Thursday, October 26, 2006

New Jersey Gets It Right

In a landmark opinion delivered Wednesday, October 25, the New Jersey Supreme Court ruled that the New Jersey legislature must, within the next six months, enact a law providing "committed same sex couples" the same rights and benefits as married heterosexual couples. The Court left it up to the New Jersey legislature to determine what to call the scheme they will create - "marriage" or something else - but whatever the name, the rights must be the same. What makes this different than the Massachusetts decision from several years ago is that the New Jersey decision recognized that suits of this nature are really about two different things:
  1. The right to marriage; and
  2. The rights of marriage.

Here's the thing. As a religious jew, I believe that engaging in homosexual acts is a moral wrong. And as a religious jew, the word "marriage" defines a religious status afforded to a particular relationship between a man and a woman. But then again, in Judaism, the status of "marriage" - and the religious obligations and benefits conferred by that status - only applies to a jewish man and a jewish woman. Jewish law does not deal with the status of non-jews, and neither a civil marriage nor a clerical marriage would confer any status change in how jewish law applied to the couple. And, of course, Jewish law would not confer the religious status of "marriage" on a jewish couple married in a civil ceremony.

Why am I giving a seminar on Jewish marriage law? Because what should be obvious from this description is that what the word "marriage" means to me as a religious Jew has nothing at all to do with what the word "marriage" means to me as a matter of American law. American law confers marital status - and the rights and obligations that come with it under American law (which, needless to say, are different from those that come with "marriage" in Judaism) - on jews and non-jews equally, on couples married by clerics and judges equally.

And what the New Jersey Supreme Court ruled - correctly - is that there is no legitimate societal reason to deny those rights and privileges provided by the American law of marriage to homosexual couples who are willing to also take the burdens and obligations conferred by the American law of marriage.

What types of rights and privileges are we talking about? A few were listed in the Court's decision - eliminating the need to engage in lengthy and expensive legal processes of "cross-adopting" each other's children (a heterosexual who marries a spouse with children has no need legally adopt the children to have rights as a parent) or changing a last name, qualifying for benefits that employers must automatically provide for employee spouses, rights of inheritance, a family member's right to visit in the hospital, and others.

And the burdens? The requirement of financial support for a spouse and their children, the need for a divorce to dissolve the relationship and begin a new relationship with another individual, the alimony payments and financial unwinding that comes with it, and other of the legal consequences of marriage that can negatively impact one party or the other.

So long as homosexuals are willing to accept the burdens of marriage as well as the privileges, there is no legitimate societal interest in denying them the right to do so.

Now, the New Jersey case was somewhat unique, in that because New Jersey had already adopted a domestic partnership law providing homosexual couples some of the rights of heterosexual married couples, the state could not raise the usual rationales for denying homosexuals marital rights - (in the New jersey Supreme Court's words) "encouraging procreation" and "creating the optimal living environment for children" - because the domestic partnership law indicates that the legislature did not see that as a significant problem. But even without the domestic partnership law, those arguments don't make much sense. Homosexual couples exist with or without marital rights, and they are not going to procreate more or less because of marital rights. And homosexual couples already have children - as they are fully allowed to in every state in the nation - without marital rights.

In other words, if the argument for denying homosexuals marital rights hinges on procreation or preventing homosexuals from having or raising children, the fact is it hasn't worked. (It's also worth noting that the two arguments are inherently contradictory, since if granting homosexuals marriage will discourage procreation, then it could not simultaneously increase the incidence of "non-optimal living conditions for children", and vice versa). It's hard to justify refusing to grant homosexuals marital rights on the basis of alleged policy benefits that clearly haven't materialized.

That said, I also think that the Court got it right when they left it to the legislature to determine what to call the institution that will provide homosexuals with marital rights. (That issue, by the way, was the only disagreement among the Justices; while the decision is being reported as a 4-3 split, the Court ruled 7-0 that homosexuals were entitled to marital rights. The three dissenting Justices would have ruled that the institution must be called "marriage.") Why is that?

Because requiring that the institution be called "marriage" has nothing to do with providing equal rights for homosexuals. It has to do with providing for equal "perception" in the minds of others - something that, unfortunately, cannot be legislated. Requiring that the institution be termed "marriage" would be an attempt to legislate the private perceptions of individuals.

As for me, even if the legislature calls it a civil union or something other than "marriage", I'll refer to any homosexual couples who enter into the relationship defined by the statute the New Jersey legislature enacts as "married." Because all that english word means to me is "endowed with the rights and obligations of marriage" - and homosexual couples who "enter into civil unions" (if that's what they're called) will fit that definition just as much as heterosexual couples who "get married" - jewish or not, clerical or not.

New Jersey got it right - and, if elected, I'd push for applying the New Jersey paradigm across the country.

Monday, October 09, 2006

Black Gold, Colorado Tea, Part Deux

Back to the oil shale. Possibly the biggest obstacle to the full development of oil shale as an oil source is production cost. Oil shale is essentially rock that contains kerogen - a geological precursor of oil. Extracting usable oil from oil shale requires an extensive - and expensive - conversion process. Until very recently, the only way to extract oil from oil shale was to strip mine the rock and bring it to a processing plant, at a production cost of roughly $40/barrel. Shell recently announced that it had developed technology that could extract oil from oil shale in situ, causing far less environmental damage and at a production cost low enough to allow it to be competitive in the $30/barrel range.

In contrast, the worldwide average production cost for conventional oil is roughly $12/barrel. The problem is obvious - even at the lower cost-per-barrel Shell has reached, oil shale technology is only profitable in a world where oil prices are above $30 per barrel. Conventional oil will remain profitable even if the price tumbles below $30/barrel. That may be hard to contemplate in today's world of $70 a barrel oil, but as these graphs from WTRG Economics demonstrate, even counting the recent spike in oil prices the worldwide average for oil has stayed within the $20-25/barrel range for a century and a half.

So while it may make economic sense to exploit oil shale right now, when oil prices are high, in the ten years it will take to truly ramp up to meaningful production levels the price of oil may drop. Worse, whatever the price of oil does in the next ten years, the very act of producing large amounts of oil from oil shale will drive the worldwide oil price down; flooding the market with oil produced from oil shale - and the proven oil shale reserves of the United States alone are three times the size of Saudi Arabia's conventional oil reserves, so production would flood the market - would drastically alter the supply and demand equation that has oil priced as high as it is right now.

In other words, there are significant economic reasons why oil shale is not and likely will not be a significant feature of the oil economy in the near future. As increased supply drove worldwide oil prices down, oil shale oil producers would tighten production (and, if necessary, cease production entirely) as it became less profitable. The result would be the U.S. getting far less strategic benefit from oil shale oil production than it might otherwise be able to.

Which is why I would propose government intervention in the market - or, more accurately, government activity in the market. The U.S. government should (and if I were President, would) guarantee all oil shale producers a profit margin of 6% on all oil shale produced in the U.S. at a cost of $30/barrel or less, up to a total of 7.5 billion barrels per year (the total U.S. oil consumption for 2004 according to the department of energy). The 6% figure is a slight drop from the average oil industry profit margin for the third quarter of 2005, which was 8.2% according to Gravmag. The drop in profit margin makes sense because of the absence of risk that the government guarantee would entail. To encourage continued reduction in production costs, I would propose a 50/50 split of any production cost decreases - that is, if production costs decline from $30/barrel to $29/barrel, the profit margin would be calculated as though the production costs had only dropped from $30/barrel to $29.50/barrel - and therefore the nominal 6% profit margin would actually be incrementally greater.

Lets talk dollars and cents for a second. At a production cost of $30/barrel, a 6% profit would be $2.10, or a total sale price of $32.10/barrel. If the market price for oil remained above $32.10/barrel, the guarantee would be irrelevant and the U.S. government would pay nothing. If the market price for oil dipped below $32.10/barrel, the U.S. would purchase the oil directly and then either use it, resell it on the market at market price, or add it to the Strategic Oil Reserve, as it chose. At most - that is if the oil shale producers produced the full 7.5 billion barrels and the market price of oil dipped to $0 - the program would cost $240B, or 1/10 of the 2005 U.S. budget. Assuming oil stabilizes at $10/barrel, that cost would drop to $165B, and at $20/barrel, the cost would be $95B. And, that money would: (1) be taxable by the government, allowing it to recover several billion dollars directly; (2) support a massive increase in the domestic economy, as oil shale production would provide jobs and other influxes of cash to the Wyoming, Colorado and Utah economies (which would, of course, be taxable); and - if worldwide oil prices stayed high until oil shale production came on line - (3) lower the cost of goods by driving down the cost of oil either as a resource in production (such as plastics) or an addition to the costs of transportation (in the form of high gas prices).

More importantly, those are primarily economic assessments. As I mentioned in the first post, the real impact of oil shale production would be geopolitical - stemming the flow of petrodollars to regimes such as Iran, Venezuela and Saudi Arabia, forever eliminating the threat of the "oil weapon" and dramatically reducing the influence of OPEC and its members on global policy issues. Looked at in that light, the funding for this initiative would be as much in America's national security interests as would any weapons development initiative put forward by the Pentagon.

This Brief Interruption Was Brought To You By

The Jewish holidays, a computer virus, and a summary judgment brief.

Or, as they are collectively known, "real life."

I'll try to keep it from bothering us too much more.