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Shocker: Government Bureaucrats Don’t Understand Business or Economics
Sadly, Epidemic Upon Epidemic
It is one of the many, many reasons our nation’s Founding Fathers profoundly limited government. They trusted businessmen much more than they trusted government bureaucrats. Because they knew: Those who can - do. Those who can’t - regulate those who can.
The Founders knew the private sector is better, stronger and faster than government. And smarter. And better behaved. And better intended. And….
The Founders only established the federal government. But they understood that these government limitations exist at every level - and thus limitations should be imposed on every level. State and local bureaucrats are just as inferior to private businessman - and should be just as restricted.
But as we all know, since the Founders’ glorious creation governments at all levels have grown exponentially - and continue to grow inexorably. And as governments have achieved their now titanic proportions, they have attracted more and more bureaucrats that are increasingly hostile to the private sector. They don’t know it or understand it - but they don’t like it. And they use all the arms of the giant governments at their disposal as weapons to attack the businesses and businessmen they loathe.
To wit: New York State Attorney General Eric Schneiderman. Who REALLY has it in for petroleum companies. And has spent the last several years placing his oversized government power in the service of environmental radicals - to persecute them:
“(E)nvironmental activists…are now accusing publicly traded oil and gas corporations of hiding the true costs of climate change to their businesses. The effort threatens to change the current focus of financial reporting—which is to provide salient information to investors—and instead serve the policy agenda of liberal activists….
“They have enlisted New York attorney general Eric Schneiderman to lead the cause. Earlier this year, he announced that he is looking at whether Exxon Mobil ignores the true risk of global warming in evaluating its energy reserves. If global warming accelerates, Schneiderman’s logic goes, then Exxon would be stuck with fossil fuel reserves rendered worthless by future regulations or a concomitant reduced demand for oil.
“Get that? Schneiderman is attempting to punish ExxonMobil – for failing to properly guess and then calculate how much government will punish ExxonMobil in the future.”
The routine petroleum company practice Schneiderman and his fellow radicals are abusing - is the quarterly estimates of the value of the oil reserves they have on hand.
This is an intricate, nuanced process. It requires analysis of where in the world and the ground a company’s reserves are, how much it will cost to extract them - and whether future oil prices will make these extractions make sense.
It’s a difficult process for oil business lifers to consistently get right. Unskilled radical government bureaucrats? They have zero business inserting themselves therein.
But don’t take my word for it. Meet Michael Lynch: “I spent nearly 30 years at MIT as a student and then researcher at the Energy Laboratory and Center for International Studies. I then spent several years at what is now IHS Global Insight and was chief energy economist. Currently, I am president of Strategic Energy and Economic Research, Inc., and I lecture MBA students at Vienna University. I've been president of the US Association for Energy Economics, I serve on the editorial boards of three publications, and I've had my writing translated into six languages. My book, "The Peak Oil Scare and the Coming Oil Flood" was just published by Praeger.”
Think Lynch knows a little bit more about the oil business than a radical New York attorney politician? You bet he does:
“Reports that Exxon Mobil will reduce its proved reserves by about 20% have caused great excitement, coming after New York Attorney General Schneiderman’s claims that the company might have misled investors about the impact of climate change on its reserve valuation….(But) revisions to proved reserves occur constantly, reflecting changes in economic conditions as well as investment in additional recovery or better understanding of a field’s geology….”
Of course, this Schneiderman assault is just the latest in a long line of Schneiderman assaults. He spent more than a year trying to prosecute ExxonMobil for engaging in First Amendment-protected speech. Then he wanted to punish them for engaging in climate forecasting (striking fear in the hearts of meteorologists everywhere).
Twice bitten, Schneiderman remains un-shy. Industry expert Lynch continues: “Needless to say, coming on the heels of both the “#keepitintheground” and “#Exxonknew” campaigns, the news of a possible reserve downgrade has caused much excitement among the environmental community….
“The reality of course is that the 2014 drop in oil prices, not climate change policies, are the cause of any reserve write-down. In fact, despite warnings of impending climate catastrophe for nearly 3 decades, there have been few moves to actually restrain carbon emissions. The…’warnings’ from James Hansen’s 1988 Congressional testimony to the recent Paris accords and the lack of impact they have had on carbon emissions. (Economic recessions have been the primary reason for lower growth in emissions.) Clearly, anyone investing on the basis of expected lower returns due to climate change policies (instead of government subsidies) would have been acting very prematurely, and paid a hefty economic price.”
Get that? Lynch is saying that oil companies have for decades been behaving…like oil companies - because of the market forces to which they and all the rest of us are subject.
And have tried as best they can to work around the pronounced, offensive inanity of incompetent government bureaucrats like Schneiderman.
If you want boobs tilting at ideological windmills - and screwing up your life in the process - people like Schneiderman are your men.
If you want cheap gasoline so you can get to work - you want the men and women of the oil companies.
And you want the former kept as far away as possible from the latter.
This first appeared in Red State.