Against Chi Chun-chieh (紀駿傑)

A professor at National Dong Hwa University, within a department for "Ethnic Relations & Cultures", professor Chi Chun-chieh (紀駿傑) has a guest editorial on the subject of oil prices for the Liberty Times translated in today's Taipei Times. Let's begin...

Professor Chi opens his piece by posing the question:

"What is a reasonable price to pay for a liter of gasoline?"

Immediately, the remainder of the article is unnecessary - for the three most obvious answers would be as follows...

1. First, considering the question in abstraction from ethical context: a "reasonable price" would be the cheapest possible price the consumer could get. 
2. Second, to frame the question within the Statist underpinnings of the environmental movement: a "reasonable price" would be the most expensive price that a democratic government deemed would not jeopardize its chances of re-election.
3. Third, to pose the question with respect to an ethics of freedom: a "reasonable price" would be whatever price would emerge in a free market, devoid of subsidies, the inflationary effects of monetary monopolies and other distortions.  

The point of professor Chi's editorial is to advocate the second option...

"At the rate at which we are using petroleum, it is a non-renewable resource. In fact, it is estimated that there are only enough usable oil reserves around the world to last for another 50 years or so. From this point of view alone, when you consider that the price of a liter of gasoline is only about twice what it costs to buy a liter of bottled water from a supermarket, it can be seen that the price of oil is really too low."

What should always be borne in mind about the peak oil argument is its age. It has been repeated again and again since 1973 onwards and always with differing projections as to how many years of profitable oil extraction lie ahead. This shifting of the goal posts has been going on now for 39 years, and yet still there are people (e.g. professor Chi) who reiterate it once again without even a token sense of contrition for all those long-since falsified projections over the years. Could this perhaps be due to simple ignorance on professor Chi's part?

Look at this...

"The environmental issue that is causing the most concern these days is global warming and the biggest cause of global warming is the combustion of oil, coal and other fossil fuels."

Actually, water vapour is the most significant of all the greenhouse gases; the relevant AGW argument is that anthropogenic carbon dioxide emissions may indirectly affect the amount of water vapour in the atmosphere over time, particularly via positive feedback mechanisms - wherein there is still uncertainty and debate (despite all the ridiculous, 15th century-style denunciation of "denialists").

Does the publication of professor Chi's claim, though both empirically and theoretically wrong (and uncontroversially so), in a national newspaper indicate that the claim itself is common? In a western country this question would be natural, but in Taiwan, with the culturally ingrained deference to "authority" and other psychological habits for avoiding conflict and argument, it may be that professor Chi will be allowed to simply jog on without students confronting him with the fact that he is simply wrong. Yet the professor's errors do not stop there...

"Oil prices have been kept too low for too long, failing to take into account the cost of production and the negative results of oil use."

Oil prices are, in fact, affected by the costs of production (i.e. extraction) - and this is true despite the existence of subsidies. It would be impossible for oil prices not to be affected by production costs.

"In Germany, wind turbines can be seen all over the country and what makes this possible is that the private individuals, groups, villages and businesses that build these turbines can conveniently sell the energy they generate to electricity companies at a reasonable price."

Subsidies. The price at which wind-generated electricity is sold in Germany is "reasonable" because it is subsidised by the German State. To recast that point in ethical terms: the price is "reasonable" because the purchaser is armed with stolen money.

"However, in Taiwan, where electricity distribution is a monopoly, private investors are not keen to invest in wind generators and so the sector has not flourished."

That may be so, but even were Taipower simply one electricity company among many others in Taiwan, the basic facts that wind is intermittent in nature and that a lot of wind turbines require a lot of land would likely drive up the costs of producing electricity from wind to the point that wind turbines would not offer an economically viable supply of electricity at the industrial scale of many tens of TW hours demanded by the market (according to the government's own figures, annual electricity consumption in Taiwan is approaching the 250 TW hour mark).

"The main reason why the US launched its widely criticized war against Iraq was to stabilize its sources of cheap oil."

Rubbish.

The U.S. could simply have arranged for the lifting of oil export sanctions on Saddam Hussein's regime - that would have provided the oil without the huge expense of the invasion and subsequent occupation. And in any case, Iraq's supply of oil to the U.S. - even today under the rule of a democratically elected government - is marginal. Where the Iraqi supply of crude oil to the U.S. in September 2011 was only 403, 000 barrels per day, the largest exporter of oil to the U.S. - Canada - exported nearly six times that amount at 2, 324, 000 barrels per day.

"In the long term, however, we must look at the issues from the standpoints of the environment and future generations when we consider what is a reasonable price to pay for oil."

The emissions of carbon dioxide from Taiwan are approximately 1% of global emissions. Last year, the global emissions figure grew by 3%. Reducing use of oil in Taiwan by increasing the prices of oil-derived products such as gasoline will therefore accomplish absolutely nothing in terms of global warming. All such policies with that objective would be utterly futile. What policies to raise the price of gasoline and other oil-derived products would accomplish however, is price inflation - which will affect the poorest in society the worst.

Instead of asking the question "what is a reasonable price to pay for a liter of gasoline?", perhaps professor Chi would be better served by asking what a "reasonable price" would be for a remedial tutor... or what would be a "reasonable price" for google lessons. Are there more professors like Chi hanging around in Taiwan's universities? Perhaps we could have an auction?