The question isn't whether fostering an environment that creates good jobs for non college graduates is a good thing. Everyone agrees it is. The question is whether the harm to a small group of these people is greater than the benefit to consumers broadly from lower energy prices. Answer: nobody knows for sure, but most of the time the anti free market "this hurts worker in this industry" argument in the face of efficiency/lower prices in a loser.
Educate me: The tumble of oil
- Thread starter tkuder007
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if i'm reading you right, i agree
why is this specific industry so important that its workers are worth protecting, in the face of what is naturally unfolding in the economy?
what other industries fit this bill? where do we stop? all things i really dont know.
what i do know, is that if my industry folds, i'll find something else. its how it works and i am a willing participant.
Radical environmental and neo marxist groups would tie this up in courts for years.
I agree with dan and the others above that there is no sense in trying to protect an industry at the expense (or potential expense) of the broader economy.
I do think that people are trying to protect these oil and gas jobs because, for a given experience and educational level, they tend to pay much better than other attainable jobs (mostly due to safety concerns, I think). These truck drivers in the Dakotas that are making $130k aren't going to just "pick up and move somewhere else" and have the same job. They'll float around, mostly on the government's dime (thanks Obama), and then eventually get automated out of the industry altogether. As tkuder said above, you can probably be a pretty big screwup with a criminal record and still get one of these jobs that will allow you to pay your child support and rent, buy a new car, and sock away a little cash for a rainy day. That's why people see them as worth protecting. I don't think this is correct, I'm just elucidating the thinking.
We're not just talking pump prices when it comes to oil. It saturates hundreds of products that are part of our daily lives right down to something as mundane as the package for the bread you have in your kitchen at home.
That's why declining oil prices could at some point set off a wave of worldwide deflation.
Let the record show that I am not necessarily in favor of a policy that boosts the cost of oil for the sake of the employment of blue collar workers. I just wanted to point out that the social cost of low oil prices is real; that does not mean that I think "protecting" workers should be a priority.
you need to expand on this if i am going to buy it.
like i said up front, my business has seen a lot of favorability below the line due to freight/fuel costs. any company that has freight as a material part of its expense would be in the same boat. we havent passed that savings along to the consumer, we've invested in people, marketing, trade, capabilities, etc. how is that deflationary?
one of us is missing something
Theoretically falling prices will cause a drop in spending and investment due to both an anticipation of continued decline in prices as well as the fact that the cost of borrowing increases as the dollars used to repay the borrowing with be worth more than the dollars borrowed. In reality, very mild deflation is probably no big deal because these effects don't kick in. But if they do, then the deflation gets worse and the cycle builds, leading to greater deflation and real problems.
No, just not a precipitous drop to a level so low that they cause a deflationary cycle. These aren't straight lines here; they are curves. A 1% decrease in energy prices every year due to decreased demand and improved efficiency in productivity is almost certainly a good thing. A massive drop in a short period of time can have negative effects that offset benefit from the drop in prices.
NickleDimer
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I take mass transit, but based on the conversations here that is minimal.
Cue Burrs' diatribe on how SEPTA is the best train line.
CoL in the CoDB is so high that, even when you adjust for the fact that most CoDBers don't have cars, the added costs of things like bread due to increased shipping/production costs don't really matter to CoDBers. When you're already paying 18 dollars for a sandwich at lunch, $18.50 doesn't really move the needle.
NickleDimer
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I disagree that we should be "picking winners and losers" and trying to prop up high paying jobs for low skill workers. Arent those jobs only high paying because they're competitors frantically trying to tap into the same source and the location blows? Let the market solve this.
i find myself agreeing with nd almost 100% in this thread, which is raising some internal alarms. also feel like i've gained a little education, so thanks all.
sounds like the downside here is to fixed financial markets (which you could argue are pretty effed up to begin with, and that any issues this creates are of their own doing), vs more real life, day to day stuff. also feel that any downside here is largely or entirely mitigated by people having more to spend across other sectors of our economy.
Hopefully it just hits the HY market, but deflation, or perceived impending deflation, could lead to a liquidity trap, which then hits the economy broadly and you could end up with a Japan situation/lost decade. Of course in a perverse way it could be good: a manageable liquidity trap could lead to a massive infrastructure spending program (which we need) to break the cycle, leading to a more robust (real, not sportsboss robust) recovery.
These have been high paying jobs whether gas has been $2/mcf or $12/mcf or oil has been $100 bbl or $30 bbl. The salaries are certainly inflated in ND or Alberta or Alaska because the local labor pool does not have the proper SKILL SET to do the job. While these menial labor jobs may not require a high education, they require an extremely high work ethic, a relatively high disregard for personal safety and a willingness to completely forgo any sort of normal lifestyle. It's not a job the typical GED or high school drop out aspires to do. When you are a rough neck, mechanic, a snubber or a crewman on a rig - you do it 16 hours a day, 14 days in a row, 2000 miles away from home. You work as many days as necessary until the job is done, get a day off and then go do it again. The people that do these jobs get paid so much because it isn't easy to find a'holes that want to spend 48 weeks a year away from their family, while working 100 hours a week. Eventually, these people get burnt out and do something else or they drink themselves to death.
NickleDimer
Post 'Til Your Fingers Bleed
So when natural gas production grinds to a halt just have some shady security firms hire them with the same working conditions and pay in a distant country that we are "democratizing". Easy fix.
You mean the opposite of the stupid Obama stimulus program where we bailed out state employees/unions as opposed to spending more in infrastructure?
Congress just passed a $300 billion transportation bill. I would like to see more but we don't have any money so it would take a one-time stimulus like effort to do this.
NickleDimer
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Are state jobs/union jobs similar to these vaunted fracking jobs? Unnaturally good pay for low skill workers?
no, teachers unions and public employees (to be fair, cops and fireman). However, it was just a give away that didn't create anything. I'm a believer in infrastructure spending and would have hoped to have seen lots more. Regardless, that ship has sailed. The agreement struck earlier this month was as good as we'll get. It provided some certainty to state DOT's to make investments but we need more spending on that side. It's just not going to happen anytime soon and that is more the point as opposed to relitigating the many failures of the $800 billion we spend early in 09.
NickleDimer
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Back in Intellectualhonestyville, only $50B or about 6% of the stimulus was handouts for education. Tax breaks, healthcare and infrastructure were the bulk of it.
You are way off. 144 billion went to states, another couple hundred for healhcare. All infrastructure spending was only 105, and that's not roads and bridges but all forms. Should have been double. Either way, point is there wouldno be another one of those anytime soon. Wastep opportunity. Too busy giving MedicaI'd money and calling it stimulus.
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NickleDimer
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Only about 53b was a straight "don't layoff teachers" handout. I agree with your sentiment, though.