Coyote Blog

I am skeptical of some but not all global warming claims, but must admit that even as a skeptic, I find this argument by James Lewis uncompelling:

Now imagine that all
the variables about global climate are known with less than 100 percent
certainty. Let's be wildly and unrealistically optimistic and say that
climate scientists know each variable to 99 percent certainty! (No such
thing, of course). And let's optimistically suppose there are only one-hundred x's, y's, and z's
--- all the variables that can change the climate: like the amount of
cloud cover over Antarctica, the changing ocean currents in the South
Pacific, Mount Helena venting, sun spots, Chinese factories burning
more coal every year, evaporation of ocean water (the biggest
"greenhouse" gas), the wobbles of earth orbit around the sun, and yes,
the multifarious fartings of billions of living creatures on the face of the earth, minus,
of course, all the trillions of plants and algae that gobble up all the
CO2, nitrogen-containing molecules, and sulfur-smelling exhalations
spewed out by all of us animals. Got that? It all goes into our best
math model.

So
in the best case, the smartest climatologist in the world will know 100
variables, each one to an accuracy of 99 percent. Want to know what the
probability of our spiffiest math model would be, if that perfect world existed?  Have you ever multiplied (99/100) by itself 100 times? According to the Google calculator, it equals a little more than 36.6 percent.

The Bottom line: our best imaginable model has a total probability of one out of three. How many billions of dollars in Kyoto money are we going to spend on that chance?

Yes, there is a point to be made that climate is really complicated.  However, I can still make correct and valid directional predictions without knowing the exact state of every variable.  For example, I can say with some certainty that, at least here in Arizona, that the temperature at 4PM is going to be higher than the temperature at 4AM, and probably by many degrees.  I can make this statement despite having no idea what the temperature at either time actually is.

I think one can say that the hypothesis is pretty strong that man-made CO2 is increasing atmospheric CO2 concentrations which in turn is causing some warming.  Where Mr. Lewis probably has a point is on the issue of positive and negative feedbacks.  Most of the warming in the estimates in productions like "An Inconvenient Truth"  relies not on just CO2-driven warming, but warming from a variety of feedback processes.  These feedbacks are really really complicated and not well understood.  I discuss this issue of feedbacks both here and here and here.

(HT Maggies Farm)

Remember all those media reports about the possible "political motivation" behind falling gas prices ahead of the election?  Supposedly oil companies were somehow manipulating gas prices ahead of the election to help Republicans win the election.  This was not a wacky Internet fringe thing -- network news anchors and newspapers like the WaPo and the NYT speculated about it, and not just on their editorial pages.

Well, you and I may remember, but apparently no major media outlet who ran this story remembers what they said.  Because I have not seen a single follow-up story after the election.  Surely, if gas and oil prices were being manipulated down before the election, they would quickly spike back up to their "natural" levels after the election.  But of course, the whole theory was insane to begin with.  To suppose that a few US oil companies, who for all their size are still small players in the world oil markets, could manipulate US commodity prices for any sustained period of time is absurd.  And even if they were successful, the cost would be astronomical (just ask the Hunt family who bankrupted themselves trying to manipulate the silver market).

So I will do the follow-up story.  It turns out that oil and gas prices were falling before the election because ... oil and gas prices are falling.  From the WSJ on Jan 9:

Oil prices dropped $1.69 to $54.40 a barrel early Tuesday as warm
weather in the Northeast continued to hurt demand for heating fuel. The
slide comes on top of last week's 7.8% pullback in crude, which briefly
took prices below $55 a barrel, their lowest level since June 2005.

From Business Week on Jan 8:

Wholesale gasoline prices have been falling for the past few weeks,
noted Jason Schenker, an economist with Wachovia Corp. He expects
retail gasoline prices to fall further; he forecasts a dime-sized
decline this week compared to last, with the per-gallon price dipping
to $2.25 from $2.35.

People often wonder why so many wild and weird conspiracy theories seem to thrive nowadays.  I am sure there are many social and psychological reasons.  But surely one reason is that the media seems incredibly willing to go front page with credulous stories of the most ridiculous conspiracy theories, and then never revisit them when they are proved absurd.  Its telling to me that it was left to Popular Mechanics, rather than the WaPo or the NYTimes, to publish to one authoritative debunking of 9/11 conspiracy silliness.

From Q and O:

CARMEL, N.Y. (AP) - It was quite a New Year's Eve at the home of
Richard Berger in Carmel - in Putnam County. Someone in the house broke
a rectal thermometer and the family called 911 around 10:30 to report
the small mercury spill.

Several dozen volunteers [the headline says 100] from the Carmel Fire Department responded to the house on Brookview Drive.

Fire Chief Darryl Johnson says mercury is a hazardous material that can cause stomach problems if inhaled.

Men wearing protective gear used wet sponges to clean up the puddle.

It was packaged and brought to the Carmel firehouse where the county health department will dispose of it today.

The Berger family was not hurt.

I remember breaking a few thermometers when I was a kid.  You took a piece of paper, creased it into a cup shape, and used the edge to pick up the little blobs without touching them.  I still seem to be alive today.  I am sure those little blobs are buried deep in some landfill now, a ticking time bomb for future generations.  And people wonder why gas prices are so high.  A country this panicky over a fraction of a gram of mercury will never let a new refinery get constructed.

One of the issues that is giving Democrats an entre to wack on oil companies is the issue of "subsidies" for deep offshore drilling.  These subsidies appear to take the form (though nothing in the world of oil field royalty payments is very simple or clear) of reduced royalty payments:

With oil prices still above $60 a barrel, do oil companies need
inducements to find and produce more oil? That's the underlying
question of today's NYT front-page article about an Interior Department report questioning the value of royalty rebates and tax breaks for gas and oil production.

The rebates are targeted at expensive and difficult exploration,
usually in deep water or that requires deep drilling. The intention is
to incentivize that exploration, allowing the United States to increase
its domestic reserves using "unconventional oil."

This is the kind of "incentivizing" that always goes wrong for the government, and turns even the best of intentions into massive rent-seeking opportunities.  My solution is similar to Cato's Tom Firey's:  Just make the royalty payment amounts and percentages subject to a bid as part of the offshore leasing process.  The government can include minimum reserve prices and such to protect itself (as they already do for offshore leases).  He suggests rolling all the value into a single up front number.  I would instead suggest a bid upfront number plus a bid royalty that is either a fixed amount per barrel, or more likely, a fixed percentage of oil revenues at some benchmark oil price.

What I am NOT sympathetic to is one party in a lease agreement trying to use its legislative party to void the terms of a previous agreement because it no longer likes the terms:

The article notes that royalties and corporate taxes deliver into
federal coffers about 40 percent of the revenue produced from oil and
gas extracted from federal property. The worldwide average government
take is about 60"“65 percent. A 40 percent federal take may have been
fair at a time when oil prices and profits were lower, the article
suggests, but the government should be getting a much higher cut from
today's prices.

Trying to just void previous deals in order to get better terms is just thuggery, and is the worst possible disincentive for long-term investment.

Thanks to Tom Kirkendall for the link to my light rail post.  For quite a while, he has been "railing" against Houston's light rail proposals (where I was born and raised).  By the way, he is right that Phoenix is even less amenable to a rail-based system than Houston.  Houston has low population density and its downtown area is small compared to metro-friendly cities like New York, making rail an iffy proposition.  But Phoenix is even less dense and its downtown is tiny compared even to Houston.

A previous post of Tom's also gives me data to feel even more confident about my proposed bet, which was this:

If we take the entire cost of the system's construction, plus its
annual operating losses/subsides, I will bet that we could have bought
every regular rider of the rail system a nice car instead and gas for
life cheaper than the cost of the rail system.

Obviously we don't have Phoenix numbers yet, but he links an LA Times story with Los Angeles numbers:

Three light-rail lines have been added to L.A. county's transit system
in the last 20 years. Together, these cost $2.5 billion in capital
costs, they serve about 125,000 passengers per day and account for a
fiscal loss of approximately $252 million per year -- if one
acknowledges that capital costs are real, something that transit
operators and boosters often neglect.

Note that LA's system is actually a more desirable system from a rider standpoint than the one in Phoenix, since in some areas the trains avoid traffic lights, making them closer to heavy rail, and thus have a faster speed.  So lets run my bet against LA's numbers.  We don't really know what the core ridership numbers are.  Certainly its less than the 125,000.  And we don't know if an out in the morning and back at night commute counts in these numbers as one passenger or two (From here, it looks like 125,000 passengers making 2 trips each).

If the core ridership number is 125,000, the highest possible choice, then the total capital cost of the system per rider is $20,000 per rider.  This means I was right, that we could have instead bought ever rider a car for the same money.  Since the real ridership is probably less than that number, this means we could have bought ever rider a car and had money left over.  Concerned about the environment?  Then make every car a Prius, which the money would just about cover even without the volume purchasing discount they would likely get.

But what about gas?  Well, they say they have a $252 million per year operating loss.  This subsidy, which is above and beyond ticket sales, equates to $2,106 (!) per daily rider, even using the higher 125,000 figure.  At $2.50 per gallon, this equates to 15.5 gallons of gas per rider per week. 

So you can see with the LA numbers, even using the largest possible interpretation of their ridership numbers, the money used for the train could have instead bought every passenger a new car and filled the tank up with gas once a week for life.

Yes, I know, the argument is that the train reduces congestion.  Supposedly.  I have two responses:

• Rail has never reduced congestion in any city.  Go see London and Manhattan.  In fact, rail seems to encourage urban density that increases congestion. 
• In Phoenix, where rail will often replace existing lanes of roads, the train will likely carry fewer people than the lanes of traffic used to, so congestion will increase.

I know there are folks who get seriously bent out of shape by this type thing (Gouging!), I think this is pretty cool, from Market Power:

I wouldn't have thought this would
happen, but it appears that a gas station I pass during my commute
practices time-of-day pricing, charging more during the peak period and
charging less during the off peak.

For the past two months, every time I have passed the station in the
evening, the price of gasoline has been at least three cents/litre
lower than it was in the morning on the way to work. This station is
very convenient for people to pull into on the way into London, but it
is very inconvenient for people who are leaving the city at the end of
the workday.

What is the difference between "populism" and "fascism by the majority"?    I sure can't see any difference.

I love it when I see stuff like "take on the oil companies" or "take on the drug companies."  The oil companies make about an 8% profit in a good year.  Drug companies are a bit higher, but not that much.  Let's say the government runs their profit down to zero.  That would then yield everyone about a 6% discount at the pump (presumably gas taxes would not go down, thus the lower percentage) and an average 12%-ish discount on drugs.  Is it really the Democrat's intention to trash incentives in these critical industries for future long term investment (oil exploration in one, drug R&D in the other) so politicans can hand out a 6% discount to the voters? 

"These very simple guidelines,
You can rely upon:
You're gouging on your
prices if
You charge more than the rest.
But it's unfair competition if

You think you can charge less!
"A second point that we would make
To
help avoid confusion...
Don't try to charge the same amount,
That would
be Collusion!
You must compete. But not too much,
For if you do you see,

Then the market would be yours -
And that's Monopoly!

That is from the Incredible Bread Machine by R.W. Grant.  And it seems to sum up the position of gasoline retailers given this story from Denver, where a grocery store chain was successfully sued for $1.4 million because it provided gasoline discounts to customers who bought over $100 of groceries.

Gasoline retailers can't win. One day, they're
accused of "gouging" us at the pump with outrageously high prices; the
next, they're accused of "predatory pricing," which means giving us a
deal so good it's illegal....

The effect of the $1.4 million jury verdict against Dillon Co.
means that two of its grocery chains, King Soopers and City Market,
will no longer give customers gas discounts based on grocery purchases.

Safeway wasn't a defendant but it got the message and likewise
suspended its discount program at 43 of its fuel centers. Discounts
sponsored by other supermarket or big-box chains are also expected to
end.

The lawsuit was based on Colorado's 69-year-old "Unfair
Practices Act," which prohibits selling a product "below cost." The law
is supposed to be enforced by the attorney general's office, but the AG
hasn't brought an action for years because of the near impossibility of
proving that gas sales are below cost when so many grocery products are
also involved.

But the law also permits private civil suits in which winning
plaintiffs are entitled to treble damages. The plaintiffs here were a
couple of independent gasoline dealers in Montrose spurred on by a
trade group representing the state's independent petroleum marketers....

The theory behind predatory pricing laws is that a large
company will sell certain products below cost in order to drive out
competitors. Once the competitors are gone, goes the hypothesis, the
big company will jack up prices to a monopoly level.

The only problem is, this never happens. New competitors always
move fast into markets where prices are unjustifiably high.
Predatory-pricing suits are generally filed by existing companies
unable or unwilling to meet competition provided by more efficient
firms. Legal restrictions on cutting prices invariably work against the
consumer.

I pointed to a similar situation a while back in Maryland.  Thanks to Overlawyered for the pointer.

I have been off in the back country of Wyoming, but happened to see this headline from the Casper, Wyoming paper the other day when I was passing through civilization:

Gas price drop raises concern

Why am I thinking that when gas prices rose sharply last year, they didn't run a front page headline that said "Gas price rise a huge boon."

A frequent topic of this blog is to point out situations where technocrats translate their distrust for individual decision-making into the justification for government control. 

Kevin Drum provides me with one of the best examples I have seen of late of this phenomena of using distrust of individual decision-making to justify government intervention, in part because he is so honest and up-front about it.  I usually try not to quote another blogger's posts in total, because I want to give folks an incentive to go visit the site, but in this case I need to show the whole thing (the extensive comments are still worth a visit):

If we treat healthcare like any other market, allowing consumers
free rein to purchase the services they like best, will it produce high
quality results? A recent study suggests not:

Researchers
from the Rand Corp. think tank, the University of California at Los
Angeles and the federal Department of Veterans Affairs asked 236
elderly patients at two big managed-care plans, one in the Southwest
and the other in the Northeast, to rate the medical care they were
getting. The average score was high "” about 8.9 on a scale from zero to
10.

....In the second part of their study, the medical researchers
systematically examined 13 months of medical records to gauge the
quality of care the same elderly patients had received....The average
score wasn't as impressive as those in the patient-satisfaction
surveys: 5.5 on a 10-point scale. But here's the interesting part:
Those patients who graded the quality of their care as 10 weren't any
more likely to be getting high-quality care than those who gave it a
grade of 5. The most-satisfied patients didn't get better medical care
than the least-satisfied.

Surprise! Patients are
poor judges of whether they're getting good care. And if consumer
preferences don't map to high quality care, then a free market in
healthcare won't necessarily produce better results or higher
efficiency, as it does in most markets.

Back to the drawing board. Perhaps a national healthcare system
would be a better bet to reduce costs, cover more people, provide
patients with more flexibility, and produce superior outcomes. After
all, why are we satisfied with allowing the French to have a better
healthcare system than ours even though we're half again richer than
them?

There is it, in black and white:  Most of you individual slobs out there cannot be trusted to make good health care decisions for yourselves, so the government should do it for you.  (And by the way, who the hell thinks the French have a better health care system, but that's off-topic for today).

Here is the false premise:  If the intellectuals who ran the study judged that the individuals involved were getting poor care when the individuals themselves thought is was good care, this does not necessarily mean the individuals being studied were wrong.  It may very well mean they have different criteria for judging health care quality and value.  In fact, what goes unquestioned here, and I guess the reader is supposed to swallow, is that there is some sort of Platonic ideal of "high-quality care" that the people who run this study have access to.

But this is ridiculous.   Does high-quality mean fast?  painless?  private?  successful?  pleasant? convenient?  I, for example, have all the patience of an 8-year-old who just ate three pieces of birthday cake washed down by two Cokes.  I need stuff now, now, now.  I hate gourmet restaurants where meals take 3 hours.  Many gourmands, on the other hand, would probably shoot themselves before eating some of the food I eat.  We have different standards.

Let's take an example from another industry:  Cars.  Every year, the "experts" at Consumer Reports and Car and Driver try out all the new cars and publish the two or three they think are the best.  So, does this mean that everyone who does not buy one of these cars selected by the experts as the best are making a bad decision?  Does this fact tell us the government should step in and buy their cars for them because they can't be trusted to make the right evaluations?   NO!  Of course not.  It means that the people who buy other types of cars have different criteria and priorities in judging what a "high-quality" car is.  Some want high gas mileage.  Some want a tight interior with leather.  Some want a big honkin' engine.  Some want a truck jacked way up in the air.  Some want room to carry five kids.   You get the idea.

There are at least two better explanations for the study results.  Let's first be clear what the study results were:  The study found that the patients studied graded health care differently than did the people who ran the study.  That's all it found.  This could mean that the intellectuals who ran the study and the individuals studied judged care on different dimensions and with different priorities.  Or it could mean that the individuals studied had incomplete information about their care and their choices.  Neither justifies a government takeover of the industry.  (In fact, to the latter point about information, markets that are truly allowed by the government to be free, which health care has not, often develop information sources for consumers, like the car magazines mentioned above.)

The thinking in Drum's post betrays the elitist-technocratic impulses behind a lot of the world's bad government.  Look at "progressive" causes around the world, and you will see a unifying theme of individual decisions that are not trusted, whether its a poor Chinese farmer who can't be trusted to choose the right factory work or an American worker who can't be trusted to make her own investment decisions for retirement.

Postscript:  In some past era, I might have called this one of the worst excuses for fascism I had ever heard.  Unfortunately, Brad DeLong recently took that title with his post that the government needs to take even more money from the rich because the rich are ostentatious and that hurts other people's feelings.  No really, I don't exaggerate, he said exactly that.  If somehow you have missed this one, look here.

This reminded me a bit of the Michael Keaton Batman movie, where the Joker was handing out money to voters in a bid for popular support:

The Capitol Hill newspaper writes that Democratic
House challengers "think they have found a clever way to harness voter
anger over high gasoline prices" by selling it for less, a move that
Republicans defending their seats say is "tantamount to vote buying."

Rep. Ron Lewis (R-KY) has asked the U.S. attorney in
Louisville to investigate whether his opponent, Democrat Mike Weaver,
violated criminal code with his recent "cheap gas event"
at an Elizabethtown station, where motorists filled up for $1.22 a
gallon "“ the price of gasoline when Rep. Lewis took office in 1994.

Beyond the obvious question of just what the hell Ron Lewis had to do with or could have done to stop the run-up of gas prices from $1.22 to their current levels, it would be interesting if this turns out to be legal at the same time that actual political speech is illegal.

I don't know election law very well.  Clearly handing out subsidized gas below cost as part of a political rally is roughly equivalent to handing out $20 bills to anyone who attends said rally.  The party officials involved argue that this activity is legal as long as there is no way to track who got the largess or to tie the money handouts to actual voting decisions:

"The gas is available to whomever wishes to purchase it
at the subsidized sale price for a short time ... there's no condition
attached," Bauer told the newspaper, adding that there is no way to
track whether motorists purchasing the lower-priced fuel are registered
to vote in the district the candidate is running for, or whether they
will vote at all.

I don't know election law very well, so I will ask the readers.  If I was running for office, and holding a publicity event at which I handed out $20 bills to attendees, would that be a legal election practice if, as with the party's logic above, I hand them out to all comers regardless of their voter registration status or party affiliation and I don't do anything to track who they are?

I did not see the ABC special the other night on climate, but I am told that as a skeptic of the extreme global warming scenarios, I was compared to both a holocaust denier and a tobacco executive.  Boy, you gotta love free scientific inquiry!

One of the tricks of all debaters, not just climate folks, is to create a straw man opponent who is easy to knock down.  Now apparently this show did not even bother to interview a skeptic at all, but they chose as their straw man "people paid off by the oil companies who believe man has no effect on climate."

Well, gee, I certainly can see how with current state of knowledge it is getting tougher to credibly sell the "no impact at all" argument, but I would say that with climate and all its vagaries its still a position that a person can stake out and not be a wacko. 

There is, though, a middle ground of skepticism that falls somewhere between "man has no effect" and "temperatures will rise ten degrees and the world will end unless we make Al Gore our economic dictator."

One of the things they never explain on shows like ABC's is that most
climate scientists agree that when other variables are held constant
(more in a minute), increases in CO2 will only increase global
temperatures by 1-2 degrees, some of which we have already seen.  It is
seldom mentioned in the press that there is a strong diminishing return
relationship between CO2 levels in the atmosphere and warming (leaving
everything else equal for a moment).  So, the next doubling in CO2
concentrations will have substantially less impact on global
temperatures than the last doubling.  This is something that most
reputable climate scientists will agree with.

So, how do climate researchers get 6-8 degress of additional warming or
more in their models?  They get it from positive feedbacks.  Most of
Nature's processes are negative feedbacks -- push a pendulum one way,
nature tries to bring it back to the center.  Positive feedback is like
a rock balanced on the top of a mountain -- one little push and it
starts rolling faster and faster.

Climate scientists posit (but as yet have not observed and can't prove)
a number of feedback processes that might tend to amplify or dampen the
effect of increase atmospheric CO2 on global temperatures.  The easiest
to understand is the effect of water.  As temperatures rise due to CO2
concentrations, one might expect clear air humidity to go up worldwide
(as higher temperatures vaporize more water) and you might expect cloud
cover to increase (for the same reason).  If water vapor goes mostly to
humidity, then global warming is accelerated as water vapor in clear
air is a strong greenhouse gas.  One to Two degrees of warming from
increased CO2 might then become four or six or eight.  If instead vaporized water mostly
goes to cloudcover, the effect of CO2 is instead dampened since more
clouds will reflect more sunlight back into space.

Generally, one can make two observations about how most of the climate models
that make the news treat these positive and negative feedback loops:

• Climate scientists tend to include a lot of positive feedback
  loops and downplay the negative feedback loops in their models.  Some
  skeptics argue that the funding process for climate studies tends to
  reward researchers who are most agressive in including these
  acclerating effects.
• The science of these accelerating and decelerating effects is
  still equivocal, and their is not much good evidence either way between
  positive and negative feedback.  We do know that current models with
  heavy positive feedback loops grossly overestimate historic warming.
  In other words, when applied to the past, these positive-feedback-heavy
  models say we should be hotter today than we actually are.

My much longer article on the same topic is here, where I also address other things that may be happening in the climate and reasons why a poorer but colder world may be worse than a warmer and richer world.  I recommend to your attention this article, which is the best statement I can find of the skeptical middle ground. 

I just finished reading the Deep Hot Biosphere by Thomas Gold.  I thought it was a really interesting read, though be forewarned that this book is treated like the moral equivalent of 9/11 conspiracies by much of the petroleum engineering profession.  Mr. Gold's hypothesis is that our oil and natural gas is not a result of dinosaurs and ferns getting mashed under the earth into oil  He posits that methane is naturally occurring in the earth in huge quantities, and the oil and gas we are exploiting are actually this naturally occurring methane either coming up as-is or converted through chemical and biologic processes underground into heavier oils.  We now know that many of the planets in our solar system have large amounts of naturally occurring methane - why not the Earth?

I found his hypotheses very well reasoned and compelling.  I had a few questions I would have like to ask of him, but he died in 2004.

The one the government did not support, plan for, or subsidize.

It increasingly looks like hybrids, particularly newer plug-in hybrids, will be the high MPG, low-emission technology winner in the foreseeable future.  The US and California governments, among others, have subsidized (and at times mandated) pure electric vehicles, hydrogen vehicles, natural gas powered vehicles, and fuel cell powered vehicles.  While some governments have come along with ex-post-facto promotions of hybrids (e.g. ability to use the carpool lane), hybrids have been developed and won in the market entirely without government help and in places like California, effectively in the face of government opposition (because they were stuck on zero emission vehicles, low-emission vehicles were opposed)

Plug in hybrids have many of the advantages of electric vehicles without the range problems.  They use standard gasoline so they avoid the new fuel distribution issues of natural gas and hydrogen.  And fuel cell technology may be great one day but is not there yet.  I was reminded of all this by this article by Stephen Bainbridge on why the EV-1 failed.

Update:  This reminds me of the 19th century transcontinental railroads - UP, SP, NP, GN etc.  Only one of these transcontinentals did not get any federal land grants or government financing -- the Great Northern of James J. Hill -- and not coincidently the GN was the only one not to go bankrupt in the close of the century.

Unfortunately, it is behind the WSJ paid firewall and not on their opinion journal site, but Gary Kasparov has a very interesting editorial that confirms my fears about Russia:

Russia may not have much industry or democracy left, but we do have
massive amounts of oil and gas plus other natural resources. When
combined with our nuclear weapons, these resources are sufficient to
buy entry into the G-8 despite Mr. Putin's transformation of Russia
back into a one-party dictatorship. This newfound international sway is
also having serious repercussions inside my country. Many here would
like to believe that Mr. Putin is ushering in a return to our Soviet
superpower glory

He tells some pretty amazing tales of self-dealing by government officials on a massive scale. 

In perhaps the best example, the giant energy company Yukos was
dismembered and its chairman jailed. Next, Yukos assets were put up for
auction and the crown jewel, oil unit Yuganskneftegaz, was purchased at
a bargain price by the state-owned company Rosneft, which received
billions in mysterious loans. On July 14, Rosneft had an IPO in London
to sell these stolen assets and, of course, the money didn't go into
the treasury. This isn't nationalization, it's simple robbery. In
Russia the expenses are nationalized and the revenues are privatized.

That last line is a great one.  I for one have scratched my head at why Bush as consistently given Putin a pass.  My only guess is that he has prioritized his war with Muslim fundamentalism so high that he needs Putin as a potential ally in the area, though Kasparov presents evidence that Putin is likely exactly the opposite.  He concludes:

The West is making a terrible mistake by mixing realpolitik with a
battle of values. Drawing and defending moral lines is the first and
most essential step in combating extremism and there is no room for
double standards. If the West is keeping track of its friends, it's
time to take Mr. Putin off the list.

Have you ever heard of government authorities making public statements around Valentine's Day to please conserve on roses since we are entering our peak demand season for them and rolling shortages could ensue?  No?  Never?  Well, the demand spike for roses on Valentines is much more dramatic than the demand spike for power on a hot summer day.  So why no urgent government messages for conservation of the former but constant ones for the latter?

Because the rose market is not heavily regulated.  Producers are free to manage their capacity without government interference, and, perhaps more importantly, producers are free to charge peak pricing in high demand periods.  In fact, prices for roses on Valentines go for a multiple of everyday pricing that a similar differential in a peak supply period at, say, a gas station would likely get the proprietor arrested for price gouging.  But we recognize that its tough to manage a business to supply all its capacity in one day of the year, and accept the higher pricing.  Why is it we can't accept the same facts of life in electrical generation, where capacity is orders of magnitude more expensive to manage than rose growing?

More from Llewellyn Rockwell at the Mises Blog and Lynn Kiesling at the Knowledge Problem

A few days ago, I posted that people seem to make strange tradeoffs between the cost of gasoline and the value of their personal time.  Don Boudreaux at Cafe Hayek makes a similar observation about recent calls to reinstate the 55 MPH speed limit, pointing out that slower speed limits may save gas but they cost people time, and time is one resource that is truly finite:

In short, for every 75-miles covered on a highway, reducing the speed limit from
75 MPH to 55 MPH will save a driver $2.58 in fuel cost -- and this assuming that
the increase in fuel efficiency of the average car caused by the lower speed
limit is a whopping 10 mpg.  But the resulting greater time on the road will
cost a driver earning the average non-supervisory wage $5.82 worth of his or her
time per 75-miles driven.

By the way, it is no surprise that this always seems to be proposed by Easterners who have no conception of the travel distances out west.

As a preface, I am not a socialist planner, so I do not presume to make other people's economic trade-offs for them.  If someone out there chooses to collect Pinto station wagons or pay $10 million to go on a Russian space launch, power to them.

That being said, I will observe that gas price concerns seem to drive people to do things that they would not normally do in other contexts.  Market Power quoted this statement from the Washington Post:

"When prices go up, you're going to see some interesting things," said Tom
Kloza, chief analyst for the Oil Price Information Service in New Jersey.
"Saving money on gas is something that's just magical in this country. Rational
thought just doesn't apply to gas."

Market Power was skeptical that such irrationality exists, but I think it may be correct.  Here are a few examples:

1.  Waiting for hours:  A couple of years ago when I lived in Seattle, a local Costco put in a gas station and sold gas for 10-15 cents or so below most of the other local stations.  Every time I went there, there was a huge line -- perhaps half an hour long -- to get gas.  For a fifteen gallon fill-up saving 15 cents and waiting 30 minutes, that equates to $4.50 an hour savings for their efforts, not to mention the extra driving time (and gas!) spent getting to this one spot rather than their local station.  How many people in the line would have driven an extra 10 miles to take a job at $4.50 an hour? 

Lately, I witnessed a free gas promotion where people lined up and waited at least 3 hours for 10 gallons for free gas (people apparently had lined up starting at 4AM for the promotion that began at 8AM.  This is a bit better deal at $10 per hour, but I wonder how many people in the line would have participated in any other endeavor for $10 an hour?  Market Power points to a similar promotion in Sioux Falls, where the value of police time providing security was probably higher than the value of the gas given away.

2.  Save a dollar, pay three extra.  One of the reasons I am unconcerned with gas price gouging is that many gas stations today use gas as a loss leader, hoping to pull motorists into their store or restaurant.  In the language of gouging, what this means is that typically you are getting a great price on gas (given what the dealer's costs are) and are getting gouged on coffee and Twinkies.  Its amazing to me that people who check the Internet to find the place with 5 cents a gallon cheaper gas will then walk into the convenience store and pay whatever for Cokes and water and cigarettes and beer and coffee.  It seems crazy, but the best way to explain it is that for a number of people, a dollar saved on gas gives them far more satisfaction than say a dollar save on soft drinks.

3.  Wagering with the rental car company.  Every rental car company offers you a wager nowadays.  They give you the chance to buy the whole tank of gas in advance for something like 20 cents less than the local market rate.  Assume the local market rate is $3.20, the rental car advance rate is $3.00, and the tank is 15 gallons.  All you have to do to win this bet as the renter is to return the car with less than 1 gallon left.  If you do, you win, otherwise you lose.  Is this a bet you want to take?

But I left something out - the value of your time.  Let's say you value your marginal time at $30, and it take 15 minutes to fill up the rent car yourself.  By taking the fuel option, you save $7.50 of time.  This means to win the bet, including the value of your time, you have to turn it in with less than 3.5 gallons left, or less than 1/4 full.  The other alternative is to not stop and turn it in at the rent car place and let them fill it up at their $6.00 rate.  But even this ridiculously inflated rate for turning the car in part-full is still a better option than the pre-paid fuel as long as you don't use more than half a tank.   And I bet that the vast, vast majority of people who rent cars, particularly on business trips, don't use a half tank (a half tank at 20mpg is about 150 miles).

One of the best tests of my proposition is to see how many businesses
today act as if this gas-price-overfocus is a real phenomenon:  Car
dealerships give away free gas rather than rebates;  many many
companies are having free gas promotions;  gas stations continue to
sell gas at cost to get you in their store.  Basically, businesses
everywhere are betting that their customers will find $30 of gas more
appealing than any other $30 giveaway. 

None of the above bothers me particularly -- people are different and interesting in how they act.  That's why government planning tends to chafe everyone.  In fact, the only part of this supposed irrationality about gas prices that does bother me is the fact that so many people run to the government for price controls and gouging investigations whenever gas prices go up, and so many Congressmen of both parties see value to pandering to these instincts.  This despite the fact that gas prices are still effectively far lower as a percentage of income than they were 25 years ago.  I wish they would all go back to sipping their $8 Starbucks coffees and just deal with it.

Update:  Was on Snopes.com checking out an email that seemed like an urban legend (it was) and saw a sidebar listing gas wars as the #1 urban legend email of the moment.  ExxonMobil seems to be the bad-guy target-of-choice, I guess just because they are the largest.  The "idea" in the email is that if everyone would boycott ExxonMobil and shop at other gas stations, the price of gas would fall.  LOL.  As Snopes points out:

A boycott of a couple of brands of gasoline won't result in lower
overall prices. Prices at all the non-boycotted outlets would rise due
to the temporarily limited supply and increased demand, making the
original prices look cheap by comparison. The shunned outlets could
then make a killing by offering gasoline at its "normal" (i.e.,
pre-boycott) price or by selling off their output to the non-boycotted
companies, who will need the extra supply to meet demand. The only
person who really gets hurt in this proposed scheme is the service
station operator, who has almost no control over the price of gasoline.

Per the WSJ($):

Last week the House of Representatives expressed its
collective outrage over high gas prices by voting as a herd, 389-34, to
make gasoline "price gouging" a federal felony.

Really. This command and control legislation reads
like the kind of law passed by the old Soviet Politburo. If an oil
company is found guilty of charging a "grossly excessive" price for
gasoline, it could face a $250 million fine and its executives face
imprisonment. Even neighborhood service station owners could be
sentenced to two years in jail and a $2 million fine for the high crime
of charging too much at the pump.

So what is price gouging?  What is the objective standard that we can all apply to our behavior to know clearly, before the fact, if our actions are legal or illegal?

One small problem is that no one in Washington can seem to define what
constitutes price gouging. Under the House legislation, the bureaucrats
at the Federal Trade Commission would define a "grossly excessive"
price and then, once prosecutors charge some politically vulnerable
target, juries across the country would decide who's guilty and who's
not. A Senate version, sponsored by Maria Cantwell of Washington,
contains terms like "excessively unconscionable price increases" and "a
gross disparity" between the normal price and the price during a
shortage or an emergency.

If this passes, there are two, and only two, ways this can be enforced:

1. The standards remain incredibly vague, such that there is no objective way to know if you are guilty of a felony until you are in front of a jury listening to the verdict.  Some juries will may decide 6 cents over cost is gouging, others may decide its 50 cents.  But you won't know until you hear the jury's verdict.
2. In an effort to deal with the problem of having no objective standard in advance, a federal bureaucracy is created to set detailed lists of allowable prices, essentially subjecting retail gasoline sales to price controls.  The prices set by regulators will either be above the price the market would have set, meaning that the price-setting is a meaningless waste of money, or it will be less than that set by the market, such that gas shortages and lines will ensue. 

These are the only two choices.  You only have to look at past history with oil price controls, airline regulation, railroad regulation, wage and price controls, etc. to know just how bad this will end.

As Jeff Flake of Arizona, one of the brave 33 no votes, tells us: "None
of my colleagues actually believes this will reduce prices, and many
realize it will ultimately make shortages worse." Yet this is what
happens when petrified politicians allow mob rule to trump economic
common sense.

My company operates several retail gasoline outlets.  We at best break even and probably lose money on the gas, but we continue to sell it to bring people into our stores and because there are so few other local retailers (we are in very rural areas).  If this law passes, I am just not going to risk going to jail because some economically ignorant jury in the future can't figure out that gas is more expensive in rural areas or because some tragic and sympathetic figure decides to sue me.  I'm out.  And if someone observes that in the rural areas in which we operate, consumers will probably be worse off if we exit, then Congress should have thought of that before they passed this Marxist-populist legislation.

Up to now, it was for this and only this reason that I tended to vote Republican more than Democrat.  I held my nose and looked past family-values-based censorship and stupid drug law enforcement and regulation of sexual choices and xenophobic immigration policies and all the rest of the conservative baggage solely because Republicans tended to pass less stupid dumbshit socialist destructive economic regulation than the Democrats. 

I've always told people that as a libertarian for whom neither party is internally consistent, you just have to pick the issues you vote on.  If I was gay or needed frequent abortions or was Howard Stern, I would vote Democrat.  Trying to run a small business against a growing tidal wave of government taxes and regulations, I often vote Republican.   If every Republican was (were?  I always get that subjunctive thing mixed up) like Jeff Flake, I would continue to vote for them.  Right now, though, I may go back to sitting on my hands or vote for whatever goofy person the Libertarian Party has put forward.

I just can't figure out who is making all these imagined profits.  I don't know any retailers of gasoline who make any real money on gasoline sales.   For god sakes, typical gasoline margins are 5-12 cents a gallon, and the credit card processing fee alone at $3 a gallon uses up 9 cents of that!  And even the great Satan ExxonMobil, in their greatest most profitable quarter ever, made a profit of 9.7% of sales, barely above the US industrial average and well below that of most well-known consumer products companies.  If anyone is making profits they don't deserve, it is Hugo Chavez and the Saudi princes, but I don't think there is much we are going to do about that.  And, if one is concerned with pricing in emergencies, I have actually pleaded for gouging when the alternative was not being able to find gas at all.

If Congress really wants to do something about gas prices, it could consider:

• Reducing gas taxes, which take more our of a gallon of gas than any private entity makes in profit
• Opening up exploration in the ANWR and on the US east coast
• Making it easier to build new refining capacity in the US
• Restructuring rules to reduce the number of EPA-mandated unique local gasoline blends are required
• Remove the 40+ cent tariff on important ethanol, which federal rules effectively require in gasoline and which is in short supply domestically

By the way, in the past several weeks, Congress has rejected legislation on every one of these items in favor of this silly gouging legislation.  The WSJ offers this final thought:

If service stations are guilty of extortion because their prices are
rising more than their costs, then are we to have pricing police
preventing homeowners from selling their houses for two or three times
what they bought them for, or movie theaters from charging $6 for
popcorn that costs 25 cents to produce, or Barbra Streisand from
commanding a $1 million fee for a single performance? Now that
Republicans have surrendered to the political expediency of price
controls on big oil, they won't have much standing to stop Democrats
from imposing price ceilings on pharmaceutical drugs, school supplies,
medical equipment, and the like.

The feeding frenzy that the media has been salivating over for days can begin, now that Exxon-Mobil (XOM) as announced quarterly profits.  They reported net income of $8.4 billion on $88.98 billion in sales, for a net income margin of 9.4%.  Previously I observed that 9.4% for a peak profit in a cyclical industry is pretty average, and that over the last decade oil company profits have been below average for the whole of US industry.

In fact, most investors found these profits to be disappointing.  You know you have a fun CEO job when half the country is pounding on you for profits being too high and the other half are pounding on you for profits being too low.  The fact is that XOM and other large US oil companies don't get the benefit of rising oil prices that they did, say, 40 years ago.  US oil companies no longer own most of their overseas reserves since many of their foreign operations were nationalized by countries in the 1960s  (with the US government refusing to lift a finger to protect these US assets, one of the early instances of the no-blood-for-Exxon argument).  Today, XOM must pay near market rate for much of this crude, either in arms-length purchases or through royalty agreements stacked in the favor of local governments.

So what can you folks who are screaming about high gas prices and obscene oil company profits do?  Well, you could tax all these "windfall" profits away, like Ford and Carter did in the late 1970s.  Of course, you would still be paying $3 for gas, but the profits would go to the US Congress to spend, who I am sure will do an excellent job.  Probably could pay for another bridge in Alaska.  Or, you could somehow ban oil companies from making a profit, and drop gas prices by that 9.4%, or about 28 cents.  This would get you $2.72 gas instead of $3.00 gas.  Feel better?  Of course, in either scenario, oil companies would stop making any investments in refining or oil exploration.  Supplies would quickly begin to fall (I won't go into it now, but take my word for it that refineries and oil wells require constant reinvestment just to keep running at current capacity) and I would bet it would take less than a year for that 28 cents to be right back in gas prices due to shrinking supply.

OK, what else could we do?  Well, we could cap gas prices.  Which is a fabulous idea, as long as no one who drives a car has anything better to do than sit in lines all day.  Or, we could regulate oil like we do telephones and electric utilities.  Highly regulated electric utilities make a net income margin of 7.1%.  If we regulated oil companies down to 7.1%, then this would reduce gas prices from $3.00 to $2.93.  So a huge and inflexible and costly national regulatory structure would save about 7 cents a gallon.  Oh, and since for most of 10 years oil company profits have been less than 7.1%, then, a utility type regulatory environment would likely raise gas prices and profits in most years. And of course you would get all the business flexibility, creativity, and customer service currently demonstrated by your local electric and phone company.

So what government action should a irate gasoline customer demand?  Well, I know this answer goes against years of education that the role of government is to step in and take over when any little aspect of life is not quite what citizens want it to be, but the correct answer is "none".  Its like the line from Wargames:  "A strange game. The only winning move is not to play."

More on why gas prices are still well below their historic peaks here.

The media is just longing to make current gas prices into a crisis.  And you can already see them gearing up to bash oil companies for "record" profits (by the way, when reading the profit announcements, pay attention not to just total dollars but to profit margins, then read this).

Glenn Reynolds links this gas price chart this morning at Random Useless Data, showing that in real terms, gas prices are still below their peaks, and not at "all-time highs."

I took this one step further, based on the assumption that it isn't the price per gallon that matters for gas, but the price to drive a fixed mileage, say 100 miles.  Since average automobile fuel economy has continued to improve, in real terms we are far below the peak cost of gasoline.  Using this and this MPG data (for passenger cars) and the inflation adjusted gas prices here, I got this chart (1979 dollars)

By the way, just so you know my personal incentives, there are very few people out there who run a business whose fortunes are more sensitive to gas prices than my recreation business.  This will not be a very good summer for me, but if we leave the market alone to do its work, things will likely be better in 2007.  Intervention by Congress will pretty much assure that things will get worse.

It appears that at least one group of students in California get a school choice program:  Those with irritating but legally savvy parents willing to exploit special education programs  (Hat tip to Overlawyered)

In Sonoma County, for example, a family recently enrolled its child in an
out-of-state boarding school, then billed its district not only for tuition,
but airfare, car rental, hotel, cell phone calls, meals, tailoring, new
clothes, an iBook computer, stamps, tolls, gas and 13 future round-trip visits.
Total tab: $67,949.

How?  By having their child declared a special ed student and then shamelessly exploiting the legal process to force such settlements

Since 1993, the number of students in public special ed programs rose 27
percent, to 681,969 from 539,073. But special ed students placed in private
schools at public expense rose nearly five times faster  --  128 percent, to
15,926 from 6,994....

Gross described the law's
myriad requirements as "150 points of potential mistakes" for school districts.

Missing even one step can cause a district to lose its case if a
hearing officer finds that a student's education suffered as a result. 

"There isn't an attorney who can't find us making a mistake on one of
those things," Gross said.

So who is qualifying as "learning disabled"?   I bet you aren't thinking of this boy, who got special education funding from the state to go to a private boarding school:

"He was not offered the classes that I thought he needed," the mother
said. "If my son didn't get what he needed, my fear was that he would drop out
of school.'' 

She acknowledged he had never been a discipline problem. The hearing
records describe him as a "young adult who is likable, friendly, energetic and
highly motivated. He is physically active, plays lacrosse and soccer, and
enjoys wakeboarding and snowboarding."

"He's a model child," she said. "However, his frustration and anxiety were
so high that I could see that this is the type of person who, out of
frustration, turns to drugs or something that he shouldn't be doing."

And, uh, what learning disability does this describe, except perhaps the general category of "teenage boy?"  This is a clear case of the most irritating parents with the most aggressive lawyers getting over on the rest of us.  Read it all.  My guess is that most everyone will be irritated, perhaps most of all those with a child with a true learning disability that really needs special help.  And make sure not to miss the state funded "dolphin therapy".  (Update:  Last year we spent a fortune for our kids to swim with the dolphins in Hawaii.  Do you think I can charge that back to my local school district?)

For the past 6-months, gas station owners have been under attack by state regulators for their pricing practices just after Katrina, when fears of shut-in Gulf oil production and refining capacity led to a temporary spike in gas prices.  Gas station owners have tried to patiently explain about supply and demand and market dynamics, but to no avail, and are starting to settle:

Sunoco Inc. became the second oil company to
settle a price gouging lawsuit brought by New Jersey authorities,
agreeing to pay $325,000 but admitting no wrongdoing....

As part of a state probe into all oil companies doing business
in New Jersey, more than 100 violations were found at 400 gas
stations in the first week of September, the most common of which
were prices being raised more than once every 24 hours, and
stations showing different prices at the pump compared to their
posted prices, officials said.

Nobody is really getting fined hundreds of thousands of dollars for changing their prices more than once in a day.  Gasoline retailers are getting fined for being unliked, and because politicians find it a populist boon to their reelection to wack on oil companies every once in a while.  One of the reasons that gasoline retailers get fined for petty crap like this is that they are the only retail industry that I know of that actually posts their prices so you can see them on the street when you drive by.  A while back we also highlighted this funny bit of high-handedness in Illinois:

Illinois State Attorney General Lisa Madigan asked 18
operators whose prices jumped significantly after Hurricane Katrina to
donate $1,000 to the American Red Cross or risk a potential consumer
fraud lawsuit, reports the Chicago Tribune.

And you just knew enemy-of-Antarctica and Aspiring Governor Eliot Spitzer couldn't miss out on the populist fun:

Illinois isn't the only state to go after retailers for
price gouging after Hurricane Katrina; New York Attorney General Eliot
Spitzer fined 15 operators $10,000 for pumping up their prices.

Anyway, I guess we still haven't gotten to the "consistency" thing I mentioned in the title.  Having been at the receiving end of such ill-conceived and populist price-gouging and anti-trust lawsuits, what is the gas station trade group doing this week?  Why, appearing in front of Congress to accuse someone else of price-gouging.  In this case, they have dragged credit card companies in front of Congress to demand action on interchange fees:

All consumers pay more at the store and at the pump" as
a result of high interchange rates, added Mierzwinski. He also noted
that "legally suspect" practices have led to market power of the card
associations, and that banks engage in a variety of deceptive practices
to steer customers toward higher transaction fees, such as charging
customers who use PIN debit, as opposed to signature-based debit, which
is much less secure yet carries a higher transaction fee to the
retailer.

Of course, he is all for free markets, as he says with this pious piece of BS:

I believe in the light of day and I believe in free
markets," noted Armour, in explaining what retailers are--and
aren't--seeking with regard to interchange. He stressed that retailers
are not requesting price caps and price controls, but rather a better
understanding of why U.S. interchange rates are so high.

Right.  Then why are we dragging these people in front of Congress, except that you want to use the coercive power of government to change their business practices?  If you have Ralph Nader's PIRG behind you, then you are looking to weild the government's hammer to achieve something you couldn't achieve through free, voluntary association and negotiation.

As a retailer, credit card companies piss me off too, but I don't run to Uncle Sam for relief.  I just don't accept certain types of cards, like ATM cards with PIN verification, since they cost a fortune in fees.   And in a lot of locations, I don't accept cards at all.  We have put ATM's onsite in a lot of places, reasoning that if consumers want debit card convinience, they can pay the fees by using the ATM machine and then paying us in cash.

Via Instapundit, comes this story of the Pennsylvania legislature declaring vendetta on local media:

Team 4 has a voicemail recording of Democratic State Rep. Tim Solobay,
of Canonsburg, saying that state lawmakers are preparing an all-out
assault on the media. Solobay hints that the first volley is a bill
that would start charging sales tax on all advertising in Pennsylvania.

Solobay left the voicemail message for editor Cody Knotts, who works at The Weekly Recorder, in Claysville, Washington County.

In
the message, Solobay says, "But you know, for the most part, the
majority of the legislative feeling about the media right now is if
there's something they can do to screw them, you can imagine it may
occur."

Apparently, the legislature is pissed the media embarrassed them last year over a pay raise:

Like many newspaper editors in Pennsylvania, Knotts wrote prolifically
last year about the 16 percent pay raise that lawmakers took, and then
gave back under heavy media pressure.

Then, last month, he
learned of a bill in Harrisburg that would hit the media hard --
lifting the sales tax exemption on advertising, along with some other
services.

If true, this is clearly a disgusting abuse of power, but probably only unique because someone was willing to actually admit the tit for tat.

However, I am left with mixed feelings.  The media generally cheer-leads every tax increase, and is the first to join the bandwagon of slamming corporate profits and poo-pooing corporate "fat-cats whining about tax increases that cut into their huge profits" - you know the drill.

So I am less than sympathetic when I hear a media guy saying this:

Knotts said the plan would cause some businesses to stop advertising.

"We
don't have a big profit margin," said Knotts. "We're sitting at around
3 or 4 percent, maybe, and it's going to cut that down to where we're
losing money and then how can we stay in business."

Media executives in Pennsylvania, including those at WTAE-TV, have been lobbying lawmakers to kill the advertising tax.

Guess what - my profit margins in camping are thin as well, and my customers get hit not only with the 6-8% sales tax you are probably facing but also lodging taxes as high as 14%.  I have never ever seen a media outlet in any city or state in which we operate oppose a lodging tax increase.  Or take oil companies, who media companies revel in slamming.  Oil companies make average margins in the 5-8% range, but get hit with sales and gas taxes as high as 30% or more.  Or what about Wal-mart?  Wal-mart has margins in the 3-4% range - have these media companies ever opposed sales taxes at Wal-mart? (hah!)  So after supporting every tax you saw come along and slamming every other business as greedy profiteers, excuse me if I don't cry many tears when you get hoist on your own petard.

Nearly every day brings new evidence of what a threat to free speech campaign finance "reform" laws have become.  I found this bit from Brian Anderson very depressing, but not surprising:

Consider what's going on in Washington State as an early warning.
Early in 2005, the Democrat-controlled legislature passed"”and
Democratic governor Christine Gregoire signed"”a bill boosting the
state's gasoline tax a whopping 9.5 cents per gallon over the next four
years, supposedly to fund transportation projects. Thinking that their
taxes were already plenty high... some citizens organized an initiative campaign,
as Washington law allows, to junk the new levy: No New Gas Tax.

Two popular conservative talk radio hosts, Kirby Wilbur and John
Carlson, explained why the gas tax was bad news and urged listeners to
sign the 225,000 petitions necessary to get the rollback initiative on
the November ballot, though they played no official role in the
campaign and regularly featured on their shows defenders as well as
opponents of the tax hike. With the hosts' help, the petition drive got
almost twice the needed signatures, but the ballot initiative, strongly
opposed by labor unions, the state's liberal media, environmental
groups, and other powerful interests, narrowly lost.

Meantime, however, a group of pro-tax politicians sued No New Gas
Tax, arguing that Wilbur's and Carlson's on-air commentaries were
"in-kind contributions" and that the anti-tax campaign had failed to
report them to the proper state authorities. The suit sought to stop
NNGT from accepting any more of these "contributions" until it
disclosed their worth"”though how the initiative's organizers could
control media discussions or calculate their monetary value remained
unclear. The complaint also socked NNGT with civil penalties,
attorneys' fees and costs, and other damages...

The real target of the suit was clearly Wilbur and Carlson, or, more
accurately, their corporate employer, Fisher Communications. If NNGT received the "contributions," that meant Fisher had sent
them by broadcasting Wilbur's and Carlson's support for the initiative.
Washington law limits contributions in the last three weeks of a
political campaign to $5,000. Depending on how one measured the dollar
worth of on-air "contributions," Fisher could thus face big fines and
criminal sanctions if it let Wilbur and Carlson keep talking about the
gas tax. "Thankfully, Fisher assured us that we could keep
talking about the subject on the air, and we did," Wilbur says. The
judge ruled in favor of the pro-tax pols, though he finessed the $5,000
limitation problem by ruling only on the "contributions" that occurred
prior to the campaign's last three weeks.

I find this offensive.  And expect similar "in-kind" donation logic to be coming to a blog near you.  And while Democrats may short-sightedly cheer as long as this logic is applied against conservative talk radio, this "in-kind" logic is a Pandora's Box that will be very hard to close.  For example, lets say my wife's reading club organizes 200 women to go out to a 3-hour rally to support Hillary Clinton.  In doing so, the club just mobilized 600 "man"-hours for Ms. Clinton, which at $10 an hour, which is a low value for a professional person's time, is worth $6000.  Have they violated the law?  Or, lets say a lawyer who normally bills $300 an hour spends all day Saturday and Sunday marching in a rally for George Bush.  Is he over the limit?

We are in the absolutely terrifying and historically unprecedented position of having had Congress pass a law that no citizen (except a few media people and a few government licensed political groups) can criticize a member of Congress by name within 60 days of an election.  And the Supreme Court signed off on this travesty!