30 Mar 2017

Murphy on Tax Policy on Energy Markets

Energy, Shameless Self-Promotion, Tax policy 19 Comments

The greatest hits (of me) from the House Subcommittee on Energy hearing on Wednesday. The video has a short intro by the Chair of the Subcommittee, then my 5 minute opening statement, then the back-and-forth anytime a Congressperson asked me a question in the Q&A.

19 Responses to “Murphy on Tax Policy on Energy Markets”

  1. ax123man says:

    Regarding his claims that renewable credits are justified by existing fossil credits, it would have been nice if you could have answered as if you were doing the Contra Krugman podcast 🙂

    Because of your hesitation answering, I wouldn’t be surprised to see this segment up on youtube titled “Congressman Pallone owns big oil apologist on renewables”

    These testimonies are annoying. He likely didn’t understand most of what you said and is simply responding with information put together by his staff. Then there is the standard Stalinist request for “yes or no please” answers.

  2. Harold says:

    “Is there any country that has a better more diversified energy market than the USA? ”

    He then goes on to list the ranking of energy production in the usa – No.3 in oil, No. 1 in coal, No.3 in hydro…
    That just says USA is the biggest consumer of energy. To say it is not bad does not seem to mean anything. Is there a real point to being No. 1? Or is this just a biggest dick contest?

    No. 2 in ethanol for example, which is entirely due to subsidies and makes almost no economic sense. Brazil is ahead because it actually makes sense to ethanol from sugar, whereas it does not from corn.

    McKinley seemed to be doing quite well with his comments and questions, but then asked an economist to answer about an engineering problem. Murphy has lots of strings to his bow, but he is totally and clearly not the expert to be asking about the stability of the grid. I think Bob should have said that that is not his area of expertise, but I can’t blame him for answering as he was asked.

    It does not inspire great confidence that these committees understand too much of what is presented to them.

    • Josiah says:


      Consumption and production are two different things.

      • Harold says:

        Presumably everything produced is consumed, and vice versa, so there is at least a connection. Whilst I appreciate that logically you are right, in practice the USA being No. 1 in say coal production says nothing about whether USA is either better or more diverse than other countries. If the USA is the largest consumer of energy it is likely that it will be at least among the largest producers.

        In other words, the evidence that was provided – i.e. production relative to other countries, provides very little evidence for the proposition: that the USA is better and more diverse.

        • Josiah says:

          Presumably everything produced is consumed, and vice versa

          But not by the same people. Japan, for example, ranks third in the world in oil consumption because has almost no oil production.

        • Darien says:

          I’ll grant you “better,” but I have to insist that ranking near the top in all different types of energy production does seem to be a good indicator that energy production is diverse. The only case I can think of in which it wouldn’t is the case in which the United States laps the entire rest of the world in production of every single energy type. Are you asserting that this is the case?

          • Harold says:

            No, on reflection and reading the comments I guess that being near the top in many different sectors does indicate a diverse supply, and some large consumers do not have such a diverse supply. Apologies to Barton.

            I still don’t think it is right to ask an economist about grid stability.

      • Harold says:

        That is, that is is simply bigger is as good an explanation.

  3. Arnie says:

    Well done. Thanks for posting your statements. Regardless of the panel reception, I learned a lot.

  4. Bryan says:

    Does anyone have a link to a good article about selling wind power for negative wholesale rates like bob talks about in the video?

    • Bob Murphy says:

      Bryan, try this. When I post my written testimony (next week probably), you will see more formal studies linked. But if you want to see “the other side,” just google “negative wind prices” and you’ll see hits from American Wind Energy Alliance etc. saying that guys like me are wrong.

  5. Gamble says:


    Would it be best for government to gather all of its revenue from money creating instead of taxation? The broadest based tax of all? Just print it and spend it. Inflation in its purest form. No favoritism what so ever. No moral hazard. No market perversion. No taxation, no IRS.

    I understand you are then left trying to best control this revenue amount but the way things stand, taxpayers seem to have little effect on government spending amounts.

    • Bitter Clinger says:

      Gamble, I looked at that at one time. Dr. Murphy is not the one to ask; you have to be like me a “Greenbacker” to even consider the possibility. “Greenbackers” believe that the only difference between gold and paper is that to “print” gold takes a large hole in the ground, heavy equipment, a toxic refining process, and a YUUUGE environmental footprint. Paper only takes a press, ink, and moral authority (with the popularity of the BITCOIN you may no longer even need the authority) At one time I looked at ‘printing it all’ while in Brazil on a project and worked in an environment of 1 percent a DAY inflation. That kind of inflation destroys the poor, those people without real assets. The poor would hoard beer bottles till the breweries would start running short and raise the deposit, then there would be long lines at the grocery stores of people turning in their bottles. The size of the US government expenditures, in my opinion, precludes the possibility of ‘printing it all’. But, you are thinking correctly. The Federal Reserve should be rolled into the treasury and the deficit should just be printed (not borrowed). The National Debt would disappear. Any administration that didn’t control inflation would have to face the voters. My problem with Dr. Murphy and Tom Woods is that they cannot answer the question, “Isn’t the obverse side of the coin that says “debt” doesn’t it say “savings and investment”?” How can we have “too much debt”? Isn’t that like saying we have “too much savings and investment”? I would be interested in Tel’s insight on this.

      • Bob Roddis says:

        Prof. Murphy and the rest of us thrust a wooden stake into the heart of MMT at least six years ago. Over and over and over. I do not recall the MMT side EVER engaging anything we ever said. Keynesians always lie.©


      • Bob Murphy says:

        Bitter Clinger wrote: “My problem with Dr. Murphy and Tom Woods is that they cannot answer the question, “Isn’t the obverse side of the coin that says “debt” doesn’t it say “savings and investment”?” How can we have “too much debt”? Isn’t that like saying we have “too much savings and investment”?”

        Bitter Clinger maybe you should at least ask me before telling someone that I can’t answer a particular question? What about my arguments in this piece?

      • Bob Roddis says:

        Then there was this smackdown:


        We have enough from the vault to fill many four hour Sunday morning oldies shows.

    • Tel says:

      I think in a high inflation environment people would rush into holding assets and avoid holding money as much as possible, possibly even switch over to alternatives like silver and gold for private exchange purposes. Then government would need to get out the guns and start trying to force people to take their worthless paper, and once the poor schmuck takes that paper he’s got to figure out what to do with it, so he enlists the guns to force the next guy to take it.

      Government would dislike alternatives so they would start being tempted to directly confiscate assets. It would get really ugly… and if you look at historical situations where governments tried that (e.g. Venezuela) it does get ugly.

      Then governments start trying to impose price controls … the economy gets gutted in the process. No, don’t do that.

  6. Tel says:

    With regard to things like Intangible Drilling Costs, I would argue that the special case for that should be removed… however the difference is not a big deal. Certainly not as big as the anti-oil lobby makes out.


    Intangible drilling costs are defined as costs related to drilling and necessary for the preparation of wells for production, but that have no salvageable value. These include costs for wages, fuel, supplies, repairs, survey work, and ground clearing. They compose roughly 60 to 80 percent of total drilling costs.

    Sure, so if a company pays wages (many do) then handle wages as a standard deduction across all companies regardless of the industry and you only need one rule for that, not a new rule for each industry. Wages are an immediate deduction, regardless of that those employees are doing for you.

    Similarly fuel consumption and similar expenses are always immediate deductions, precisely because there’s no recoverable value when you have expenses like that. They come straight off the profitability of the company.

    If the deduction were repealed, drilling costs would need to be treated like other depletable property, deducted over the life of the well.

    No this is wrong, wages would still be wages and fuel would still be fuel. Take a look at medical research industries, suppose you have some biologist working on a new product, her wages don’t get somehow attached to that product as a long term thing, those wages are deducted immediately. Maybe what she produced is very valuable and maybe the company makes a profit on that at a later date but the sunk cost of wages never gets bound up with that from an accounting perspective. If it did then you would be attempting to operate a labour theory of value by measuring the embedded labour in a particular product… that’s a highly questionable thing to do for a risky industry where sometimes a lot of labour goes into a complete flub but other times relatively small labour returns great profits.

    We could look at the software industry as well, wages are an immediate deduction, and it’s well known that startup companies burn through cash pretty hard, and therefore often don’t make a profit for quite a while. Why don’t these anti-oil zealots go after companies like Amazon for writing off their expenses? From an accounting perspective it’s exactly the same operation.

  7. Adam says:

    Look smarter with beard. Less offensive too. Amazing.

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