Another dispatch from Fred Thompson:
A quick Google search suggests that the phrase “politics
makes for strange bedfellows” first appeared in an ancient Sanskrit text and
was probably in fairly wide usage when Charles Dudley Warner in My Summer in the Garden (1870) punned “raspberries
are sprawled all over the strawberry-beds: so true is it that politics makes strange bedfellows.”
Economics has its own special version of this trope, which
goes to an explanation of the shape and kind of government regulation of
business, especially at state and local levels: bootleggers-and-Baptists
coalitions. In the canonical example, bootleggers and Baptists partnered to
provide the support needed to keep the Deep South legally dry after the repeal
of the Eighteenth Amendment in 1933. The Baptists were ‘agin drinkin’ and the
bootleggers needed the states to protect them from legal competition to stay in
business. Moreover, both found it easy to demonize their opponents, the liquor
lobby.
Nowadays the most common example of this phenomenon occurs where
industry partners with environmentalists to obtain a special competitive
advantage. Here in Oregon, it is perhaps best exemplified by the so-called
‘Clean-Fuels Program,’ which joins the environmentalist good guys with ‘local
clean fuels producers’ against out-of-state fossil fuel interests.
The best thing about this Program is that it will raise
motor fuel costs. Clearly the way to discourage carbon
emissions is to make them more expensive, which the Clean Fuels Program
does, albeit in a very roundabout way.
Beyond increasing prices at the pump, the efficacy of
Oregon’s Clean Fuels Program depends upon the aggressive deployment of biomass
on the assumption that the use of biofuels is carbon-neutral, that plants pull
CO2 back from the air when they grow, offsetting the carbon emitted from
burning them as fuel, which is all true. But diverting a cornfield or a forest
to produce energy means not using it to do something else, like make food or
store carbon. Consequently, using biomass to produce energy could change land
uses, food supply and ecosystems without actually affecting climate change.
Supporters of the Clean Fuels Program correctly note that it
does not require any deployment of
biomass, nor does it score fuels with the assumption that all bio-fuels are
carbon neutral. As the Oregon Environmental Council explains: “The Clean Fuels
Program ... gives the oil industry options to either blend low-carbon biofuels
or purchase credits from clean fuel providers for fuels ... propane, natural
gas, sustainable biofuels, biogas and electricity,” which on the face of it
sounds like a pretty smart arrangement,
However, whether it is or not depends on the carbon scoring.
Unfortunately, the scoring used by DEQ (which they wanted to change but were
prevented from doing so) ignores the ecological opportunity cost of alternative
fuels.
It is also the case that the local producers supporting this
program are almost entirely in the biofuels/biomass business. Moreover, they
strongly opposed the DEQ’s rescoring to better account for ecological
opportunity costs. Consequently, most of the purported gains from the Clean
Fuels Program come from substituting biofuels for fossil fuels. Scoring of
electricity is equally biased since it ignores the fact that, at the margin,
electricity is produced by burning fossil fuels. None of the other options
available are currently competitive with gasoline/diesel fuel, which is a pity.
IMHO, Oregon, like
BC, needs a carbon tax,
but getting there is far more likely via substitution of motor fuel taxes. In
Oregon a portion of taxes collected on motor fuels is earmarked for county
roads and municipal streets and thoroughfares, but that proportion has been
cutback to protect state-responsibility highways, and municipalities and
counties have very few degrees of freedom with respect to increasing revenue.
Clackamas County, for example, has 1400 miles of county roads, they have enough
money to budget for about half of the routine maintenance needed to keep to
roads from getting worse. It costs about 25K/mile to chip coat the roads to
fill fissures, which, if left open, allow the roads quickly to deteriorate. A
badly deteriorated road can cost as much as $400K/mile to rebuild. Only 20% of
the roads are in good or better condition. The rest are in fair to poor
condition.
The legislative leadership had worked out a compromise that
might have been practicable – a substantial increase in motor-fuel-taxes,
combined with indexing it to inflation, and further study of applying the
weight-use-mile tax to personal vehicles (which is now monitored on commercial
vehicles using GPS devices), in return for allowing the so-called ‘clean-fuels’
law to lapse. Then the young Turks in the D party rammed thru an extension of
the ‘clean fuels bill’ in the face of 100 percent R opposition and that of a
handful of Ds, on the assumption that the Rs would have to hold their noses and
pass an increase in motor fuels taxes anyway, that their allies at the municipal
and county levels as well the Association of Oregon Industries would demand it.
Right now the Rs are hanging tough and refusing to support an increase unless
the Ds repeal the ‘clean-fuels’ bill. We'll see how that turns out. In theory,
Ds need only one R defection in the Oregon House to get what they want and
there are Rs in Portland metro who should cave. I say, in theory, because there
are also Ds who are predisposed to defect in the other direction, folks who
would rather have the clean-fuels bill than a transportation package.
I don’t doubt that the Oregon Economic Council are the good
guys. But this is not good legislation and the OEC’s business allies aren’t
necessarily good guys either (for that matter, neither are a lot of the
supporters of a transportation package). The question isn’t really who to get
in bed with, but what’s the greater good for Oregonians.
