NC Media Watch

A quest for reason and accuracy in letters to the editor, guest editorials and other issues of interest to the citizens of Western Nevada County.

Saturday, August 27, 2005

Incentives or punitive regulations (Edited)

The Union editorial staff, New energy bill provides little relief for drivers, August 27, 2005
It's been 19 days since President Bush signed the energy bill into a law that provides $14.5 billion in tax breaks to corporations. Since then, gasoline prices have climbed an average of 15 cents per gallon in the state.
The government only has two options, punitive regulations or incentives. Would the editorial board have preferred more punitive regulations? Regulations that drive up the cost to produce a product, like requiring different gas blends in different communities in California, requiring producers to modify their refineries for every batch. Details on boutique gas here. Maybe, regulations demanding additives be added to the fuel, then allow environmentalist to sue corporations for using the additive. Maybe the editorial board would like more regulations, that make it even harder to build refineries. The current rules have stopped refinery building for the last 20 years, more punitive rules could extend that to 40 years. Our refining capacity is at 98 percent, if we can get some more punitive rules in place, we can make it 100 percent, with a 110 percent demand due to population growth, then watch fuel prices climb.

Pat Butler was telling us about the lower prices in the Mid West. Perhaps he could look at the regulatory environment in the Mid West, and draw some parallels. It is hard to build a $120,000 house in California, when the first $60,000 goes to government fees. Gas prices are lower in states with fewer regulations. Think about it!
Since that time [1970], our lawmakers, many of whom receive generous campaign contributions from oil companies, have stayed the course with a one-dimensional energy policy that relies almost entirely on fossil fuels. That policy has left us dependent on the Middle East and other countries to meet our growing appetite for oil.
Oil companies are public corporations, they are owned by stock holder. Over 65 percent of US family own stocks. So, where will the oil come from, if not from the Middle East. We refuse to drill in our own back yard.
Unfortunately, the energy bill doesn't really provide incentives for conservation.
Conservation is an individual decision. Even with the current fuel prices, people keep buying SUVs and big pickup trucks. Why, because fuel is a smaller segment of the family budget today than is was in the 1980s. When adjusted for inflation, fuel prices are lower today than in the 1980s.
We need to drive less, walk more, demand vehicles that get better gas mileage and insist that alternative energies be developed and quickly. In the meantime, if you continue driving large, gas-guzzling vehicles, you are endorsing an energy policy that leaves this nation vulnerable to circumstances that are beyond our control and could propel gasoline prices to crippling levels.
Some good advice, but we also need to pay more attention to the punitive regulations that incrementally drive up the costs of homes, products, and yes gas. One example is the California greenhouse gas regulations, that are based on emotional reactions to global warming junk science. We allow our regulators to make punitive regulations based on bad science, then complain about the results. We deserve what we get. Higher prices on all products, including energy.

UPDATE: A google search found this information about percent of personal consumption that goes to energy purhases:
Energy consumption “rose from about 6% of PCE in 1970 to about 9% in 1980. From 1980 to 2000 it fell to close to 4%. since 2000 it has rebounded to just under 6%”.
So you can see we are spending less of our personal income on fuel now than in the 1980s, but it could soon be equal to the 1980s, real soon now!

More details can be found here and here.

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Blogger Frederic Christie said...

Yes, and virtually no one actually discusses, those "punitive regulations" are usually more than offset by oil industry subsidy (see Take the Rich off Welfare, among others) and still don't come close to representing the true social costs of gas, externalities added in, which should be 3-10 times what they are now.

Sun Aug 28, 12:54:00 PM PDT  

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