US and Iraqi Oil

[August1991]

Many people make the argument that the US invaded Iraq to "get" its oil. I have started this thread to discuss this topic.

Canada, Saudi Arabia, and Venezuela are the top three sources of US oil imports.

Al Jazeera

Here, the top three are Saudi Arabia, Mexico and Canada. Energy Information Agency

We can play around with numbers but basically, I think Americans do not require Middle East oil. They produce oil themselves, or get it from countries outside the Middle East. They also use natural gas and electricity (often imported from Canada).

Americans have been quick to devise ways to use less energy. (American cars are now light plastic/ceramic, not heavy metal.)

[maplesyrup]

I thought we had already discussed this issue. Why are you wasting people's time with such nonsense?

It's the Crude, Dude, reviewed

From her analysis of the key world events of the past few turbulent years, McQuaig proceeds into a detailed history of such interrelated phenomenon as OPEC, the development of the SUV, and the history of U.S. foreign policy in the Middle East. The arrangement makes for a bit of a change of pace for readers; in fact, with the main arguments delivered so thoroughly in the opening sections, the second half of the book feels almost like superfluous supporting evidence.

But the history and context, of course, is crucial to indicting the architects of the present-day drive for control of the world’s oil resources. One element that distinguishes It’s the Crude, Dude from other recent attempts to expose the agenda of empire-building in the Middle East is its inclusion of the role of U.S. support for Israel. This Holy Land, for instance, is conspicuously absent from Michael Moore’s Fahrenheit 9/11.

And speaking of that icon of progressive America, someone told me recently that Linda McQuaig has been billed as "Canada’s Michael Moore," which shows you just how ubiquitous the filmmaker from Flint has become. It also speaks, though, to McQuaig’s effectiveness at presenting a class analysis of politics in a palatable and even entertaining form. Moore has just released a companion reader to his smash-hit documentary; but It’s the Crude, Dude could also fit that bill, and then some.

Supposedly bin Laden attacks on September 11 and Bush goes after Saddam. Please give us all a break. What are you, some kind of weird White House missionary?

[Guest eureka]

Without searching for actual figures now, I recall that US reerves are a little more than 20 billion barrels of oil. Production is, conservatively, 6 million barrels per day - I think it is rather more than that but am not certain.

That would indicate that the USA will run out of oil in around ten years without the discovery of significant new fields,

That does not seem likely and suggests a an accelerating dependence on foreign suppliers, primarily in the Middle East. Alberta could not fill that need in the time frame, if ever.

[maplesyrup]

Just follow the money and you will find out who is deciding things, who is making the money, who is trying to smoke ya, and who is blowing smoke up your ass:

http://www.thestar.com/NASApp/cs/ContentServer?pagename=thestar/Layout/Article_Type1&c=Article&cid=1095545411401&call_pageid=970599109774&col=Columnist1022182710415

The documents have attracted surprisingly little attention, despite their possible relevance to the question of Washington's motives for its invasion of Iraq — in many ways the defining event of the post-9/11 world but one whose purpose remains shrouded in mystery. Even after the supposed motives for the invasion — weapons of mass destruction and links to Al Qaeda — have been thoroughly discredited, talk of oil as a motive is still greeted with derision. Certainly any suggestion that private oil interests were in any way involved is hooted down with charges of conspiracy theory.

Yet the documents suggest that those who took part in the Cheney task force — including senior oil company executives — were very interested in Iraq's oil and specifically in the danger of it falling into the hands of eager foreign oil companies, rather than into the rightful hands of eager U.S. oil companies.

As the documents show, prior to the U.S. invasion, foreign oil companies were nicely positioned for future involvement in Iraq, while the major U.S. oil companies, after years of U.S.-Iraqi hostilities, were largely out of the picture. Indeed, the U.S. majors would have been the big losers if U.N. sanctions against Iraq had simply been lifted. "The U.S. majors stand to lose if Saddam makes a deal with the U.N. (on lifting sanctions)," noted a report by Germany's Deutsche Bank in October 2002.

The disadvantaged position of U.S. oil companies in Saddam Hussein's Iraq would have presumably been on the minds of senior oil company executives when they met secretly with Cheney and his task force in early 2001. The administration refuses to divulge exactly who met with the task force, and continues to fight legal challenges to force disclosure. However a 2003 report by the General Accounting Office, the investigative arm of Congress, concluded that the task force relied on advice from the oil industry, whose close ties to the Bush administration are legendary. (George W. Bush received more money from the oil and gas industry in 1999 and 2000 than any other U.S. federal candidate received over the previous decade.)

The Cheney task force has been widely criticized for recommending bigger subsidies for the energy industry, but there's been little focus on its possible role as a venue for consultations between Big Oil and the administration about Iraq. One intriguing piece of evidence pointing in this direction was a National Security Council directive, dated February 2001, instructing NSC staff to co-operate fully with the task force. The NSC document, reported in The New Yorker magazine, noted that the task force would be considering the "melding" of two policy areas: "the review of operational policies towards rogue states" and "actions regarding the capture of new and existing oil and gas fields." This certainly implies that the Cheney task force was considering geopolitical questions about actions related to the capture of oil and gas reserves in "rogue" states, including presumably Iraq.

It seems likely then that Big Oil, through the Cheney task force, was involved in discussions with the administration about getting control of oil in Iraq. Since Big Oil has sought to distance itself from the administration's decision to invade Iraq, this apparent involvement helps explain the otherwise baffling level of secrecy surrounding the task force.

It's interesting to note that the Cheney task force deliberations took place in the first few months after the Bush administration came to office — the same time period during which the new administration was secretly formulating plans for toppling Saddam. Those early plans were not publicly disclosed, but we know about them now due to the publication of several insider accounts, including that of former Treasury secretary Paul O'Neill. So, months before the attacks of 9/11, the Bush White House was already considering toppling Saddam, and at the same time it was also keenly studying Iraq's oil fields and assessing how far along foreign companies were in their negotiations with Saddam for a piece of Iraq's oil.

It's also noteworthy that one person — Dick Cheney — was pivotal both in advancing the administration's plans for regime change in Iraq and in formulating U.S. energy policy.

[August1991]

I thought we had already discussed this issue. Why are you wasting people's time with such nonsense?

No, we haven't discussed this issue, MS.

McQuaig et al claims it's all about oil. I think she (and the others) are wrong.

This issue seems fundamental to the US war in Iraq. Let's discuss it.

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Does the US need/want to steal Iraqi Oil?

[caesar]

It does want to control Iraq oil/ middle east oil. "control is the word not steal. They, also, want a presence int he middle east to control the middle east; Saudi Arabians are tiring of having an American military base on their soil.

I don't think it was a simple as being solely for the oil but oil comes much higher on the list than did their claim of a threat from Iraq.

[Guest eureka]

It certainly was not only about oil. There is still the "Daddy" factor which is so derided.

Yet, a leak of an official document that is embarrassing Blair, says that it is about "Daddy."

However, that is a side issue. America certainly need the oil if it is to continue its profligate ways. Domestic sources are declining raoidly. The few friends it had are not so friendly. As Caesar pointed out, the Saudis are beginning to chafe at the American "way of lfe" that is increasingly encroaching on its culture.

Few of the oil bearing regions are exactly on good terms with America. The need is there and the power to force compliance with American aims is thought to be there also. Of course it is not really as Iraq now shows - and as the US was warned.

We are in for interesting times and, in my view, a not too distant economic collapse that will snowball after America begins to sink. The window in which alternative technologies might have been developed has passed unopened just as that for Climate Change is being held firmly closed by the Bush cabal in its short term economic interests.

[Hugo]

I don't think the US is after Iraqi oil. After the cost of the war is counted for the US government, it would have made more sense to strike some kind of deal with Russian oil suppliers, perhaps even using the money that waged the war to subsidise their prices instead (I believe Russian oil is still a smidgen more expensive than Middle Eastern).

The only way that this could be about oil, in my opinion, is if the US government is looking at the very long-term picture, and planning for cheaper oil in 50 years or longer. This is unlikely, firstly because the complexity and unpredictability of the world make such long-term forecasts impossible and the plans based upon them worthless, and secondly, because a democratic administration rarely, if ever, plans anything that would only come to fruition after the end of its political life, especially if that plan will only have negative consequences before that end.

I think the true reason for Gulf II is democracy-seeding, to start cleaning out the hornet's nest of Islamic extremism that breeds cultures hostile to Western democratic values (and terror is a strategy, not an institution). George W. is probably trying to fulfill a desire voiced by Woodrow Wilson after WWI, to "make the world safe for democracy."

Note that "democracy" and "freedom" are not the same thing, no matter how often they are confused. What we are talking about, then, is not freeing the world and bringing liberty to people, but bringing them under the American umbrella of values, which are increasingly opposed to liberty and freedom.

[Black Dog]

Does the US need/want to steal Iraqi Oil?

You're oversimplifying the issue. But we can break it down a little bit.

We can play around with numbers but basically, I think Americans do not require Middle East oil. They produce oil themselves, or get it from countries outside the Middle East. They also use natural gas and electricity (often imported from Canada).

Consider this: the US, with 5% of the world's population,

consumes 45% of the oil. According to the Energy Information Administration (EIA) of the Department of Energy, the US will be importing 70% of its oil from abroad by 2025.

That ain't chicken feed. Domestic oil production has fallen, while places like Venzuala and Saudi Arabia have become problematic for political reasons. Therefore, establishing a U.S-friendly regime on top of the world's second largest oil supply is very beneficial.

Control of Iraq's oil would also allow the U.S. to exercise greater control of prices (by breaking the OPEC straglehold) and access. China, the U.S.'s biggest rival, has exploded from a small oil exporter in 1989 to an importer of almost 2 million barrels per day. Controlling who gets access to the oil gives the U.S. a great strategic upper hand.

Finally, there's teh mattter of good old fashioned greed. Look at the Bush cabinet. As Maple says, follow the money. This is an administration with crude in it's veins and deep ties to the industry. These guys will slip back into the pockets of Big Oil as soon as their tenure in Washington is done, so they are doing their best to ensure the political conditions exist to maximize profit for themselves and their buddies.

Americans have been quick to devise ways to use less energy. (American cars are now light plastic/ceramic, not heavy metal.)

SUV's are the top selling vehicles in the U.S. Consumers steadfastedly refuse to adopt consumption patterns that affect their lifestyle, while oil companies and the auto industry have a myopic view of the bottom line that avoids any change that could jeaporize short-term profit. And Bush's solution to "energy independence" is to increase domestic production, not reduce consumption.

[theloniusfleabag]

Dear August1991,

I must concur with Black Dog and maplesyrup. The US doesn't, at this time need, the actual oil, they need to control the prices by controlling the supply.

Think of it this way, If August1991 had the chance to forcibly take control of the entire Wal-Mart enterprise, or at least it's entire inventory and stores, would he do it? Yet he asks, "What would one person do with 20,000,000 microwaves? Why, it would be silly for one person to have that much stuff!" The answer is that the person would sell it for his own profit, he could dictate the price that others could sell it for too, by controlling the majority of the supply. Oil is different than microwaves, too, for oil's supply is much more finite.

OPEC controls enough of the production to control the price. That is coming to an end. Iraq (debatably) has the world's largest proven reserves in the ground. Whomever controls that will set the price America pays for it's oil, no matter where they get it from. If they charge $100/bbl, you can bet Venezuela will charge at least $99/bbl.

I have mentioned this book before, August1991, I hope you have read "Imperial Hubris, Why the West Is Losing The War on Terror". The author is as credible as you can get. he states that if the US continues to snub alternative energy sources and chooses war to fund the cheapest energy source for itself, then 9/11 and the rest of the terrorist actions are just the tip of the iceberg.

The US will have only itself to blame, but they'll spin it until you're dizzy saying it isn't their fault.

[August1991]

Thelonious, since 1973, people have been predicting that we will run out of oil. Jimmy Carter made energy policy a major feature of his administration.

Invariably, the reserves grow faster than our consumption. (One reason for this is that publicly-traded oil companies must be careful how they value reserves on their balance sheet.)

People mistakenly believe that one day, there suddenly won't be any oil. It doesn't work that way. As the price rises, certain oil fields become profitable. IOW, as we use oil, its price rises.

The general trend of oil prices has been upward but oil is cheaper now than it was in the late 1980s.

As the price of oil rises, not only does this make previously difficult fields profitable but it also makes alternative energy sources attractive. One source is conservation. Today's big SUV is more energy efficient than a 1970s hatchback. The US requires less energy to produce a "unit of GDP" than at any time in the past 100 years. (Think of airplane enginesand lighter packaging.)

----

As to your Walmart example, I don't quite understand what you mean. The US government, by invading Iraq, is not going to "get" any oil. The US government is not in the oil business.

International oil companies will sign contracts with Iraqis to take delivery of crude oil at world market prices. The Iraqi government will no doubt impose a hefty royalty on any oil taken out of the ground. The situation is no different from what happens now in Venezuela or Alberta. Indeed, that's how Saddam Hussein did business before 1990.

Do you mean to say that the US wants to protect itself from a possible embargo? The US fears a cartel of oil suppliers could block oil sales?

Well, the US now trades with the rest of world on may items and in theory, the US could face an embargo on many items. US foreign trade is only 10% of its GDP and as I've noted, its principal foreign oil suppliers are Canada, Venezuela, Mexico and so on.

No cartel embargo against the US would ever work. The incentive to cheat would be too great.

Iraq (debatably) has the world's largest proven reserves in the ground. Whomever controls that will set the price America pays for it's oil, no matter where they get it from. If they charge $100/bbl, you can bet Venezuela will charge at least $99/bbl.

Then Mexico would charge $98, Nigeria $97 and away we go.

----

It strikes me as obvious that the US invaded Afghanistan and Iraq for reasons (misguided or not ) of national security.

The events of September 2001 motivated the reaction. Afghanistan was obvious. As to Iraq, Tony Blair made the argument that Saddam was simply too dangerous to be left ignored. Saddam seemed as good a place as any to respond.

There has been a tremendous amount of spin since September 2001 but the basic message is out. Everyone in the world knows that the Americans are going to fight back. Howard and Bush were both re-elected. Blair will likely be re-elected too. (I note that Qaddafi has made peace with the British.)

I think BD made a comparison between Iraq and Vietnam. IMV, the comparison is legitimate.

Vietnam was one battle in the Cold War. The Americans won the Cold War but they didn't win every battle. I'm not certain their tactics were always the best. But they won.

The same applies in Iraq. In fact, this is an ongoing war that I suspect is in its final stages. The war started in 1914 and it concerns primarily the freedom of the individual.

Note to TheloniousMonk:

I have mentioned this book before, August1991, I hope you have read "Imperial Hubris, Why the West Is Losing The War on Terror". The author is as credible as you can get.

I'm reading now about the fall of Hongkong, then I'll take a look at this. I must say that I am immediately suspicious of any author who refers to oil when discussing the Iraq war.

[caesar]

Thelonious, since 1973, people have been predicting that we will run out of oil. Jimmy Carter made energy policy a major feature of his administration.

Ha, so you ARE American; I thought so. Well the USA is running out of oil; no more dinosaurs to make more. We, in Canada have a good supply. Sure hope you Americans don't invade us when we shut down the border to energy exports. Your government better return our lumber companies money and not go ahead with the idea of giving it away to your lumber companies (Isn't that conversion) We, in BC have had it up to here with USA trade nonsense.

[theloniusfleabag]

Dear August1991,

People mistakenly believe that one day, there suddenly won't be any oil. It doesn't work that way

Perhaps you could could give a new explanation what 'non-renewable' means in the term 'non-renewable resource'.

As the price rises, certain oil fields become profitable. IOW, as we use oil, its price rises

Indeed, as we are seeing in Ft. McNewfoundland, AB.

However, fossil fuels take hundreds of millions of years to create, not higher prices, and, with oil, consumption vastly outstips creation.

Today's big SUV is more energy efficient than a 1970s hatchback.

The numbers are not 1:1. I cannot give a direct ratio right now, but I'm sure you'll agree the population has changed a bit since then.

The US government, by invading Iraq, is not going to "get" any oil. The US government is not in the oil business.

As of now, the top US gov't decision makers are ALL ABOUT oil. It was and is their lifeblood.

The Iraqi government will no doubt impose a hefty royalty on any oil taken out of the ground.

Any new Iraqi gov't will be pro-US or it will not exist.

Do you mean to say that the US wants to protect itself from a possible embargo? The US fears a cartel of oil suppliers could block oil sales?

No, not at all. I am talking about pricing and production.

Finally,

I'm reading now about the fall of Hongkong, then I'll take a look at this.

Good on ya. The Winnipeggers gave the Japs a right bloody nose, and earned the respect of the Japanese that the Brits failed to do in Malaya. A case of "Defeat With Honour".

[August1991]

Ha, so you ARE American; I thought so.

J'y suis. J'y reste. Mon pays, c'est l'hiver.

[caesar]

Posted on Nov 17 2004, 02:35 AM

--------------------------------------------------------------------------------

QUOTE 

Ha, so you ARE American; I thought so. 

J'y suis. J'y reste. Mon pays, c'est l'hiver. 

My French is a bit rusty; JE Suis ~I am

Did you think a few words in French proves you are Canadian or Quebecian????

[theloniusfleabag]

Dear caesar,

August1991 says his house is a wintery one, so I am guessing he is Les Canadien. I must admit, even though 'je ne pas parlez francais', I have never seen "J'y"before.

[Hugo]

I must admit, even though 'je ne pas parlez francais', I have never seen "J'y"before.

It means, "Here I am, and here I stay."

Now, Thelonius, what August is getting at is that one day the pumps are not going to just run dry and leave us all up the proverbial creek. What will happen is that existing oilfields will dry up and less profitable ones will be opened, which will make prices rise. As prices rise, new oil will be drilled as oil sources that were not viable before (shale oil, for instance) will now become profitable. Furthermore, as oil prices rise alternative energy sources will become progressively more appealing and thus profitable. The rise in oil prices will also signal to energy producers that more profit can be had in alternative sources, which will have the effect of stimulating growth of market R&D into these sources.

Basically, as oil supplies tail off and prices rise, alternative energy production will gradually ramp up. By the time the oil actually runs out, we won't need it anymore. The free market will naturally create this effect, it's simple economics. The best thing we can do is get out of the way and let it happen, meddling is likely to have very bad effects.

[Black Dog]

Basically, as oil supplies tail off and prices rise, alternative energy production will gradually ramp up. By the time the oil actually runs out, we won't need it anymore. The free market will naturally create this effect, it's simple economics. The best thing we can do is get out of the way and let it happen, meddling is likely to have very bad effects.

I don't buy this. We've known fossil fuels have been a dead end for a long time now, yet the "free market" has responded very slowly. The auto industry is a good example. For every step forward (such as the painfully slow development of low-emission, high fuel efficient hybrid or electrical vehicles) they take two steps back (ever bigger SUVs). North American automakers in particular have been slow to respond and have exploited every opportunity and squeezed every lobby they can (such as holding off any changes to the federal fuel-economy standards) in order to maximize their short-term profits for shareholders at the long term expense.

I'm not saying alternative energy sources won't be explored: only that automakers and the oil industry will do everything in their power (which is a lot) to prolong the wait.

[Hugo]

I don't buy this. We've known fossil fuels have been a dead end for a long time now, yet the "free market" has responded very slowly.

As you have correctly identified, there is the problem of non-economic or political influences in markets. When business interests and politics mix, as when oil lobbyists have the ear of the White House, you have the problem of industry using noneconomical methods to skew the economy. Basically, businesses can harness political tactics like subsidies, tarriffs, taxes, federal (dis)approval and so forth to skew, distort and even reverse the outcomes that a free market would produce. Lobbyists generally sell this to politicians in terms of "saving jobs" and so forth, which make these tactics sound more palatable than their actual, true economic terms, such as "causing unemployment" and "delaying technological progress."

It is true that companies will try and maximise gains for shareholders, not just in the short-term but also in the long-term (look at amazon.com, which, I believe, has never made a profit and yet has no shortage of investment). However, the crucial thing is to restrict these gains to that which can be obtained by free market methods, rather than those which can be obtained by political, coercive means.

This, more than anything else, would probably make the effect I described above fail.

[Guest eureka]

August and Hugo are more or less right about the operation of the market. They do not, however, take into consideration the inevitable lag in response - a real world phenomenom.

We will run out of oil for all practical purposes lomg before any alternatives are found. If higher priced will bring new sulloies on stream, they will not suffuce for need. The price alone will kill the market for personal uses such as home heating and automobiles. It is debatable too, whether those sources do exist in sufficient quantoties. The Tar Sands in Alberta are a case in point. Estimates of recoverable oil are very much lower than those of a decade ago and the extraction methods may not be sustainable in terms of their energy needs

August, I have no doubt that you are a Quebecker. Many of your posts suggest a familiarity that could only be from firdt hand experience.

Would you, though, explain the 1:1 realtionship of energy to GDP. I read somewhere not long ago, that in agriculture in the US, the energy requirements had increased greatly in recent years to one unit of energy to one of output.

Don't remember more about that, but it was clear on the increase and the present ratio.

[August1991]

For every step forward (such as the painfully slow development of low-emission, high fuel efficient hybrid or electrical vehicles) they take two steps back (ever bigger SUVs).

BD, you could hardly pick a better example of the absurdity of government regulation than SUVs.

The EPA imposed minimal gas consumption regulations on the fleet of vehicles built and sold by manufacturers. The EPA left trucks out of the definition of the fleet.

To get around the regulation, manufacturers started to make small trucks and sell them as big cars - the SUV was born.

If the EPA had never passed the regulation, SUVs would not exist today.

Some Web Site (This site explains the problem but then entirely misses the point by implying that SUVs should be regulated.)

The very best protection for the environment was the rise in oil prices in the 1970s. That's when Toyota dislodged General Motors as the world's largest car manufacturer. Consumers became interested in gas mileage.

[Hugo]

They do not, however, take into consideration the inevitable lag in response - a real world phenomenom.

Interestingly enough, if you see a lag in free market response somewhere you can bet government regulation is at the bottom of it. For instance, state contraction and expansion of the money supply disrupts the time relationship between saving and spending, which is the actual cause of recessions (it's a myth that cyclical recession is inherent to the free market).

The time lag in this case will, in a free market, be perfectly adjusted to the problem. A sudden dearth of oil will result in a huge upward swing in oil prices, which will just as suddenly stimulate a lot of investment in alternative energy. This investment will bring alternative energy to the market far faster. Consider IT for an example of how investment and market interest can create a vast industry that was worth $2.1 trillion worldwide in 1999 (source: WITSA) from nothing in only a relative few years.

However, none of that is actually relevant because such a scenario is not going to happen. Your time-lag problem is only feasible were every well in the world to run dry at the same time, which is patently absurd. As reserves dwindle, investment in the oil industry will slow (it becomes an increasingly risky investment with increasingly smaller rewards), which will mean prices will rise even though actual production has not yet fallen. By the time the supply actually starts to drop measurably, the critical crossover price of fossil/renewable energy will already have been reached and fossil fuels will be on the way out. Thus, your time-lag objection is not credible.

[August1991]

In North America, Canada consistently had the highest energy/GDP ratio between 1970 and 1997, although it declined 26% during the period.  The U.S. energy/GDP ratio also declined sharply (33%) between 1970 and 1997, while Mexico’s rose 12%.

US EIA

So I guess I'm guilty of some hyperbole.

The EIA has constructed a quantity index of "energy" (oil, natural gas, electricity, coal) and then compared this index with GDP in 1970 and 1997. To simplify, it takes 1/3 less fuel to heat an American home to 70 F.

Canada has a higher ratio for the simple reason that we export our abundant energy through the products we manufacture. When the US and Europe import Canadian paper and aluminium, they in effect import Canadian electricity.

[Black Dog]

As you have correctly identified, there is the problem of non-economic or political influences in markets. When business interests and politics mix, as when oil lobbyists have the ear of the White House, you have the problem of industry using noneconomical methods to skew the economy.

Precisely. There's no such thing as a free market: for instance, while doing a bit or reading this morning on this subject, I came across a tidbit stating that U.S. automakers are demanding massive government handouts to continue to develop alternative fuel vehicles: corporate welfare.

We can agree, then, that the system itself needs an overhaul. But realistically, I don't see the increasing merger of state and corporate power reversing itself anytime soon.

BD, you could hardly pick a better example of the absurdity of government regulation than SUVs.

The EPA imposed minimal gas consumption regulations on the fleet of vehicles built and sold by manufacturers. The EPA left trucks out of the definition of the fleet.

To get around the regulation, manufacturers started to make small trucks and sell them as big cars - the SUV was born.

If the EPA had never passed the regulation, SUVs would not exist today.

Fuel-efficiency standards didn't create SUVs. the manufactures did because they envisioned a market for them and set about creating one. The "light truck" loophole allowed them to bypass the standards, but I fail to see how regulation was responsible: if there was no regulation, I expect SUVs would be even larger and less efficient.

The same manufacturers have also lobbied continually for the removal of the efficiency standards and have successfully kept them at their 1970s levels.

[Hugo]

Precisely. There's no such thing as a free market

No, there certainly isn't. Since every aspect of the economy is interconnected, once non-market measures are introduced into one industry or to one aspect of the economy they are introduced into all industries and all economic factors.

The problem is that industrial or post-industrial economies are about as fathomable as the workings of the human brain, so when government interferes in the economy it's effectively pushing buttons at random, saying "I wonder what happens if I do this?" Unsurprisingly, unforeseen consequences in the forms of unemployment, price increases, slowing of development, scarcity, recession and even economic crash are invariably the result.

U.S. automakers are demanding massive government handouts to continue to develop alternative fuel vehicles: corporate welfare.

Of course, and if they receive corporate welfare it will be bad for everyone in the long run (except these companies, but only as long as the subsidy continues). Corporate welfare damages or destroys proper market incentives, which therefore tends to slow, halt or even reverse the free market tendency towards more and better for a lower price.

We can agree, then, that the system itself needs an overhaul. But realistically, I don't see the increasing merger of state and corporate power reversing itself anytime soon.

I agree. The sad fact is that on both the political and the corporate sides there is too much to gain from the existing arrangement. Politicians get campaign funding, kickbacks, stock options and all sorts of goodies. Companies get to be "lazy" and bypass economic procedures by applying noneconomic force to their problems, which is more cost-effective for them and makes their bottom line better (at the expense of the bottom lines of the citizenry).