Deinonychus antirrhopus

In The Mail

Well, not quite in the mail as it is still waiting to ship, but I'm looking forward to reading Bayesian Econometrics. This book covers how to actually do bayesian econometric analysis whereas many books discuss the theory of bayesian econometrics (for example Dale Poirier's text).

Kevin Drum on Why Democrats Aren't Winning

I think Kevin sums it up pretty nicley when he writes,

This is one reason I haven't blogged much about Roberts. The liberal blogosphere has made opposition to Roberts practically a litmus test of "getting it," of understanding that liberals can play every bit as hard as conservatives. But you know what? It's the netroots that doesn't get it. They think unyielding opposition to Roberts shows how tough we are, but what most Americans see — including all those moderates whose votes we need — is a guy who seems conservative, but also mild mannered, intelligent, and well qualified. It's true that he took nonresponsiveness to whole new levels during his confirmation hearings, but let's face it: that particular Kabuki dance started after Robert Bork flamed out spectactularly for being a little too forthcoming to Senate questioners. Roberts just refined it a bit.

The fact is, by every previous standard of Supreme Court nominees, Roberts is well qualified for his position. Is he conservative? Of course he is. But that's because the American public elected a conservative president and a conservative Senate. If we want better nominees, that's what needs to change.

And the way to change that is to change the minds of centrist voters who are tiring of George Bush and the Republican party but still wary of Democrats. They may say they're fed up with Bush, but when it comes time to pull the lever on election day they also need to feel like it's safe to vote for a Democrat. Right now they still don't.

When you have people like Dean, Kos, and other far Lefties running around screaming like fools they aren't going to get very far. Off the cuff comments about massive regulation efforts, that they know what is good for the rest of us, and so forth, it is hard to se myself ever trusting the Democrats any time in the near future.

Gasoline, Oil and Natural Gas Prices Surge

The drivers appear to be the shut down of 11 refineries along the gulf coast, the decrease in crude oil stockpiles. As for natural gas the increase in prices is due to the strengthening of a tropcial storm in the Carribean.

Eleven refineries along the Gulf of Mexico are closed because of Rita and Katrina, which struck last month. Offshore oil output in the Gulf remains shut. Prices extended gains after the Energy Department reported that gasoline supplies rose 4.4 million barrels to 199.8 million in the week ended Sept. 23. Crude-oil stockpiles fell more than expected, the report showed.

...

Natural gas surged to a record on concern that tropical weather may cut production that has been crippled by two hurricanes in the last month. The U.S. National Hurricane Center said today that a ``vigorous'' tropical system in the Caribbean Sea was strengthening. So-called tropical waves can mark the beginnings of a hurricane.

According to the Department of Energy, 7 refineries accounting for 1.7 million barrels per day of refinery capacity were in the directly in the path of the hurricane and damage to these facilities and the lack of electricity are keeping others offline. In short, about 15% of the U.S. refining capacity is now offline (which speaks rather well of my shirt cuff calculations). The following graphic gives you an idea of the magnitude of what we are talking about,

According the Deptarment of Energy's daily report a large number of natural gas processing facilities are offline.

Over a dozen gas processing plants have confirmed that they are off-line owing either to flooding, lack of supplies, an inability to move stored liquids, or safety precautions (see September 26 Report).

The combined capacity of the plants that are offline is around 10 billion cubic feet per day. Definitely not a good thing for those who heat their homes with natural gas and with winter coming on fast.

Kevin Drum on Bush and Oil

Kevin has a post on a recent speech by Bush where Bush talked about oil. Needless to say Kevin takes pretty much a dim view of the entire speech from reading his post. Here are the sections that Kevin took issue with,

Bush called on Americans to "pitch in" and conserve gas by reducing non-essential travel, teaming up in carpools and using mass transit.

....Bush said the administration is also continuing to waive rules that require special gasoline and diesel blends in some parts of the country in an effort to cut pollution.

...."These storms show that we need additional capacity in America to be able to meet the needs of the American people," Bush said. He said he would ask Congress to look at expediting the ability of the country's refiners to expand or build new refineries.

He said alternative sources of energy needed to be developed, too. "That's why I believe so strongly in nuclear power," Bush said.

I sometimes get the feeling that Kevin's dislike for Bush has gotten in the way of his ability to think clearly. For example, Kevin's first complaint is that Bush hasn't implemented a conservation plan due to Katrina and Rita. Granted simply asking people to conserve gasoline probably isn't going to do much, but then again trying to get a government plan that...you know...actually works in place would probably happen right about the time that things settled down and got back to normal. For example, during the California electricity crisis there was a program implemented in the summer of 2001 called the 20/20 program. The idea was to give people 20% off their bill if they reduced consumption by 20%. Sounds like a great idea, except for the fact that the California electricity market was pretty much back to normal due to the flexible price caps.

Kevin's next complaint is about the waiving of the requirements for gasoline blends. This is actually a good thing, IMO. Kevin's complaint about the enviornment is completely specious in that what is really important is not that there is a blend of gasoline that is bad for the environment, but that there is simply one blend nation wide. That is, right now all the various blends (click here to see a map) create smaller markets where refineries producing one type of blend cannot quickly (nor cheaply) switch over to another blend. This adds to the price volatility for gasoline. Picking one blend for the entire country would create a national market vs. smaller local markets. This would help reduce price volatility and reduce the market power of oil refiners. Note, that it isn't which blend that is chosen, more that there is a nation wide standard.

Kevin's complaint about nuclear power is also rather curious. Kevin has blogged repeatedly on peak oil, and clearly reading just a couple of these posts will indicate that Kevin believes in peak oil. So, what does he think we'll use as an energy source when there is no more oil (at a cheap price or in sufficient quantities for automobiles)? Beats me, but apparently he doesn't think it will be nuclear. Maybe he'll build the first wood burning car or something. So while Kevin is right that expanding the amount of nuclear electricity generation will likely have little or no impact on oil consumption, refining, etc. in the short run it could be one of the alternatives as we approach the peak in oil production and the price starts to rise.

Further, I think Kevin's comment here,

...an almost palpable eagerness to use any excuse to strip away environmental rules the energy industry dislikes....

ir rather naive. My guess is that the oil/gasoline industry likes things just the way they are. After all their profits are skyrocketing as prices climb. Loosening up environmental regulations might very well result in competition from new entrants. This will drive down the price and profits.

But lest people think I always disagree with Kevin, his comment about expanding and implementing new tax breaks for the oil industry is quite correct. The oil industry has skyrocketing profits, prices are high and look like they'll stay there. Sure, the last two hurricanes caused some damage, but hey, that is what the pricing mechanism is for, passing along those costs that can be passed along. Extending tax breaks is merely corporate welfare and/or an attempt to keep consumers happy by shifting the burden of the price increases from consumers to tax payers.

I have hope that someday Kevin will actually post something that deals with energy economics that is actually based on sound reasoning and not progressive fantasy.

Follow Up to Clinton and Deficits

Several days ago I posted that Clinton had engaged in a cheap shot at Bush regarding current borrowing to cover for government shortfalls in revenues. In comments Tangoman has argued my charcterization of Clinton's comments as false was inaccurate. He has also posted on this over at Gene Expression.

There are several problems with Tangoman's post, IMO. First he takes Clinton's genral statement about borrowing during a time of military conflict (i.e. borrowing during any and all armed conflicts) and then focuses solely on my discussion of borrowing during WWII. Based on the information Tangoman has provided WWII is probably not the best example. The problem is that there is little or no data on foreign held debt from that time period. Thanks though to Victor at Dead Parrot Society who has pointed out in comments (see the original post linked above) that the U.S. did borrow from foreign investors during the time of the Vietnam conflict. Further, this is also true for the first Iraq war as well.

So, we now have proof that Cliton's statement is demonstrably false. This is, I believe, why Tangoman shifted gears and decided to focus on the public debt as a percentage of GDP and noting that if declined. The problem here though is that while public debt as a percentage of GDP declined, the U.S. also ran deficits in just about every years since the end of WWII save for 12 (IIRC) and no, those 12 do not coincide with the Vietnam war. In short, the U.S. was "borrowing money from somewhere else" to "finance" the Vietnam war. The reason the focus simply on the public debt as a percentage of GDP is misleading is that GDP can grow faster than the debt which will result in a decline public debt as a percentage of GDP.

Further, there was a change in the way the government works in that excess Social Security and Medicare revenues have to be held in government bonds. This by itself will tend to increase the public debt as well. In looking at tables of the public debt the amount held by the government has also risen fairly substantially compared to several decades ago. Hence the public debt as a percentage of GDP, by itself, is not a good measure.

The financing of the Iraq War is different from that of the Vietnam War, in that while we increased our sale of debt instruments abroad during the Vietnam period, we were also growing our economy at such a rate that the added debt was actually diminishing our debt burden as a percentage of our GDP. President Bush's mismanagement of our treasury has resulted in increased borrowing adding to our debt burden as a percentage of our GDP while at the same time decreasing the share of individual tax collections as a percentage of GDP.

This criticism is also somewhat misleading as well. The first problem is that economic growth rates are lower for the past 25 years or so than during the Vietnam era. Why this is, is one of the big questions in macroeconomics. Blaming it on Bush would be stupid. Further, a recession started shortly after Bush took office (about a month and blaming this on Bush is stupid as well). So the prospect of budget surpluses was pretty much a goner at that point. Now the tax cuts and spending by Bush are both classic Keynesian stimulus responses to a recession...something the Democrats (like Bill Clinton) typically advocate. So blaming the budget deficits in the first couple of years on Bush is just political propaganda, IMO. Now, the recession is over and spending is still high, and going to go much much higher. Blaming those on Bush is legitimate, but this manner of blaming them is also idiotic.

That capital markets have expanded to include many other countries is, IMO, a good thing. It is good in that it means there are more sources of money for those countries that need to borrow. The idea of where the U.S. borrows from is irrelevant. Hence Clinton's comment is nothing other than pure political propaganda designed to make Bush look bad and the Democrats (probably his wife who will likely run for President in 2008) look good, or at least like a preferable alternative. What makes it even more disheartening is that I think Clinton could have made this criticism of Bush and his policies without resorting to this nonsensical (jingoistic?) fabrication. Instead, the Great Fabricator has to go for the lie instead of the truth even when the truth would have worked. In any event, I consider this issue completely resolved and I don't plan on revisiting further...oh save to note that, again thanks to Victor, there was borrowing from Holland...during the Revolutionary War, you know the war that gave birth to this country.

Why Are Creationists Always So Illogical?

Why Are Creationists Always So Illogical?

Well, I guess I really don't know that every Creationists is always illogical, but I'll be damned if they don't use lots of logical fallcies in their writings. Case in point Joe Carter from Evangelical Outpost. In his Apologetics series his last post opens up with two paragraphs that contain numerous logicall fallacies.

As we near the end of this series, I want to ensure that the purpose is properly understood. My aim is not to “prove” the existence of God, for that would be a laughably presumptuous task. And even if I were able to do so, God doesn’t need my help in showing that he exist. After all, there has never existed a human that, if they would be honest with themselves, could truly doubt that God exists.

Some people may find such a claim rude and presumptuous. It does seem to imply that that I know what all mankind should know. But I think that there are indeed certain things that appear, at least on the most basic level, to be rather uncontestable and incapable of being truly denied by any human. The set of such propositions is relatively small and there are only three that I would claim to know for certain: “I exist”; “there is an objective standard of good”; and “God exists.” The last point may still be doubted but, as I hope to show, to do so requires denying the second claim as well. For if God does not exist, we cannot be “good.”*

Lets see...we have

• The No True Scotsman fallacy.
• Poisoning the Well.
• Hasty generalization.
• Unrepresentative sample.
• Question begging.

Now that is an impressive list of logical fallacies. In some cases we even have two fallacies in the same sentence. For example

After all, there has never existed a human that, if they would be honest with themselves, could truly doubt that God exists.

This is both the "No True Scotsman" and "Poisoning the Well". The "No True Scotsman" applies because if somebody says, "Oh, I'm quite honest with myself and I have my doubts about God's existence," then Joe Carter can respond with, "Well I guess you aren't truely honest with yourself." A clever debating tactic when one can get away with it, but logically very suspect. The Poisoning the Well aspect renders it very difficult to go and use arguments from people who question the existence of God. Such as Dawkins. Joe Carter can always reply to any criticism relying on an argument put forward by Dawkins with, "Oh, yeah Dawkins said that too and he denies the existence of God, so we all know he is delusional." Further, Joe could even extend it by asking, "Are you as delusional as Dawkins?"

Now, I'm not going to highlight every logical fallacy in that post (that would take way too long). My question is why do creationist writings always seem to contain so darned many logical fallacies? Are they just unaware of them? Do they use them on purpose? Is it something having to do with a belief in God that leads them to make statements that they see as being perfectly valid, but in reality are logical fallacies?

Unbridled Creationist Nonsense

It has been awhile since I've done an anti-creationist post so here goes.

This latest round of bashing crationism comes from the Evangelical Outpost, and in particular a post about the Anthropic Principle (fine-tuning if cosmological constants) and its implication for design/naturalism. Yeah, it is an older post, but what the heck, since creationists never get tired of trotting it out, why should I get tired of rebutting it (well that and shooting fish in a barrel is fun sometimes).

The post starts off by noting that the probability that the universe could be fine tuned (lets call this F for either fine tuned or life friendly, since fine tuning basically implies it is life friendly...for our type of life anyways) is very small. That is,

P(F) << 1.

In the above, P stands for probability, F for life friendly, and << means much less than (or really, really small).

However, those who have looked at this issue from a rigorous probabilisic stand point have noted something interesting. But first a little bit more notation (which I'm basically taking from Ikeda and Jefferys). The first is,

N: Naturalism. That is, the universe is governed by and came about by natural processes. Thus, ~N is supernaturalism.

L: Life is present in the universe. Thus, ~L is a sterile universe.

Now, many who deal with the anthropic principle have noted that it is a logical necessity that given life is present in the universe and naturalism, the universe must be life friendly. That is,

P(F|N&L) = 1.

This should be totally obvious, but I guess not.

There is little dispute that probability of this series of “coincidences” occurring is infinitesimally small. Still, it is often argued that since we exist then the probability must be 1.

What Joe Carter is arguing here is the following: since there is life then the probability of fine tuning is 1. That is,

P(F|L) = 1.

This is not the case. It is only the case when you condition on both life, L, and naturalism, N. So right off the bat the article is wrong.

Next is the faulty analogy,

Suppose you are dragged before a firing squad of 100 trained marksmen, all of them with rifles aimed at your heart, to be executed. The command is given; you hear the deafening sound of the guns. And you observe that you are still alive, that all of the 100 marksmen missed! Now while it is true that

5. You should not be surprised that you do not observe that you are dead,

nonetheless it is equally true that

6. You should be surprised that you do observe that you are alive.

Since the firing squad's missing you altogether is extremely improbable, the surprise expressed in (6) is wholly appropriate, though you are not surprised that you do not observe that you are dead, since if you were dead you could not observe it. Similarly, while we should not be surprised that we do not observe features of the universe which are incompatible with our existence, it is nevertheless true that

7. We should be surprised that we do observe features of the universe which are compatible with our existence,

in view of the enormous improbability that the universe should possess such features.

Now with the firing squad situation it is not the case that I am conditioning on being alive, but that I am alive. That is

P(L|100 expert marksman firing squad) << 1.

This is a different probabilistic statement than,

P(F|N&L) = 1.

Or here is another way to look at. Joe Carter is a fan of William Dembski's explanatory filter. Now, if we assume naturalism, and that there is a life, then it is a logical necessity that the universe is life friendly. That is L & N => F. Thus, using Dembski, we'd conclude that P(F|N&L) = 1. But, since this is inconvenient we'll actually ignore it.

Another problem I find with this line of thinking is that it implies that the probability of a stochastically independent event is determined by the existence of an observer.

Ding, ding, ding. Hidden assumption here. Independence in probability means the following,

P(A&B) = P(A)P(B).

With regards to the Anthropic Principle that would mean the following,

P(F|N&L) = P(F).

In other words, by assuming independence Joe Carter is assuming away the entire problem. Further, it is completely illogical. Remember we are assuming life and naturalism, so it must be the case that the universe is life friendly.

For example, imagine a universe that is exactly like ours yet contains no carbon-based life forms. We could determine the factors required for such an existence and calculate the probability of such constants appearing as they do.

Sure. And Probability P(F|N & ~L) be different than 1. And yes, P(F) << 1. So what? Nobody is denying P(F) << 1. Nobody.

The implication made by opponents of fine-tuning, though, is that the probability suddenly becomes 1 by the mere addition of a human observer. Such a conclusion is exceedingly absurd.

No. As I've noted nobody is trying to argue that P(F) = 1 because there is a human observer. That is patently absurd.

Basically all this boils down to is not understanding conditional probability.

Most critics of fine-tuning have begun to recognize that this approach is insufficient. Faced with scientific evidence that undermines their agnostic assumptions, they turn to metaphysical speculation in the form of the “many worlds” theory.

Two issues here. The first is, "No". Critics who have used the probability argument are not turning to the many-worlds hypothesis. I know Ikeda and Jeffery's have looked at the implication of their probability approach to the many-worlds hypothesis, but their result stands irrespective of the many-worlds hypothesis. Mark Perakh has also looked at the Anthropic Principle from a Probabilistic view point and come to similar conclusions. He has not turned to the many-worlds hypothesis (at least that I know of). Further, a list of those who first used the probabilistic approach then shifted gears abandoning it and turning to the many-worlds hypothesis would be nice, don't ya think? In other words, this is an unsupported statement, a typical creationist ploy.

As I have stated ad nauesum, the uses of such an argument are not to prove that God exists but to highlight the metaphysical and illogical knots that agnostically inclined will twist themselves into in order to avoid having to admit that the existence of God is more reasonable and probable than its alternative.

The only logical knots I see are on the part of Joe Carter. Not surprising, as this seems to be typical of creationists when it comes to probabilistic arguments. The creationist love their The Sheer Improbability of It All argument, and would hate to give it up.

Cato Institute: Budget Disaster Looming

The Cato Institute has the following on their front page,

Budget Disaster Looming At a briefing last week, House Majority Leader Tom DeLay declared an "ongoing victory" against bloated federal spending. Congress passed $62 billion of spending for Hurricane Katrina relief that will push the deficit back up to the $400 billion range. When asked whether Katrina relief should be offset with budget savings elsewhere, DeLay said "bring me the offsets, I'll be glad to do it."

Cato Institute scholars Steve Slivinski and Chris Edwards have the offsets that the majority leader is looking for. They have compiled $62 billion in spending cuts that would offset Katrina relief in the short-term and create savings to reduce the federal deficit over the long-term. (Graphic)

The graphic lists the cuts and the rationale for each cut. The cuts are targeted at business subsidies, welfare for the well-to-do such as farm subsidies, and activities that should be funded by states and the private sector. The cuts would not affect programs for the poor, and thus could get support from reform-minded Democrats. Many of the cuts were proposed, but not realized, by House Republicans in the 1990s.

Slivinski and Edwards think that Mr. DeLay needs to sit down and reexamine the federal budget. DeLay said "after 11 years of Republican majority we've pared it down pretty good." Yet total federal spending, aside from interest, has increased 79 percent since 1995 -- much greater than the inflationary increase in prices since 1995 of 28 percent. The budget has certainly not been "pared down" by the Republicans.

In a piece for Friday's Newsday, Slivinski writes: "There's no reason why money spent on natural-disaster relief should not compete with spending in other areas of government. If the relief spending is truly more necessary than other programs in the budget, then those less essential programs should be pared back to make room for it. Congress does not seem concerned about how the federal government (read: taxpayers) is going to pay for any of this. Yet now is exactly the time to figure that out. Charity does require sacrifice, even from big-spending politicians using other people's money for charitable purposes."

Chris Edwards weighed-in on Monday, with a piece in the Washington Times: "Today the GOP needs to rally behind new fiscal leaders and a new blueprint for reform, akin to the 1994 Contract with America. House conservatives have a new plan in the "Family Budget Protection Act" and they have new leaders such as Rep. Jeff Flake of Arizona. What they need is for party leaders, such as Mr. DeLay, to embrace the new generation of reformers and put their ideas front and center in Republican policymaking. Republicans need to look back to the 1990s to appreciate that budget cuts can be a winning strategy. And they need to look forward to realize complacency is no longer an option. Huge Katrina expenses, continued Iraq spending and rising entitlement costs means now is the time to launch a new Republican budget revolution."

This further highlights that the era of big government is here to stay and those ushering it in are the Republicans. It should be clear that Republicans in general are no longer interested in reducing the size of government. There is quite a bit of fat to cut in the federal budget. Add on top of this huge spending programs like the Medicare Prescription Drug Plan and it is obvious that Bush and Republicans do not have a problem expanding the size of government to unprecedented levels.

I Guess It Depends On What Is Is

Now I have to wonder about the accuracy of this,

On the US budget, Clinton warned that the federal deficit may be coming untenable, driven by foreign wars, the post-hurricane recovery programme and tax cuts that benefitted just the richest one percent of the US population, himself included.

"What Americans need to understand is that ... every single day of the year, our government goes into the market and borrows money from other countries to finance Iraq,
Afghanistan, Katrina, and our tax cuts," he said.

"We have never done this before. Never in the history of our republic have we ever financed a conflict, military conflict, by borrowing money from somewhere else."--emphasis added

During World War II, the U.S. debt went to over 100% of GDP. According the Bureau of Economic Analysis GDP in 1945 was $223.1 billion. The national debt at that time was $258.7 billion. That is, the U.S. public debt was just under 116% of GDP. Compare this to today when the public debt is about 64.7% of GDP. Now don't get me wrong the run up in debt and the future with endless deficits doesn't look good, but Clinton is...well it looks like he is making crap up. I suppose it is possible that all the debt incurred during WWII was sold only to the U.S. public. Frankly I doubt it since U.S. debt has taken two forms. There are marketable and non-marketable bonds. Non-marketable bonds are sold under pretty strict conditions, but the marketable bonds are sold without any conditions. So it is likely that countries like England, Canada, and others, and the individuals in those countries were buying U.S. bonds just like they do now.

There is reason to point out that the deficits are problematic, and I think Bush needs to take an axe to the budget (although I doubt he has the ability or the courage to do it), but this kind of...well lie just goes to show that Clinton sure can lie really well. I bet he didn't blink or stumble over that one at all. Reagan might have been the Great Communicator, but Clinton is the Great Fabricator.

More on Hurricanes and Global Warming

In the comments to my post on the misleading headlines trying to tie Anthropogenic Global Warming to Hurricanes, there was a comment I wanted to address. Dean over at Today's Democracy has a post looking at data on hurricanes over time. He even has a nifty chart.

A quick glance would make it look like the claim that global warming is responsible for hurricanes is problematic. After all, there are fewer storms right? Well, yeah, but that is what this research also noted. The research has claimed that while the total number of storms has declined (slightly), the severity of the storms has increased...or more accurately that the number of severe storms has increased. So this isn't inconsistent with Dean's data.

Another problem with Dean's data is that it looks at only those hurricane's that strike the U.S. while the research in question looks at hurricane's on a global scale (yes, I know hurricanes in other parts of the world are called typhoons and cyclones), but apparently what is actually going on is pretty much the same. So it is problematic to use a subset of the global data to make statements at the global level.

Now all that being said, there are still some reasons to doubt that Katrina is a product of global warming. First, hurricane frequency and severeity is cyclical. Apparently back in the 1920's hurricanes were pretty bad. Was that global warming too? I have read that hurricane's come in a 20 to 30 year cycle as well. Could that be part of what is going on? One of the things I have noticed about scientists engaged in global warming research is that they seem to love simple linear trend statistical models. The problem is that if the data you are looking at is cyclical and you don't have a long enough time span you could get a spurious trend (that is fancy talk for finding a trend that doesn't exist). The following pictures demonstrates the problem.

Only with a long enough time series can you spot this problem unless you have soem reason before hand to suspect a cycle. Further, cycles may not be nice and periodic like the ones in the graph. El Nino is cyclic, but its periodicity is not well behaved like the sine function above. Same thing with the economy.

Another problem with simple linear trends is when there is autocorrelation present in the data. Autocorrelation (a.k.a. serial correlation) is when the error term in the current period is related to the error term in the previous term (actually this is called first order autocorrelation, and yes there is higher orders of autocorrelation). In this case, one can get a trend that is spurious as well. The following picture demonstrates this problem,

So the tendency to use the simple linear trend to show percieved trends in the data to members of the media and public could very well be misleading. Sure it makes for nice and simple to understand discussion, but the real process underlying what is actually going on is being hidden, in short it has the potential to be misleading.

Another problem is that while there are hypotheses that are being put forward and developed that deal with the impact of global warming on hurricanes, it is somewhat suspicious to think that warming that is going to happen in say another 40 to 50 years is driving hurricanes today. As far as I know, hurricanes are not forward looking. Instead of anthropogenic global warming, this strikes me as anthropomorphic global warming.

So I think out of all the people who worked on the recent research the best comments are from professor Peter Webster,

"But we don’t know a lot about how evaporation from the oceans’ surface works when the winds get up to around 100 miles per hour, as they do in hurricanes," said Webster, who adds that this physical understanding will be crucial to connecting trends in hurricane intensity to overall climate change.

"If we can understand why the world sees about 85 named storms a year and not, for example, 200 or 25, then we might be able to say that what we’re seeing is consistent with what we’d expect in a global warming scenario. Without this understanding, a forecast of the number and intensity of tropical storms in a future warmer world would be merely statistical extrapolation."

As well as the comments of Jay Fein,

"Basic physical reasoning and climate model simulations and projections motivated this study," said Jay Fein, director of NSF’s climate and large scale dynamics program, which funded the research. "These results will stimulate further research into the complex natural and anthropogenic processes influencing these tropical cyclone trends and characteristics."

Or in short: Interesting result, there may be a relationship with global warming, but we need to do lots more research before we can speak with any degree of certainty on the subject.

Misleading Headlines

There is a new study that has noted that the number of catagory 4 and 5 hurricanes have increased. During the 1970's there were on average 10 catagory 4 and 5 hurricanes globally. In the 1990's that number has gone to 18 per year globally. But what is interesting is that this article has the title, Hurricanes are getting stronger, study says whereas the Houston Chronicle has the title Study links global warming to stronger storms. Pretty significant differences in my opinion. Especially when we contrast the final paragraphs of the Inovations Report article,

"But we don’t know a lot about how evaporation from the oceans’ surface works when the winds get up to around 100 miles per hour, as they do in hurricanes," said Webster, who adds that this physical understanding will be crucial to connecting trends in hurricane intensity to overall climate change.

"If we can understand why the world sees about 85 named storms a year and not, for example, 200 or 25, then we might be able to say that what we’re seeing is consistent with what we’d expect in a global warming scenario. Without this understanding, a forecast of the number and intensity of tropical storms in a future warmer world would be merely statistical extrapolation."

Further, we must remember that quite a bit of the global warming is going to take place in the comming decades. The idea that future warming is influencing current hurricanes is...well...stupid. The Houston Chronicle article does not this (to the author's credit),

Landsea said it's unlikely global warming would already be increasing hurricane intensity.

But it also does not have the quote by Webster suggesting that quite a bit more needs to be understood before making connections between hurricane intensity and global warming can be made. Also the warning about needing a longer time frame for the data as well. For example, this article notes that hurricanes run in a 20 to 30 year cycle. I haven't a clue what periodicity is for hurricanes and if the time periods in this recent study correspond to this cycle or not, but it something to keep in mind.

Update: The Long Beach Press Telegram has perhaps the most hysterical headline, Katrina due to global warming?.

Cross posted at Outside the Beltway.

My Take on President Bush

I don't like him as President. Kevin Drum has a post that lists some of Bush's big accomplishments. When I looked at the list I realized that the bottom line is that I think Bush is generally a bad president from my point of view. To give some idea of my position, I've taken Kevin's list and made a table out of it listing which accomplishments I liked, which ones I'm neutral about and which ones I don't like.

So there it is. I like 3, I'm neutral or slightly in favor of 2 and I don't like 7 of Bush's accomplishments. Further, some of Bush's accomplishments I dislike quite a bit. For example, Bush's Medicare Prescription Bill looks like nothing but another budgetary black hole that is going to make solving the health care/medicare problem far, far more difficult and painful. Left off the list was Bush's Energy Strategy which is nothing but a pork fest that will do literally nothing for improving the U.S.'s energy situation. No new oil refineries, paltry subsidies for hybrid cars that from some reports don't live up to the hype.

Basically, I see Bush as a Big Government Social Conservative. Bush hasn't met a spending program he didn't like...well so long as it doesn't involve gays or the possiblity of people having sex. And while I like the tax cuts, Bush's inability to resist spending revenues that just aren't there means that there will be higher taxes down the road. So while I like the current tax cuts, eventaully I'll have to pay for them plus interest.

On top of all of this I don't think the Democrats offer a viable alternative. They want to raise taxes, and spend even more (so I'll have even higher taxes down the road). Right now the Democrats seem to be stuck in the grips of the Deaniacs and the Kossacks and other complete nutjobs who can't seem to think straight anymore. I think at the next presidential election I'll take the day off, get rip-roaring drunk and stagger over to the polling boths and vote for Lyndon LaRouche.

Uncertainty and Science

Kevin Drum posts about Chris Mooney's new book, The Republicans War on Science. Overall it isn't a bad post...except when we get to the end.

As Chris put it last night, Republicans want to turn science into yet another of the he-said/she-said shouting matches that work so well for them in other areas, generating uncertainty where none exists and undermining one of the few sources of objective knowledge we have.

Let me say up front that I'm not a big fan of Bush's. I don't like his stance on embryonic stem cell research. I think Bush's position in regards to Intelligent Design is embarassing. And the HIV/Condom issue is another area that I find annoying. But the above sentence indicates somebody who doesn't understand science. Science does not report eternal truths. Ever.

Science gives us evidence for evaluating various hypotheses. However, there is rarely if ever going to be enough evidence where we can claim something is True^TM. For example, if a scientist is evaluating his data using Frequentist statistical methods he will often report the results as "we fail to reject/we reject the null hypothesis". The issue is even more stark with Bayesian statistics where the validity of competing hypotheses are put in terms of probabilities. In the latter case, you really don't want to assign any hypothesis a probability of 1.

So science does not remove uncertainty, it merely allows us to better understand the issue at hand and to reduce the level of uncertainty. There are plenty of instances where scientists have thought one way, only to find out that they were wrong and had to change the model, theory, etc. that they were working with due to new discoveries and advancements.

Tax Cuts & Revenues

Brendan Nyhan notes that John Kerry was rather prescient in that it wouldn't take long before the Republicans would issue a call to lower taxes to counter the deliterious effects of Katrina.

Last Wednesday, I flagged this passage from a John Kerry email to supporters:

How long will it be before [Republicans] start telling us that tax cuts for the wealthy can provide just the stimulus we need to get the Gulf Coast economy moving again?

My response: "I'd say a week, maybe less."

The problem is that from this pretty good start Nyhan slides right into misrepresentation when he writes the following,

Norquist is implying that tax cuts generate revenue rather than reducing it -- a discredited bit of supply-side cant that even Bush administration economist Greg Mankiw has disavowed.

First off, the idea that cutting taxes can actually raise revenues is not something that is unique to supply-side economics. The idea is that tax revenues are a function of tax rates, and that starting at zero tax revenues are also zerot. At the other extreme (income) tax rates of 100% would also yeild zero tax revenue (the idea here being why work [at a paying job] when everything you earn goes to pay your taxes). So we know that at both end points revenues are zero. Thus, it isn't too much of a stretch to conclude that initially tax revenues rise, then decline. Hence there are at least two tax rates that will generate the same amount of tax revenue, one tax rate being high and the other being low.¹ This theorestical model is pretty basic and not too many would dispute it. Where the argument comes in is exactly where on the tax revenue "curve" we are currently at. If we are on the portion where tax revenues increase when tax rates increase then decreasing tax rates will decrease revenues.

By implying that cutting taxes in general is a discredited notion Nyhan is misleading his readers. Further, indicating that Mankiw also supports this view is misleading in that reading Mankiw's comments it seems more accurate to say that he thinks the Bush tax cuts in specific were unlikely to raise tax revenues. Making such a statement about a specific tax cut cannot be generalized to any and all tax cuts.² It is quite likely that we are currently at a point on the tax revenue curve where tax cuts simply cannot result in tax revenue increases.

In short, the concept is completely legitimate and actually predates the notion of supply-side economics and the Reagan administration. Arguing that we are at a point where tax cuts cannot raise tax revenues is legitimate. Arguing that this whole concept, commonly known as the Laffer curve, is problematic for setting tax policy, is also legitimate, in my opinion. Saying (or even implying) it is entirely discreditted is misleading.
_____
¹It is also possible that there is more than two tax rates that result in the same amount of tax revenue, and in one case there is one tax rate that yields the maximum tax revenue.
²Mankiw's actual statement was,

Mankiw said Moore was criticizing "a passage where I had raised skepticism about claims that tax cuts would generate so much employment growth as to be completely self-financing. And I remain skeptical of those claims." Mankiw added that "the most extreme advocates of tax cuts, I think, sometimes paint an excessively rosy picture out of what they can get out of them. I don't think this administration has done that."

Rent Seeking, Strategic Behavior and Gasoline Prices

Not a very exciting sounding topic, but it does deal with something that is close to just about every adult out there, gasoline prices. Changes in gasoline prices affect all of us, and hence it is something most people should, in my view, know more about, but usually don't. The notion of rent seeking is where a person, a group of people, a corporation, etc. seek to increase their profits via the political process instead of doing things like making and selling their goods/services. For example, you have an industry and the industry association gets together and decides that it would be better for those in the industry if new entrants could be prevented or reduced, but how to do it? Licensing. You go to politicians and point out that there is potential or even real problems in the industry from shoddy work, dishonest operators, etc. The solution is a license after meeting certain requirements. And bingo, now you have fewer entrants because entry into the industry is now costly. If you are already in the industry (and especially if you are grandfathered in) you now improved your market power. Market power translates into an ability to raise prices and hence increase your profits. However, these new profits are not from producing more, being more efficient, etc. These profits are for all intents and purposes unearned, hence they are called rents.

Now that is a nice description of the problem, but does it happen in reality? The answer is yes. The other day the Foundation for Taxpayer and Consumer Rights (FTRC) released a press release claiming that oil companies intentionally limited refining capacity to drive up gasoline prices. To me this is not at all suprising.

The three internal memos from Mobil, Chevron, and Texaco (Click here to read the memos.) show different ways the oil giants closed down refining capacity and drove independent refiners out of business. The confidential memos demonstrate a nationwide effort by American Petroleum Institute, the lobbying and research arm of the oil industry, to encourage the major refiners to close their refineries in the mid-1990s in order to raise the price at the pump.

So oil companies are behaving in a strategic manner to improve their profits. Nothing new here, IMO. In fact, I'd say that anybody who is shocked, surprised, or upset by this is a naive fool. This is what companies do. No company wants competition. Every company would love to be a monopolist. The Mobil memo for instance seems to be nothing more than an appraisal of another competing refinery starting back up. The Texaco memo on the other hand looks like a nice example of rent seeking in that it discusses using proposals about establishing tighter fuel standards to their advantage in terms of reducing supply and thereby driving up prices. Given the description and example of rent seeking in the first paragraph of this post, it looks like nothing other than good old rent seeking.

In short what we have are oil companies using environmental legislation to their benefit. So when the FTCR and their consultant Tim Hamilton say things like the following,

"It's now obvious to most Americans that we have a refinery shortage," said petroleum consultant Tim Hamilton, who authored a recent report about oil company price gouging for FTCR. (Click here to read the report.) "To point to the environmental laws as the cause simply misses the fact that it was the major oil companies, not the environmental groups, that used the regulatory process to create artificial shortages and limit competition."

it strikes me as monumentally naive. Are oil companies to blame? Sure, but at the same time the oil companies used the very same environmental laws to do their dirty work. So this idea that environmental laws and regulations played no part is bordering on the stupid. In reading the report, Promoting $3 at the Pump in California I see some dubious assertions. For example,

Increases in the prices charged for oil by OPEC countries are not primarily responsible for the dramatic increase in gasoline prices in California. Much of California’s crude oil is harvested locally by major refiners who control their own fields. OPEC nations only supply approximately 20% of the oil delivered to refineries in California. Fields controlled by the oil companies in California or Alaska provide the majority (66%) with the remaining 14% coming from non-OPEC foreign locations (Figure 2).

This indicates a complete lack of understanding of economics and the fact that the oil market is a global market. If oil produced in California has a price of say $20 in California, but it could be sold in another part of the world for $50 then you sell in another part of the world. The result is that prices would rise in California and fall the other part of the world producing a global price. This is what we observe today. So noting that oil that is refined in/for the California gasoline market comes mostly from California is pretty much irrelevant.

California consumers will pay an estimated increase of $15.5 billion more at the pump in 2005 than in 2000 because of profiteering by oil companies and government’s failure to act. (Figure 5).

Yes, and there are only two types of gasoline that can be sold in CA, and those types cannot be sold anywhere else. Hence this creates a local market and since retooling a refinery is costly it gives those refiners who produce for the CA market market power (i.e. the ability to raise prices).

No public evidence exists of substantive increases from 2000 to 2005 to oil companies in the cost of a) producing crude oil; b) refining oil into gasoline or diesel; or c) transporting the refined products to market.

Geez, anybody who suffered through an elementary microeconomics class would know that price is not determined just by costs, but by demand and supply (costs). Looking at just the costs and ignoring the possible changes in demand gives only part of the picture. Also, we'd want to look not just at the cost of refining, but the industry composition as well. Are firms shutting down? If this is the case than that also gives the remaining firms market power as well.

And this notion that it is bad for one firm to engage in strategic behavior that drives out other firms is just ridiculous. It is ridiculous in that is what all firms try to do. They want to be the successful firm, get rid of the compeitition and increase their market share if it is percieved as being good for profits.

The basic idea in all of this is that the oil companies like the environmental laws (although they may claim otherwise) in the sense that it can prevent entry into the market. The hostile environment in CA to new refineries helps the oil companies drive up prices. The thing the FTCR and Tim Hamilton have completely missed is that the high profits of the oil companies also invite entry into that industry by competitors who want to cash in on those profits, but these potential competitiors are kept out which insulates the oil companies and hurts consumers.

The naivete is further on display when the FTCR sends letters to Bill Lockyer expecting him to do something about it. Lockyer is a politician and as such probably has hopes of making it to the governorship of CA. Does anybody really think Lockyer wants to reduce tax revenues so that if he does become governor he'll have an even harder time balancing the budget and may have to raise other taxes?

And the solution suggested by the report, regulating gasoline sales, is just silly. We can look at the electricity market in CA and see how well that worked out. Prior to deregulation one of the big reasons CA had high electricity rates was because the state force utilities to purchase electricity from environmentally friendly sources (solar, wind, geothermal, etc.) called Qualifying Facilities or QFs. The cost of this electricity was very high and pushed up the average rate. This lead to a push for deregulation which proponents aregued would lower prices (never mind getting rid of the high priced QFs or renegotiating those contracts). And in the end energy prices in CA are no higher than ever (and ironically for the big industrial/commericial users--i.e. the biggest proponents of dergulation--got the biggest increases). The idea of allowing for more refining capacity and competition to lower prices just doesn't enter the picture (which was also part of the problem in CA with deregulation in that there was sufficient generation capacity for the most part, but taking one or two generators offline would cause problems and price spikes...pretty much like what we see with gasoline refining).

In short, the problem is that we need more refining capacity. The people at FTCR know this, after all they did write,

"It's now obvious to most Americans that we have a refinery shortage," said petroleum consultant Tim Hamilton, who authored a recent report about oil company price gouging for FTCR.

The obvious long terms solution is to not clamp down harder on the refining situation, but to increase the refining capacity and prefereably with new companies to increase competition. Another lesson that anyone who has suffered through an elementary microeconomics course would know.

Thanks to TangoMan for pointing out the press release to me.

School Finances, Junk Food, and Student Obesity

Here is an interesting item from the National Bureau of Economic Research: schools that are under financial pressure are more likely to make junk food available and allow food and beverage advertising to students.

In Reading, Writing and Raisinets: Are School Finances Contributing to Children's Obesity? (NBER Working Paper No. 11177), co-authors Patricia Anderson and Kristin Butcher combine data from several sources to examine both the effect of financial pressure on school food policies and whether these school food policies help create overweight adolescents. They find that schools that are under financial pressure are more likely to make junk food available to their students, to have "pouring rights" contracts, and to allow food and beverage advertising to students. By using measures that capture financial pressure to predict the fraction of schools in a county with these particular food policies, they then estimate the effect of the fraction of schools in a county with these food policies on adolescent body mass index (BMI).

Now it is just the school either. The research also finds the that having at least one overweight parent is a significant factor as well. In other words, those students who do not have an overweight parent are not likely to have a problem with obesity.

Further, the NBER summary of the article notes that while there are adverse health problems with introducing junk food on campuses, that the revenues generated by the sale of junk food is also used to fund various programs that in the absence of junk food and the revenues thus raised would not be funded. Hence there is a trade off problem here.

[Caveat: This post is based on the article's abstract and NBER summary of the research. Since obtaining a copy of the article would cost me $5, I haven't read it. If somebody wants to send me $5, I'll gladly buy a copy, read it and write more on the article.]

Why Cutting Gasoline Taxes Wont Help

Prof. Hamilton has the answer. But for those of you who are too lazy to click through here is the short version.

Let's say that the market clearing price with taxes is $3/gallon and that taxes are $0.5/gallon. So the initial view is that cutting taxes would cut lower the price by $0.5/gallon. The problem is that there is currently a shortage. So short of rationing, once the gas tax is removed prices would rise to their pre tax market clearing level. In then end there'd be little if any price relief and all that would happen is various government entities would wind up short on revenue. The added profits might provide greater impetus over a slightly longer period to bring capacity back online faster, but that is about all the benefit you'd get.

Bill Lockyer: Economic Ignorance Personified

Bill Lockyer, California's Attorney General and all around fool (It was Mr. Lockyer that implicitly advocated the rape of Ken Lay) has come up with another way to show that he has absolutely no understanding of economics. Mr. Lockyer is going to investigate oil companies for profiteering.

As Prof. Hamilton suggests lets first start with the assumption that gasoline is $4 in Georgia and is $3 in CA. If you were in the business of refining gasoline what would you do? Retool quickly to capitalize on the price differential? This is what the market mechanism does. It allocates resources depending on scarcity. If the gasoline is relatively more scarce in Georgia than in California then the price in Georgia will be higher and thus attract more resources to that region. The effect is to raise the price in California and lower the price in Georgia. This is elemenatry microeconomic theory, something that Bill Lockyer apparently failed utterly when he was in college (or even worse skipped the course...which, IMO, should immediately disqualify him as the State's Attorney General and he should be asked to resign immediately).

In short, the outcome of prices rising in California as a result of shortages in Georgia and other areas is the price of having a national market economy. Is it profiteering? I guess it could be viewed that way depending on how one defines things like excessive profits. But it is the pursuit of those profits that will add impetus to restoring pipelines, refineries, and electrical service to those Gulf states affected by the Hurricane. It is the very same motive that induces people to open a gas station and sell gasoline even in normal times. Short circuiting this mechanism with idiotic investigations not only drains resources that could be used for something productive, but it could mean a longer time getting the refineries back in operation which would mean a longer time period with people paying higher gasoline prices in Georgia. In short, Bill Lockyer wants to punish the people who live in areas affected by high gasoline prices.

Update: Just thought I'd add that if Lockyer is well aware of the above then his actions are nothing short of venal and cynical. It undermines the very resilience of the market system for mitigating adverse shocks. Granted it does this by "spreading the pain", but this strikes me as a good thing for society not a bad thing.

Katrina, Oil and Gasoline

Well, it looks like gasoline might not be going as high as previously thought. Right now, via Bloomberg gasoline for near month delivery is at 222 cents/gallon. Why? Well it looks like the Colonial Pipeline is back online. This is good news as far as getting gasoline out of the New Orleans area. The Capline pipeline also resumed operations on Wednesday as well. The Valero St. Charles refinery has restored power and that a quarter of the workers there have returned. Also, Chevron's Pascagoula, Miss.refinery has avoided catastrophic damage, but is still offline. From what I've read Port Fourchon and the LOOP are also not nearly badly damaged as were feared and the biggest hurdle appears to be getting electrical power restored. In fact, the LOOP restored pumping operations yesterday. And the Plantation pipline is back in operation. Strange that the Oil Drum seems to have missed all of these bits of news.

Another bit of good news the Oil Drum seems to have missed is that the EPA has come out with a limited waiver for 46 states regarding the volatility requirements for unleaded gasoline. In other words, a refinery in that is geared up for conventional gasoline that previously could not sell in areas with boutique blend requirements may now be able too. This will help reduce gasoline volatility.

The electricity situation is daunting though. According to this article 99 lines have been reported down and 104 substations out of service, and that is just the transmission system (high voltage lines). The distribution system is almost assuredly worse off. For example if Mississippi is any indicator, there are an 4,500 poles that need to be replaced in Mississippi.

In short, things are bad in regards to oil shipping, refining and pumping, but the problems may not be as horrible as first thought. Since oil is a global commodity the loss of offshorre production in LA wont have a huge impact on oil prices (oil prices at NYMEX are well under 70/barrel at $67.80 according to Bloomberg). The fact that some of the refineries aren't as badly damaged as initially feared and that piplines and Port Fourchon and the LOOP are actually starting some aspects of operation all spell limited good news.

Thanks to Victor at Dead Parrots Society for pointing out some of these items.

Update on the Gasoline Situation

Okay, Outside the Beltway has been down most of the day (at least I kept getting a network error) and since I can't access my site from work anymore (oh and welcome to my porn site), this is a bit late.

Anyhow, earlier today gasoline prices at the NYMEX went up to about 292 cents/gallon, but then eased off and closed out the day at 232 cents/gallon. Kind of weird in that it was lower than yesterday's close of 247. Not sure what to make of this as over at the Oil Drum the news is just bad, bad, and worse. Frankly, the easing of gasoline prices was a bit surprising. In looking at google news, I don't see much that would explain this, but maybe I'm missing it (any links posted in comments would be appreciated). One thing I can think of is that people trading gasoline futures were really in a panic yesterday and earlier today, then rationality set in after lunch or something.

Speaking of google news, the stuff I do see seems pretty bad.

• Katrina Gulf Oil-Rig Wreckage Sparks Fear of $100-Barrel Crude

• Recession may be lurking in Gulf Coast devastation

Those are just a couple of the fun filled articles out there.

Apparently somebody in Detroit is guilty of having a brain.

U.S. must expand oil refining capacity

Katrina's impact on prices spotlights refinery shortage

The Detroit News

President George W. Bush is expected to release supplies from the nation's emergency crude oil stockpile to help oil refiners whose supplies have been disrupted by Hurricane Katrina. This is a useful, if short-term, move.

[snip]

Building a new refinery in the United States has become virtually impossible because of environmental regulations, and because almost no one wants to live next door to an oil-processing plant.

Since 1981, the number of U.S. refineries has declined to 149, from more than 300, and only one new facility has been built since 1975.

Meanwhile, demand for gasoline is up 24 percent since 1990.

While many existing refineries have expanded operations, it hasn't been enough to keep pace with demand. Nearly all refineries are operating at near 100 percent capacity, and the United States now has to import 10 percent of already refined gasoline.

For the current refiners, that's not an entirely bad deal. Limited capacity keeps gasoline prices high and profits up.

But for the consumer, and the overall health of the American economy, it's a potential disaster.

Steps must be taken quickly to expand the nation's refining capacity. President Bush has proposed using the nation's shuttered military bases as sites for refineries, and that's an idea Congress should embrace.

I'll try to do a post tomorrow on oil refining and some of the problems in that segement of the market.