I was a bit miffed that anyone would make a campaign issue out of opening up California and Florida to offshore drilling. As I recall*, drilling was suspended in those areas by Ronald Reagan, when Bush Sr. was running for president. The only credible explanation for stopping it in those places, and not in Alaska, which is much more critical from an ecological perspective than most of California – as beautiful as it’s coast is, was because California and Florida have more electoral votes. Property values probably also had something to do with it.
I’m not a budget wonk but, allow me to suggest another motive, besides satisfying the desires of the oil companies. Revenue from offshore oil and gas is the largest source of non-tax government revenue. Not that today’s disenchanted so-called “principled” conservatives have ever been concerned with government revenue.** However, once a Outer Continental Shelf (OCS) lease sale is included in the 5 year plan that MMS is required to develop, the projected revenue can be included in the federal budget. If this process is expedited, as MMS is clearly seeking to do, Bush – and the Republicans could present a “balanced budget” for the coming years, in time for the November election, even if the figures are wishful thinking. Even if they don’t get elected, the wrecking ball will have been set in motion to paralyze the next administration when the projections aren’t realized.
This kind of maneuvering is not without precedent. A bit of googling turned up this Sierra Club press release from October 2005 which states:
In addition, there will be a major vote, likely following the Columbus Day recess, on the fate of the Arctic National Wildlife Refuge and possibly on lifting the moratorium on off-shore oil drilling. Drilling proponents in Congress are trying to use the Budget process to advance these controversial issues. Congress has included anticipated revenues from lease sales in the Arctic in the Federal Budget Resolution, even though the revenue projections are inflated to 80 times the current average.
Google also turned up this bit of analysis by Richard Fineberg (pdf), pointing out that “If the entire $5.0 billion in [projected] lease bonus revenue is not realized, the federal portion of that shortfall must be added to the increase in the federal deficit caused by the reconciliation package.”
And MMS has already started preparing a new 5-year plan – for which it has requested comments by September 15, specifically asking:
Although OCS oil and gas leasing is typically conducted through an extensive, long-established process, are there alternative ways to ensure appropriate consultation and to streamline our leasing procedures? Should the OCS Lands Act be amended to allow changes in the 5-year plan without starting the process all over again in cases of acute supply or demand shift affecting national security?
In other words, expect an amendment to the OCS Lands Act to be attached to something Congress will have to vote on, in September or October, to legitimize amendments to the existing 5 year plan, that MMS is already hard at work on.
*Disclosure: at that time, I was the research assistant for a committee and three panels at the National Academy of Sciences, that were engaged in a review of the Minerals Management Service Environmental Studies Program. After Bush Sr. was elected, that same committee was asked to determine whether the scientific information was adequate to support leasing decisions in California and Florida. It was not, and California and Florida have been off limits to new lease sales ever since. I have no idea whether there has been any change in the quality and relevance of studies undertaken since then but note that, at the time, the committee also made a point of highlighting numerous studies conducted by previous NAS committees, which had had little if any effect on program decisions. To its credit, MMS did actually sponsor some of the first studies regarding the contribution of onshore OCS facilities to the loss of Louisiana’s wetlands. Those were among the exceptions.
Now, if I could only remember the name of the MMS official who, in an offhanded comment, said that, if only there were another gas crisis, there would be no need to produce environmental studies because people would just want the gas… Which would back up what Naomi Klein is saying.
**For more on the ideology of “starving the beast”, there is an excellent discussion this week at the TPM book club regarding The Predator State – a new book by James K. Galbraith that I am adding to my reading pile, along with The Wrecking Crew by Thomas Frank.
Given the talent that mainstream journalists always seem to have for finding “experts” on both sides of an issue even when there is a solid of a consensus as one can ever expect to get from science, and from anyone who has done an honest review of the evidence (e.g., on human induced climate change), I was shocked to learn that, at least on the NewsHour, they weren’t able find a single expert to argue for a gas tax holiday. Gregory Mankiw cites an e-mail from Len Burman:
Yesterday I was on the NewsHour to talk about the gas tax holiday. I asked if there was another guest and the producer said, “We tried, but we couldn’t find anyone to argue the other side (that the gas tax holiday made sense).”
Mankiw is the economist who founded the Pigou Club, which advocates raising the gas tax. In light of the current uproar, the manifesto is worth revisiting.
McCain’s proposal is as predictable as Republican proposals to solve the crisis by opening ANWR to drilling, but, has Hillary Clinton really joined the assault on reason? Did she really ask members of Congress whether they are “with her or against her” on her gas tax proposal? Pressed on this by George Stephanopoulos this morning, did she really just dismiss the arguments against her proposal as “elite opinion” as she sidestepped the question? TPM Election Central has the direct quotes:
“I think we’ve been for the last seven years seeing a tremendous amount of government power and elite opinion behind policies that haven’t worked well for hard working Americans,” she said.
A bit later she added: “It’s really odd to me that arguing to give relief to a vast majority of Americans creates this incredible pushback…Elite opinion is always on the side of doing things that don’t benefit” the vast majority of the American people.
An ordinary voter begged to differ, however. Stephanopoulos turned the mike over to a woman who said she supported Obama and said she makes less than $25,000 a year.
“I do feel pandered to when you talk about suspending the gas tax,” the woman said, adding: “Call me crazy but I actually listen to economists because I think they know what they’ve studied.”
I don’t always listen to economists either – I grew up arguing environment vs economics with my economist father, at the family dinner table, Italian style. But that was a long time ago, and sometimes, on some things, they are actually right. Since then, I even studied a bit of it myself….
Meanwhile, Obama on Meet the Press, speaking from experience, confirmed that suspending the gas tax won’t actually lower prices. Which is what happened in Illinois after he supported doing this at the state level. Hopefully, some enterprising journalist will ask both McCain and Clinton to explain how their gas tax proposals are consistent with their positions on addressing climate change, or whether they will shelve those at the first sign of a deepening energy crisis. I have generally refrained from taking sides since we need both of them not just to win in November, but to get anything done. But Hillary is really starting to sound desperate and is digging herself into a big hole with this one. Its sad.
When McCain, and then Clinton, started to call for a summer holiday on the gas tax, my first thought was, if it was actually suspended for the summer, good luck to whoever tries to reinstate it in the fall. That is because prices hover around the breaking point and therefore would just rise to fill the gap. Krugman has a concise textbook explanation, worth searing into the brain:
Why doesn’t cutting the gas tax this summer make sense? It’s Econ 101 tax incidence theory: if the supply of a good is more or less unresponsive to the price, the price to consumers will always rise until the quantity demanded falls to match the quantity supplied. Cut taxes, and all that happens is that the pretax price rises by the same amount. The McCain gas tax plan is a giveaway to oil companies, disguised as a gift to consumers….
…The Clinton twist is that she proposes paying for the revenue loss with an excess profits tax on oil companies. In one pocket, out the other. So it’s pointless, not evil. But it is pointless, and disappointing.
Kudos to Obama for not pandering on this one, and for turning it into a teachable moment. If he sticks to it and still manages to get the nomination, he will have demonstrated his ability to not just tell voters what they want to hear. Still probably easy compared to any attempt to reinstate it later. I know this is pushing it but, by that logic, it is conceivable that the price would stay the same even if the tax were raised….
I caught a few snips of Sen. Obama being interviewed on Fox News this morning (transcript here) and am disappointed to say that both of our leading contenders for the Democratic nomination are still falling into the trap of reinforcing caricatures of Democrats that are inherent in the talking points of what has become the mainstream lunatic fringe. Sen. Clinton fell into that trap most notably and recently when she felt compelled to “disagree” with MoveOn, on a position they never took. So lets just say they are both allowing themselves to get framed, but since I try to stick to environmental science and policy here, for now I’ll just respond to Obama’s remarks about regulations vs markets.
If Obama wants to transcend partisanship, instead proliferating the image of Democrats as advocates of top down regulation vs Republicans as advocates of market solutions for environmental problems, when
asked set up with the question about where he might have differences with his own party, he could have, instead, taken the opportunity to say something more interesting, which is that the markets vs regulations debate is just an old tape that keeps getting replayed, and that there are legitimate debates, even among Democrats, over how best to confront complex environmental problems for which regulations alone are clearly inadequate. And that many Republicans, less bound by caricatures and ideological convictions, are already part of that conversation.
Although it doesn’t fit so neatly into soundbites, most of those engaged in environmental issues have, for quite some time now, known and acknowledged that end-of-the-pipe command-and-control regulatory solutions were only useful for going after the low-hanging fruit. From non-point source pollution such as stormwater and agricultural runoff, to global warming, we have had had to contend with a more complex breed of problems that requires a wide range of complementary approaches, including but not limited to market-based incentives. Secondly, regulations and markets are not an either or proposition – for example, for a cap and trade policy to work, you need regulations or policies to set a cap, and also to determine how permits are allocated and how revenues are used – which is the actual crux of the debate. Without that, markets will just stay the course that is inherent in the status quo and in existing policies.
Presidential candidates aren’t the only ones guilty of this of course. Given that the MSM feeds on it, disagreeing with one’s own side, while a pitfall for political candidates, is becoming a well worn path to fame and fortune for others. Another notable example being Nordhaus and Shellenberger who are making similar arguments in which they paint environmentalists with a similar broad brush. There is an interview of Michael Shellenberger by John Horgan over on bloggingheads.tv, much of which had me thinking “well duh” – to the extent I listened to it. More interesting commentary is this op-ed by Elizabeth Edwards, noting the shallowness of general news coverage of the presidential campaigns, in which “issues that could make a difference in the lives of Americans didn’t fit into the narrative template” which is, of course, why the PNT aims to cover at least some of the news that doesn’t fit.