February 16, 2004
DAMN TARIFFS...OOPS, NEVER MIND:
Steel users facing heavy prices, short supplies (The Associated Press, February 15, 2004)
Jeffrey Nayhouse, owner of Allegheny Fence in Pittsburgh, is contending with the unpleasant reality of rising steel prices. Nayhouse says the price of steel wire and tubing has increase 30 percent or more.
One of his suppliers wrote to him last week that "due to the existing environment, we cannot print pages as quickly as the (price) increases are taking effect."Nayhouse isn't alone. Many domestic steel users are being pinched by rising prices, which are being attributed to a weak dollar, high consumption in China and inflated prices for raw materials.
Prices were at 20-year lows just a few years ago, which steelmakers blamed on a worldwide glut of capacity. [...]
Many blame China for its ferocious appetite of raw materials.
"China is basically screwing up the world market for steel prices right now," said Don Lawrence, purchasing agent for George L. Wilson & Co., a Pittsburgh building materials distributor.
The pie-in-the-sky crowd hasn't yet awakened to the fact that the same thing will happen with oil soon--which is why we should wean ourselves, via an exorbitant gas tax.
MORE:
A Shade of Green: S.U.V.'s Try to Soften Their Image (DANNY HAKIM, 2/16/04, NY Times)
"We fight S.U.V.'s because it is irresponsible to make vehicles that guzzle, pollute and are unsafe," said Dan Becker, a global warming specialist at the Sierra Club. "But the auto companies have the technology to fix these problems, and if they do, acceptance of S.U.V.'s will improve." [...]Posted by Orrin Judd at February 16, 2004 9:51 AMFinancial analysts have estimated that hybrids are more likely to account for as much as 10 percent to 15 percent of the market over the next decade or so.
"If hybrids just end up as a niche vehicle," Mr. Friedman said, "they really won't have an impact on the environment and global warming. Millions of these vehicles have to be sold every year."
But he says he thinks less ambitious technologies would also be a good option. He recently collaborated on "a blueprint for a better S.U.V.," a report that laid out a design for a more fuel-efficient and less rollover-prone vehicle that used less-expensive technologies than hybrid systems. Many skeptics view hybrid power as an inherently profit-sapping technology because it involves two drive systems instead of one, though Toyota insists its hybrids are already profitable.
"I'm just not a blind monk of hybrid technology," the chief executive of Nissan, Carlos Ghosn, said last month. Nissan will offer a hybrid version of its Altima sedan in 2006.
The industry is struggling to decide which of three technologies has the most potential to cut fuel consumption: hybrids, advanced diesels or hydrogen fuel cells. The two vehicles to be introduced this year will present hybrid S.U.V.'s in different packages: the Escape is a basic, no-frills sport utility that starts around $20,000 with a conventional engine, about $15,000 less than a conventionally powered Lexus, a luxury vehicle. Hybrids have, in the past, cost a few thousand dollars more than similar cars, though the new midsize Toyota Prius starts at about the same price as the midsize Toyota Camry. Fuel savings can make up for the high purchase price over time; there are modest tax deductions and Congress appears close to offering more. [...]
Ford, as the world's third automaker to sell a hybrid, hopes to carve out a spot between Toyota and Honda and the rest of the industry. The Escape also offers a very visible vehicle to begin to deliver on the desire of William Clay Ford Jr., chairman and chief executive, to be seen as both an environmentalist and an industrialist.
oj --
Why don't we wait for candidates Kerry or Hillary to follow up on that one...We don't need to lose the last National Review/Enter Stage Right reader before November. I can't wait for Harry to jump on this one (even if he is no supply-sider) by remind you that top-down fuel taxes is statist Europe's first recourse on energy policy. I would wait till we have exhuasted all supply-side measures on the carbon side; assessed progress on real susbtitute technologies; and established the degree to which market prices alone can not be a suitable disciplining mechanism (prove the externalities) before I would make gas taxes a conservative Repuclican issue.
Posted by: MG at February 16, 2004 10:08 AMThey are a Republican issue--they're a sin and consumption tax that can be used to replace other taxes. When it comes to national security and the underpinnings of the economy we never let market forces govern.
Posted by: oj at February 16, 2004 10:16 AMIt doesn't matter, the REPUBLICAN Senate tucked a 5 c/g gas tax increase into that outrageous highway bill.
It's about jobs, after all.
Posted by: Sandy P. at February 16, 2004 11:00 AMNatural gas supply is more of an immediate concern than crude, which becomes a momentary concern from time to time, but really isn't much of a longer-term (our lifetimes, for starters) concern at all. As an example -- in the right price environment, Canada's oil sands become commercial, solving our supply issues for the foreseeable future. The sky isn't falling when it comes to global oil supplies. It may make us feel virtuous to punish ourselves with a European gas tax, but all that really does is give liberals more money to spend on projects usually harmful to the regime.
Posted by: kevin whited at February 16, 2004 12:12 PMThere's plenty of steel -- about a billion tons of it lying around ready to be rolled.
What there isn't is plenty of rolling mills and millworkers. We junked both under Reagan.
I've had my say on alternative fuel before -- whatever is going to happen later, there's so much oil now that what the price you get alternatives down to, the oil owners will beat it.
But for the project of raising vehicle fuel prices in order to goose innovation in alternative fuels, I'd just point out that Europe raised vehicle fuel taxes very high more than 50 years ago, and instead of getting novel forms of fuel, they got little cars.
Posted by: Harry Eagar at February 16, 2004 3:24 PMAll that surplus steel - it wouldn't be due to the development of better plastics and composite (carbon) materials, now would it? Or to improvements in the efficiency of manufacturing steel?
It can't all be China's fault (or Reagan's).
Posted by: jim hamlen at February 16, 2004 3:50 PMHarry:
Europe doesn't drive--we do. We'd be well served just to return to a rail system like theirs.
Posted by: oj at February 16, 2004 6:10 PMEurope doesn't drive??!!!!
Spoken like a man who hasn't spent a minute on European highways.
I have spent years on them--trust me, they drive. The cars are often tinny boxes that no one would buy given a choice, but they are cars nonetheless, in their hordes.
Posted by: Jeff Guinn at February 16, 2004 8:30 PMThe problem with rail remains the areas outside of the three main population corridors -- Washington-Boston, Pittsburgh-Milwaukee and San Diego-San Francisco. Many of those ROWs remain single-track operations, which is fine for freight, which can be shunted off to a siding while two or three other trains pass in the opposite direction, but not so hot for rail passengers on long-distance trips, who may have been doing 80 to 100 mph a few minutes earlier but are now stuck looking out the window and watching uphill trucks passing them by the dozen. You don't have to have 300 mph maglev trains scooting about the nation, but you've at least got to make the trip faster than a car or a Greyhound bus.
Under ideal conditions, the government would privatize Amtrak in the areas where passenger rail could be profitable and the infrastructure for dual track operations is either there already or can be built, and focus on improving the roads in the other areas where the lack of population or the automobile-created sprawl out into the suburbs makes a centralized rail system unfeasible.
Posted by: John at February 16, 2004 9:10 PMMG sez:
"(prove the externalities)"
OK, I say we fund the entire War on Terror out of a tax on imported oil. Where do you think Al Qaeda's money ultimmately come from?
That, and build more nuclear power plants already - or rather get the government out of the way.
Posted by: Ralph Phelan at February 17, 2004 10:22 AMThe U.S. produced 100 million tons of steel a year for 100 years -- 10 billion tons.
Some of it is locked up in, for example, the George Washington Bridge, but if you want steel, you don't have to go to Mesabi. Your corner junkyard has plenty.
Lots of luck getting it processed, though, and, yes, thanks to Reagan and the stupdity of American steel management.
Novel materials had nothing to do with it, but Chinese subsidies did destroy the rest of the world's gray-iron casting businesses.
Anybody who thinks we need railroads instead of cars obviously has never traveled from Hicksville to Manhattan on the LIRR.
Harry:
Did you ever read "And The Wolf Finally Came"?
Posted by: jim hamlen at February 17, 2004 10:48 PMI treat the fear of oil dependency right up there with the fear of overpopulation. It is a by-product of 70's scare-mongering. Of all our non-renewable natural resources, oil probably has the longest lifespan. We have time to develop a replacement technology, the low prices will act as a spur to ensure that R&D dollars only go to the most efficient, economically promising projects.
If the price of oil will go up soon, won't that alleviate the need for a gas tax now? Won't that accomplish the same thing?
Posted by: Robert Duquette at February 18, 2004 1:58 AMRobert:
Good points. Especially when you keep in mind that we have a roughly 300-yr supply of coal in the US that could be used to produce liquid fuels if the price of oil ever got high enough.
King Fahd made a cautionary note to his fellow OPEC ministers in the early 80s: The stone age didn't end because people ran out of stones.
Posted by: Jeff Guinn at February 18, 2004 7:04 AMRobert:
Except that those higher prices and revenues will continue to do horrific damage to the functioning of the petro-states. We can use taxes here to both make other technologies more attractive and to offset other taxes.
Posted by: oj at February 18, 2004 9:11 AMNo, jim, never heard of it.
Same point I've made before, Orrin. In the last couple generations, the world economy has been commoditized. Oil, lawyers, almost anything you can think of.
One that that happens with commodities is that you hardly ever run short. There is no shortage of steel, but there is a shortage of steel plants and steel workers.
As far as this country is concerned, the shortage is artificial.
Posted by: Harry Eagar at February 18, 2004 1:42 PMYes, the argument is still inane as your admission that there is in fact a shortage demonstrates.
Posted by: oj at February 18, 2004 2:06 PMWhat shortage?
Posted by: Jeff Guinn at February 18, 2004 5:30 PM