But what you’re really seeing is inflation, caused by decades of terrible monetary policy.  And the Federal Reserve seems to be the turd in the punchbowl everyone pretends not to notice.  The dollar has lost 95% of its purchasing power since the Fed was created in 1913.[6]  In other words, what you could buy for $1 in 1913 would now cost a little over $22 in today’s money.[7]  Today, the dollar is becoming increasingly debased because the Federal Reserve is flooding the market with millions of unbacked dollars through a process called “quantitative easing.”  As the money supply increases, so do prices.  This, coupled with the current unrest in major oil-producing countries, is the reason that oil prices have been on the rise.  It’s important to point out that the inflation seen today is not the cause of our economic woes, but one of many symptoms of bad policy.  The chickens are finally coming home to roost.   

Something else to think about is the often unreported detail of profit margins.  When we see reports on the news about the enormous profits the oil industry rakes in, the profit margins almost always seem to be buried.  As Dr. Murphy explained, in 2007, the oil industry made around nine cents for every dollar of revenue, when the average for other companies in the S&P was 13 cents.  To put things in perspective, this puts them behind such industries as mutual funds, publishers, drug manufacturers, footwear, medical supplies, and even long-distance carriers.  

Yet another aspect the media tends to bury—or omit from their reports altogether—is the amount of taxes that these companies pay each year.  Exxon Mobil, for instance, pays a hefty tax rate of around 49 percent.  In the first quarter of 2008, Exxon Mobil announced $10.9 billion in earnings; however, they paid $9.3 billion in income taxes.[8]

A little food for thought for the next time you hear someone speaking ill of the big oil “owners” and their profits:  Why would people who live in the world’s most prosperous nation want to vilify and punish an industry with tax codes and profit caps for capitalizing on capitalism?  Are they not aware that the reason we are so prosperous is because of capitalism, not in spite of it?  Did you know that the true “owners” of these big oil companies are really just ordinary Americans?  In fact, according to an article written by Ben Stein, “mutual funds, index funds, and pension funds… own about 52 percent of Exxon Mobil’s shares.  Individual shareholders, about two million or so, own almost all the rest.  The pooh-bahs who run Exxon own less than 1 percent of the company.”[9] 

On Wealth Redistribution

With the 2008 creation of the Troubled Asset Relief Program, also known as “TARP,” the United States government began to purchase assets and equity from failing business and programs, using billions of tax dollars.  Could it be that Uncle Stalin is careening out of his lane again?

If you are a taxpayer, then you are also a shareholder in the auto industry, because about $76 billion of your hard-earned tax dollars went towards bailing out corporations like GM and Chrysler.[10]  Accordingly, that makes President Obama the CEO.  “The automakers are in the situation of needing to pacify politicians that are in the position to bail them out with expensive fuel-efficient cars,” said Rebecca Lindland, auto analyst with IHS Global Insight. “But shouldn’t it be more about satisfying the needs of the American consumer?”[11] 

To answer Rebecca’s question in a word, absolutely.  Satisfying the needs of the consumer is one of the cornerstones of capitalism; government control over the means of production is a cornerstone of socialism.  But this is only the tip of the iceberg.  It seems that a gradual transformation to socialism has been occurring right here in the United States, and right under the noses of the American people. 

Between TARP, federal stimulus programs, Federal Reserve rescue efforts, the AIG bailout, FDIC bank takeovers, housing initiatives, and other financial initiatives, taxpayers are on the hook for at least $3 trillion.[12]   But it doesn’t stop there.  At the time of this writing, our total debt amounts to over $14.2 trillion, and that’s not even counting unfunded liabilites!  Stated differently, every man, woman, and child in this country is on the hook for $45,677 and counting.   

You only need to glance at a photograph of the world at night to witness the devastating effects of communism and socialism.  The Korean peninsula is an excellent example. The capitalistic country of South Korea is completely illuminated, like a beacon to their neighbors in North Korea, who are left in the darkness of a communist dictatorship.  The international boundary can be seen as clearly as if had been drawn on the photograph by a well talented cartographer.  In this same photo, Puerto Rico appears to be entirely composed of light; Cuba barely appears to exist.[13]  Beginning to notice a pattern?

The socialist model of government has numerous flaws.  Socialism may appear to create equality, but it takes away from incentive.  When things are simply handed to people, it diminishes their incentive to work.  Fewer inventions and innovations are created, because the people who’ve created them are rewarded equally to those who have accomplished less, or even nothing at all, thus grinding the economy to a halt.  Would you possess a strong desire to work harder, or do something better, knowing that you would reap a reward equal to that of someone who didn’t work at all?  When people have no incentive to work, the economy suffers.  Our goal should be to create equal opportunities, not equal outcomes.

Besides, when was the last time you heard of the government being efficient with anything?  Amtrak is an excellent model of government inefficiency in action.  Compounding the problem, confiscatory tax rates on the top earners in socialist states can be attributed to the loss of the best and the brightest those nations have to offer.  There’s even a name for it:  brain drain.  When a nation redistributes its wealth, it really only diminishes its wealth. 

 A Final Thought

This so-called “green movement” has unfortunately metamorphosed into yet another vehicle for advocates of big government to drive their agenda home in a nice, shiny package of eco-friendly, smiley-faced totalitarianism.  People like Al Gore—who also claimed to have invented the “amazing internet,” by the way—employ their politically charged talking points and scare tactics in order to ram that Prius down your throat, not only because they are slowly gaining control of the industries, not only because of their corrupt dealings with large corporations, but because they honestly think that they know what’s best for you.  How arrogant! 

Whether it’s control of the automobile industry, high taxes on lucrative industries, or government control of the markets, tyranny will always find a place in a society that allows it. When people depend on the government to provide them everything, the government can also take away everything. 

On that note, I will leave you to consider the words of a true patriot, Founding Father, architect of the Declaration of Independence, and a Framer of the Constitution of the United States of America, Thomas Jefferson:  “A wise and frugal government, which shall leave men free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned – this is the sum of good government.” 

Research

[1]King Jr, Neil. “Energy: A Past President’s Advice to Obama: Act With Haste — Jimmy Carter Says New Administration Needs to Harness the Benefits of a Crisis Mentality to Tame Energy Policy.” Wall Street Journal 11 December 2008: A16.

[2]Bensinger, Ken. “Hybrid car sales go from 60 to 0 at breakneck speed.” 17 March 2009. Los Angeles Times. 16 March 2010 <http://articles.latimes.com/2009/mar/17/business/fi-hybrid17&gt;.

[3] Monahan, Patricia. “Mow Down Pollution.” 28 May 2006. Pittsburgh Tribune-Review Website.  7    March 2010 <http://www.pittsburghlive.com/x/pittsburghtrib/news/s_455613.html&gt;.

[4]Porretto, John. “Exxon Mobil Reports Record $45.2 Billion Profit For 2008.” 30 January 2009. Huffington Post. 7 March 2010 <http://www.huffingtonpost.com/2009/01/30/exxon-mobil-reports-recor_n_162468.html&gt;. 

[5]Murphy, Robert.  “On Those Oil Profits.” 8 March 2008.  Townhall.com.  7 March 2010 <http://townhall.com/columnists/RobertMurphy/2008/03/08/on_those_oil_profits&gt;. 

[6] Paul, Ron.  “Be Prepared for the Worst.”  9 October 2009. Forbes.com.  2 March 2011 <http://www.forbes.com/forbes/2009/1116/opinions-great-depression-economy-on-my-mind.html&gt;  

[7]U.S. Inflation Calculator. (2011, February 17). Inflation Calculator. Retrieved March 2, 2011, from U.S. Inflation Calculator: www.usinflationcalculator.com 

[8] Herbst, Moira. “Exxon: Profit Pirate or Tax Victim?” 2 May 2008. Businessweek. 12 March 2010 <http://www.businessweek.com/bwdaily/dnflash/content/may2008/db2008051_596535.htm&gt;.

[9] Stein, Ben. “Exxon Mobil Needs a Hug.” 2 March 2008. New York Times. 12 March 2010 <http://www.nytimes.com/2008/03/02/business/02every.html?_r=1&gt;.

[10]Goldman, David.  “CNNMoney.com’s Bailout Tracker.”  16 November 2009.  CNNMoney.com.    2 March 2011.  <http://money.cnn.com/news/storysupplement/economy/bailouttracker/>. 

[11]Carty, Daniel.  “Doesn’t Anyone Want a Hybrid?”  17 March 2009.  CBSNews.com.  2 March 2011<http://www.cbsnews.com/8301-503983_162-4870914-503983.html> 

[12]Goldman, David.  “CNNMoney.com’s Bailout Tracker.”  16 November 2009.  CNNMoney.com.   2 March 2011.  <http://money.cnn.com/news/storysupplement/economy/bailouttracker/>. 

[13]Mahew, C. & Simmon, R.  “Astronomy Picture of the Day.”  27 November 2000.  NASA.   2 March 2011 <http://apod.nasa.gov/apod/ap001127.html&gt;

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