Streetsblog Capitol Hill

“I want to congratulate you on your Committee’s approval of the ‘Moving Ahead for Progress in the 21st Century Act,” begins House Transportation Committee Chair John Mica’s letter yesterday to Sen. Barbara Boxer (D-CA), chair of the Environment and Public Works Committee.

From there, the letter changes tone:

However, I am concerned that the Senate two-year proposal does not address the fundamental problem of the long-term insolvency of our Highway Trust Fund. Your proposal will essentially bankrupt the Highway Trust Fund and make it impossible to provide any funding for fiscal year 2014.

The letter continues the debate between Mica and Boxer over how to supplement revenue from the national gas tax to fund transportation spending. It’s Mica’s response to a letter he received from Boxer three weeks ago, in which she questioned whether or not his plan truly maintained current funding levels.

Mica agrees with Boxer that current funding levels should be maintained (though her bill calls for current spending plus inflation, which Mica hasn’t bought into yet). But he has a problem with the fact that the Senate hasn’t identified the new sources of revenue necessary to do that. (He says he’s working on that himself.)

Mica attached a CBO report showing Highway Trust Fund deficits beginning in 2014 under Boxer’s scenario. Boxer has said that with the additional $12 billion from some other, yet-unidentified source, her bill will keep the HTF afloat. Current levels of spending, funded only with Trust Fund receipts, would start creating deficits even sooner – the Highway Account would run into red ink this fiscal year and the Transit Account in the next fiscal year.

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“In the coming weeks, House Republicans will formally introduce an energy & infrastructure jobs bill, and hope to move the legislation through the House before the end of the year,” House Speaker John Boehner announced yesterday.

Back in September, the Speaker let slip that the GOP would like to “link the next highway bill to an expansion of American-made energy production.” Turns out, two House Republicans have already put forth proposals to do just that. Both plans pay for infrastructure investment not with user fees like a gas tax, but with revenues from oil drilling.

Yoking transportation funding to fossil fuel extraction presents a horrific feedback loop. Drill for oil to pay for infrastructure to drive more cars to burn more oil — it’s a recipe to entrench oil dependence in transportation policy in a whole new way.

Very few details have emerged so far about Boehner’s plan. For example, it’s unclear whether House leadership plans to use one of those bills as a guide. Most likely, it will combine the House Transportation Committee’s multiyear transportation reauthorization proposal with some hybrid plan to expand domestic energy production.

This new development is disheartening for anyone who genuinely wants to see a reauthorization pass anytime soon. Congress has been unable to pass one because of polarizing disagreements over funding and complete paralysis when it comes to taking the necessary step of increasing the gas tax. A plan to expand oil drilling, with the Deepwater Horizon disaster still fresh in Americans’ minds, is bound to be even more controversial.

With no chance of passing the Senate or being signed by the president, a bill like this will only serve to distract attention from more realistic proposals to reauthorize the surface transportation program. Besides, the logistics will likely be so complex and the revenues will be far enough in the future that even putting politics aside, the proposal is untenable.

AASHTO reacted positively to the news, however, with executive director John Horsley saying, “”It’s encouraging to hear Speaker Boehner express his support for transportation infrastructure investment and we appreciate his commitment to move a bill through the House in the near future.”

With Boehner’s announcement, expanded oil drilling – long a GOP goal – has become a condition for Republican support for adequate funding for the transportation bill. The House-proposed bill had included a one-third cut in funding across the board, which was resoundingly rejected by industry groups, transportation advocates, and Democrats. Several months later, House leadership agreed to raise the funding levels but wouldn’t say where the money would come from. Now we know.

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President Obama has proposed a plan to pay for the American Jobs Act, the $447 billion bill to create 1.9 million jobs, including $50 billion for infrastructure. His “pay-for” plan includes limitations on itemized deductions for the wealthy and the elimination of some tax loopholes for oil and gas companies.

Republicans have a different idea, though: oil drilling. Several GOP representatives have introduced bills to expand fossil fuel extraction and use the proceeds to fund transportation infrastructure.

Somehow, whatever the problem is in Washington, Democrats want to solve it by raising taxes on the wealthy, and Republicans want to solve it with oil drilling.

When it comes to funding a quick jolt to the economy, it’s pretty clear that oil drilling won’t really cut it. “Any royalties from any new energy development wouldn’t start flowing to the Treasury for years,” said Erich Zimmermann of Taxpayers for Common Sense. “Essentially this would be like spending money now to be paid for with revenues that may or may not be realized at some future time. Sounds like a recipe for a doubling down on our current deficit mess.”

Some speculate that a GOP oil drilling plan would explain the recent news that House transportation leader John Mica, with permission from his party’s leadership, is looking to raise transportation funding levels by an extra $15 billion a year in his proposed six-year reauthorization bill. After all, they’ve said that raising the gas tax is off the table.

A plan to pay for transportation and infrastructure through oil drilling would erode the entire basis of the transportation funding system, which historically rests with the Highway Trust Fund, paid for with fuel taxes and a smattering of other fees on driving and vehicles. In fact, Congress requires that at least 90 percent of what the Highway Trust Fund spends must be generated from taxes “related to the purposes for which such outlays are or will be made.”

“Generating additional revenues from an increase in energy production, therefore, would likely violate this requirement and at the very least result in an override of the Budget Act,” Zimmermann said, “but would also call into some question the importance of the ‘user pays’ principle itself as it relates to paying for the transportation system.”

Whether or not Mica is planning on paying for his transportation bill with oil drilling is a matter of speculation at this point. But several other Republicans have already introduced bills to that effect.

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It’s generally difficult to determine exactly how and to what extent the shadowy hand of Big Oil is at work in our publicly funded infrastructure decisions.

Some of the more notable exceptions over the past few years have included the Koch Brothers-Scott Walker Wisconsin roads bonanza. Or the attempted assassination of the Cincinnati Streetcar by Ohio’s asphalt lobbiest-turned-DOT Director, Jerry Wray.

But Texas has just taken self-interested interference in public infrastructure projects by an oil company to a whole new level.

Nevermind that the state can’t afford it. Or that the region doesn’t have the congestion to justify it. The Houston region is renewing its push for a $5.2 billion third outerbelt at the behest of ExxonMobil.

According to the Houston Chronicle, the state is short about $315 billion — with a b — short of what is needed just to keep its existing highways in good repair and moving smoothly.

But Exxon has apparently pulled the well-worn trump card for private businesses seeking massive public subsidy in the form of roadways: it has threatened to leave the region. The multinational oil corporation has plans for a 385-acre campus, naturally, outside the reach of Houston’s two existing outerbelts, according to the Huffington Post.

The commission’s vote in support of the project was unanimous, and if all goes as planned, the segments of the road adjoining ExxonMobil will go online just as the company’s new campus, which sits about 10 miles up the road from its old campus, is completed in 2015.

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Deron Lovaas is the federal transportation policy director for the Natural Resources Defense Council. This story is cross-posted on his blog.

As debt negotiations continue in Congress, President Obama appears to be sticking to his guns on repealing the enormous tax breaks enjoyed by the oil and gas industry. The industry takes advantage of tax breaks dating back to the dawn of the oil age – the kind of fiscal encouragement intended to support nascent businesses, not consistently profitable ventures.

Getting rid of tax breaks for the multi-billion dollar oil industry is one of the few debt-reduction schemes that people can cheer about. Even George W. Bush suggested rolling back tax breaks for the oil industry in 2006. Why has Congress not managed to follow through on a popular idea that would create billions of dollars of yearly revenue for the government (and that could be sensibly plowed into the underfunded transportation program)? In part because of the efforts of The American Petroleum Institute (API), the powerful trade association that lobbies on behalf of the oil and natural gas industry.

API’s job, like that of any trade association, is to cater to the lowest common denominator – to protect lagging companies and maintain the status quo that will allow them to stay in business, no matter how outdated their business model is.

In this way, associations are even more deadly than individual companies. Under API President Jack Gerard’s leadership, for example, API no longer considers research into alternative energy a priority. The group is focused today on opening every inch of American soil and coastal waters to drilling, and ensuring that Big Oil hangs on to its precious subsidies.

API claims that losing the subsidies will put Americans’ retirement savings at risk, because many 401(k) plans hold stock in oil and gas companies. This argument is sheer nonsense.  Pension funds hold stock in many blue-chip companies. Is API suggesting, as Steve Ellis of Taxpayers for Common Sense asked, that the government should make a practice of subsidizing profitable companies in order to bolster pension funds? If I may quote Joe Biden: C’mon man. Let’s get real.

API isn’t concerned about America’s future any more than they are concerned about the pension plans of those poor, hard-working teachers and police officers they mention in their ads. Their goal is to lock in immediate payoffs for their clients – oil and gas billionaires.

Retaining massive subsidies for a mature industry while slashing funding for programs that will define our future — education, health care and transportation – is a short-sighted way to govern. What does America gain by handing over billions of taxpayer dollars to the oil and gas industry? A continued, dangerous dependence on a commodity we cannot control.

Lisa Margonelli, director of the New America Foundation’s Energy Productivity Initiative, hit the nail on the head on the problem with Congressional action on oil subsidies. Yesterday, she wrote in Politico that ending Exxon’s unjustifiable tax breaks would be nice, but there are far more egregious examples of U.S. government handouts to big oil:

Oh well, never mind that. Oil drilling permits for everybody! Photo: Steadfast TV via National Geographic

Really, a bigger problem is that the U.S. taxpayer simply doesn’t charge the oil companies enough for the oil that we own. A 2008 GAO report found that the US government “take” from oil sales in the Gulf of Mexico ranked 93rd out of 104 countries that sell their oil. THAT subsidy to the oil industry is huge, much larger than the $2.1 billion that is the subject of today’s Congressional theater.

The really problematic U.S. oil subsidies are not even on the table. Here we’re discussing a relatively small $2.1 billion in subsidies, when today American drivers will spend $1.5 billion on gasoline alone. Why? Because even more than we’ve subsidized oil production, we’ve subsidized oil demand. We encourage oil consumption, and even throw money at it through everything from paying for highways without charging for their use, to giving tax write offs for parking spaces and fuel consumption, to selling auto insurance in a “one-size-fits-all” price regardless of whether you drive 3000 miles or 25,000 miles per year, to prohibiting private mass transit systems like jitneys from competing in many cities.

And then there’s the massive amount of money we spend on maintaining military hegemony in the oil producing and shipping hot points around the world without adding that fee to the price of gasoline. These are the subsidies we really need to address and Congress should drop the charade and get to work.

When you add that all up, gas is a whole lot more expensive than even today’s prices would suggest. The late Milton Copulos, president of the National Defense Council Foundation, estimated that if you add in “things like the cost of defending the flow of oil in the Persian Gulf, the loss of domestic jobs and investment, the uncertainties that enter the economy and the costs related with oil supply disruptions,” gas would cost $11.06 a gallon. And that was in 2006.

We pay for those things out of our income taxes (and our grandkids are paying for them through our massive debt load). And to think drivers say that they pay the full cost of the infrastructure that supports their driving habit. We’re all paying for it.

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Democrats and Republicans are jockeying for the title of Gas Price Slasher, though neither party has a plan that has any potential to reduce prices. While Democrats propose cutting oil company subsidies, Rep. Doc Hastings (R-WA) has introduced three bills to expand oil drilling, saying that they’ll spur employment in the Gulf and reduce U.S. dependence on foreign oil.

The Natural Resources Defense Council’s David Goldston, in his excellent summary of the legislation on NRDC’s Switchboard blog, says these bills would “open almost all the waters of the U.S. to oil drilling; prevent any judgments from being made about where and when and how to drill; tie the hands of this and future administrations and the courts; and weaken the system of safety and environmental review. Quite a legacy.”

Congress hasn’t passed a single piece of legislation since the Deepwater Horizon disaster last April to make drilling safer. The House passed a safety bill (when it was still controlled by Democrats) but the Senate blocked it. If passed, these bills would be the first action Congress takes on drilling since the spill.

The three bills the Republicans are bringing to the floor – two of them as early as tomorrow – are:

• H.R. 1229, the Putting the Gulf of Mexico Back to Work Act, which would set a 30-day time limit for reviews of drilling permit applications, with automatic approval kicking in after 60 days
• H.R. 1230, the Restarting American Offshore Leasing Now Act, which would mandate that the government sell oil and gas drilling leases in the next year for the central and western Gulf of Mexico and off the coast of Virginia – areas the administration decided not to lease after the Gulf oil spill last year. The bill also blocks court review of controversial environmental impact statements done before the spill.
• H.R. 1231, the Reversing President Obama’s Offshore Moratorium Act, is by far the most controversial (and has such a partisan name it virtually guarantees that no Democrats will vote for it). It would mandate that at least half the unleased area off the East Coast, the Southern California coast, the Arctic Ocean and Alaska’s Bristol Bay be put up for lease sales every five years until there’s nothing left to lease. Most troubling, future administrations could not reconsider or change this mandate, even in the event of a spill, or economic damage to tourism or another industry, or because there was no capacity to handle a potential emergency.

“This is replacing oil policy with a kind of oil mania,” wrote Goldston. It’s as if Hastings set out to prove just how addicted the country is to oil, he went on: “Under these bills, the U.S. would truly be acting like an addict, willing to sell out any principle, dispense with any caution, endanger any asset to get its next fix.”

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What do the president of FedEx, the former Director of National Intelligence, and 19 other business and military leaders have in common? They’re urging the U.S. to adopt less oil-intensive transportation habits. They say our national security depends on it.

Retired military officers have joined forces with business tycoons to form the Energy Security Leadership Council. They’re looking for ways to reduce U.S. oil dependence and improve energy security. In 2008, the ESLC released a study detailing the need for the U.S. to shift from a petroleum-based to an electricity-based transportation sector.

Realizing that fuel efficiency and alternative fuels are just two legs of a three-legged stool, the ESLC released a report yesterday, “Transportation Policies for America’s Future,” calling for significant changes in transportation infrastructure [PDF].

America’s transportation network exists almost in a vacuum, the report says, with virtually no connection between how it is designed, how it is funded, and how American families and businesses use it every day. The result is an inefficient system in which system needs are out of alignment with investment, cost is out of alignment with usage, and congestion is threatening to undermine the potential gains associated with recent improvements in vehicle technology and fuel diversification.

The ESLC call for policy shifts including:

• The establishment of national performance metrics, with reduction in oil consumption chief among them, for projects to receive federal funds.
• Create a new federal formula program, totaling 25 percent of annual federal transportation funding, to reduce congestion and encourage “economically justifiable alternatives to single-occupant travel in internal combustion vehicles” in metropolitan areas.
• Create a $5 billion-per-year competitive program with funds available to congested metropolitan areas seeking to implement dynamic tolling, improved traffic signals and payment systems, and public transportation solutions.
• Maintain and improve highway and passenger rail capacity outside of metropolitan areas and along major freight corridors.
• Remove federal restrictions on state tolling of new and existing roads.
• Shift to a VMT fee that “adequately accounts for fuel consumption externalities.”

These aren’t treehugging hippies advocating for these changes. These retired high-ranking military officers and corporate CEOs are convinced that the U.S. addiction to oil is the nation’s Achilles heel. “Hostile state actors, insurgents, and terrorists have made clear their intention to use oil as a strategic weapon against the United States,” they say. “America’s energy security can be fundamentally improved through major reductions in oil demand.”

Today, U.S. taxpayers see the cost of oil wars in the Middle East taken out of every paycheck, all to feed America’s driving habit. A new proposal for more transparent pricing would shift that burden to the automobile drivers themselves by imposing a new oil security fee at the pump.

That’s just one of the recommendations in Taking the Wheel: Achieving a Competitive Transportation Sector Through Mobility Choice, a new report by the Mobility Choice Coalition. [PDF] The coalition brings together fiscal conservatives, environmentalists, and national security interests to propose transportation reforms that would reduce oil dependence.

Unlike many similar reports, the Mobility Choice study doesn’t put emissions reductions front and center. They’re more interested in fiscal restraint and national security – well-timed considerations for our current political climate.

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Last Christmas, an Oregon couple driving with their baby in the backseat followed erroneous GPS instructions and got stranded on wilderness roads in a Cascades snowstorm. Twelve hours later, they had given up hope and taped a farewell video. While a rescue party fortunately was able to save them, they no doubt wished they hadn’t allowed their belief in modern electronics to override their own clear eyes and good instincts.

Their misplaced faith is hardly exceptional. If there is one true religion in the United States, it worships at the altar of Technology. Christian or Jew, Muslim or atheist, we accept this doctrine: that technology provides the main path to improving our lives and that if it occasionally fails, even catastrophically, all it will take is another technology to make everything better.

How else to explain two case studies in modern hubris that now appear to be reaching their denouements: The Deepwater Horizon catastrophe and Toyota’s sudden acceleration debacle.

It is our belief in technology that has for years reassured us, along with oil industry advertising and the promises of the U.S. Minerals Management Service, that drilling offshore -- way offshore -- could be done safely while we kept on refilling our tanks. It has reassured us, along with car company marketing and green lights from the NHTSA, that our cars -- increasingly electronically complex -- would keep our families safe while we put ever more miles on the odometer.

The automobile, not the computer or smart phone, is still the technological icon we venerate with the greatest fervor. The car is the most important, most expensive piece of technology most of us own. It is the technology of the past century, and neither BP nor Toyota would be as large or as powerful without that reverence.

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