Throughout the transportation debate, the notion that the gas tax is failing and that we need to look for other sources of revenue is often taken as a starting point of discussion.

Such was the case in an opinon piece by Bradley Meacham & Steve Marshall in the March 5 2008 Seattle Times. "With the uncertainty of traditional revenue sources, we need a new approach that both addresses the growing demand for infrastructure and helps reduce greenhouse gas emissions, offers more alternatives to driving alone, and moves people and goods safely, reliably and on time."

As Usual, the 520 bridge (above, right below the Great Blue Heron) was designated as the proposed new beachhead for tolls, and it was noted that like on the Tacoma Narrows Bridge, motorists would not have to stop at a booth. But none of the big problems with tolling were mentioned.

What problems?

Spot Tolling is always inherently unfair

Tolling one section of roadway always comes down to charging people to go from A to B but not from B to C. The argument that the road from A to B costs more to build than the road from B to C can sometimes seem convincing--but that is not really when tolling is proposed.

In actuality, although spot tolls are typically presented as rational user-fees for expensive sections of roadway, they really aren't. They are only embarked upon in situations where the roadway to be tolled is, by happenstance of geography or politics, a monopoly section of roadway. In other words, what sold the tolls on the Narrows Bridge, for instance, wasn't really the high cost of the bridge to be built but the simple fact that the nearest alternative to Highway 16 was the long run around the South Sound or a cumbersome Ferry ride. If a lot of work needs to be done on the Fremont Bridge, you can bet no one will suggest a spot toll on that, since drivers can just make a couple left turns and be on the Aurora Bridge.

The unfairness of tolling creates serious problems. Not the least of these, is the political problem of implementing tolls. There is plenty that's unfair about life that we can't do anything about. Why institute a new method of raising revenue that is blatently and blandly unfair in its basic conception? Opposition to tolls has been fierce in many parts of the country.

The unfairness of tolling also leads to unintended consequences as drivers choose to avoid tolled roadways, congesting routes that can serve as alternatives to the tolled road.

 

 

 

 

 

 

 

 

it may seem intuitively fair to toll from A to B. But in the case of the Narrows bridge that wasn't the reason the toll succeeded so much as the monopoly power of the road from A to B. The nearest alternative was the Vashon Ferry or the route around Shelton. This problem alone should immediately concern anyone who cares about the ideals of this country. The 520/I-90 case is classic. Tolls are only put where geography and political happenstance allow them. Due to the political difficulty of getting tolls put on 90, it appears tolls will only go on 520. The only way to get around the blatent unfairness in that--well there is no way. Advocates of tolls simply minimize it as though it didn't matter.

 

 

Tolling is a very inefficient way to raise money and creates a new bureaucracy and a new class of miscreant.

to raise enough revenue is taken on faith. The inability to quickly fix highway infrastructure like the Viaduct in Seattle's waterfront is seen as evidence that the gas tax doesn't and can't raise enough money to do these thing.

(Photo of Toyota Prius)

The now and future rise of hybrid and electric cars such as the Toyota Prius shown above is used to shake people's faith in the gas tax as a future revenue source.

 

I'm proposing a completely different approach:

1. Reject Tolls

2. Reject Congestion Pricing

3. Create a new substitute gas tax for electrics and hybrids that would be based on odometor readings but defer putting it in place for the time being.

4. Then DoTs should either:

A. Live within the means of the revenue raised by the gas tax or

B. Propose increases in the gas tax.

 

(photo of 520)

 

 

A Streaked Horned Lark. Photo by Patrick Sullivan. Of several subspecies of Horned Lark, the streaked Horned Lark of the oak-prairie in the Pacific Northwest is by far the most colorful and the rarest. The proposed Cross-Base Highway would destroy some of it's remaining best habitat.

Our region is at a crossroads. A major transportation initiative will be on the ballot in November that I comment on in an ad placed in the August 28, 2007 Seattle Times & Seattle Post-Intelligencer. Here is the text:

 

The Magnolia Bridge, one of many bridges in the region with safety ratings similar or worse to the Minnesota bridge that is not scheduled for repairs even if RTID passes.

Bridge Safety (Paragraph 1 of ad): An article published in the August 3, 2007 Seattle Times by Jim Brunner says, "A $14.5 billion roads package headed for the November ballot would help repair or replace a few of the region's vulnerable bridges--including the Highway 520 floating bride. But most of the cash would be earmarked for expanding highways and would not touch other local brides in need of repair." The article goes on to give examples of at-risk bridges.

(One slight error in Brunner's quote: The RTID would not (fully) replace Highway 520 as transportation leaders currently envision it. As usual, the revenue stream created by RTID would be just another down payment, and more revenue sources such as a toll would be required under the current favored plan for this bridge.)

Subsidy (Paragraph 2): RTID adds to an existing government subsidy for driving that distorts the market and reduces overall efficiency in the transportation sector.

Anytime a general tax rather than a user-fee (such as the gas tax) is used to build or maintain the roadway, a subsidy to drive is created.

The RTID would raise the sales tax, a general tax, to pay for the roadway. This would add to existing general tax revenue already dedicated to building and maintaining roads that are creating congestion, pollution, sprawl and general inefficiency in the U.S.

The RTID would also raise car tab fees to pay for the roadway. This is another horrible error insofar as car tab fees don't affect the marginal cost of driving, only the total cost of driving. As Dr. Vukan Vuchic writes in Transportation for Livable Cities, "Decisions to purchase an item (or use a service--EN) usually depend on its marginal rather than its total cost."

In other words, when we decide whether or not to hop in the car and make a trip, we only consider the cost of gas, parking, tolls and view such costs as insurance and car tabs as sunk costs.

When much of the costs of driving a car are not included in the marginal cost, this acts as another subsidy by government (think: the referee in this game) for driving.

Besides adding to pollution and congestion, the subsidy of driving has another huge ill-effect: it reduces the profitability of transit and thus increases the need for government to subsidize transit.

As is often the case, a first subsidy creates the need for a second.

(Some may question the need for transit in the first place, but as a large mass of baby boomers move toward their retirement years, this question will recede further rom the center of political debate. Government must insure that the elderly, the young, the disabled, the poor and, for all of our benefit, those who have had their driver's license legally rescinded, can still have some level of mobility. Whether Gov't should be the manager/owner of these systems should be an open question and our journalists should feel free to report from places in the world with private transit operators and compare and contrast.)

 

photo Patrick Sullivan

Oak Prairie (paragraph 3): When we see a critter as beautiful as the above streaked Horned Lark, some might be inspired to bring up a pointless debate about whether it was something that God made, ordered to multiply and then informed us was good; or whether it was the product of millions of years of evolution.

But our immediate response to it should be to say "Our generation has no right to obliterate a thing of such beauty."

Unfortunately, obliterating this bird is exactly what voting for RTID would do. The Cross-base Highway would be bulldozed through some of it's last best habitat in this state.

A word on Tolls and Congestion-pricing

Tolls seem to be in our future, as DoTs all over the country are starry-eyed about them. Congestion-pricing has been used in London and elsewhere and sadly, some green organizations have become impressed with both ideas.

However, we already have a nearly perfect means for collecting revenue for building and maintaining roads, the gas tax.

The Gas tax is extremely efficient--the money spent collecting the tax is a tiny percentage of the total amount raised.

The mechanism is already in place. We don't have to fund a new bureaucracy to make it work.

There is little or no cheating in the system as far as the experts know. It's a pure user-fee which operates on the margin, so it doesn't create an artificial incentive to drive more than necessary.

None of these attributes are true of tolls or congestion pricing. Both are extremely innefficient at collecting money --in some cases half of the money collected goes to the mechanism for collecting the money.

New bureaucracies are required. New high-tech methods are required.

A new class of miscreants is created. People who were previously law-abiding will now be sent down along the slippery-slope of criminality when they drive a lane they weren't supposed to be in.

Unlike the gas tax, tolls are insensitive to carbon pollution. The gas tax increases when you burn more fuel to go a mile, so it acts as a marginal disincentive to pollute. Tolls don't.

Tolls are always unfair. They tax the motorist going from A to B but not the motorist going from B to C. Why? for political jurisdictional or convenience reasons, no truly principled ones. The toll on the new Tacoma Narrows bridge is reportedly popular--but why really should someone pay for that bridge when a similar toll will never be put on the Aurora Bridge, which I often drive, simply because of its proximity to alternatives: the Ballard, Fremont & U-District bridges.

Congestion Pricing is unfair also. Why should people pay extra to drive into a city? The obvious effect of such a tax will be to push more driving into the country where it's free, and congestion pricing will become a powerful incentive for urban sprawl and more pollution.

Why do DoTs like tolls? Because they've run into a wall of resistance when it comes to increasing the gas tax, and they desperately want more money. With tolls and congestion-pricing, the political resistance can be divided and conquered.

 

 

 

Appendix

 

Our transportation system is a hybrid between a market system and a government bureaucracy. The market provides the vehicles that drive on the roads, while government pays for and builds those roads. But a persistent subsidy of the private product--the car--results when government uses anything but the gasoline tax to pay for the roads and their external costs.

This subsidy promotes congestion and the pollution accused of altering climate. Meanwhile we miss the chance to let the market go to work to solve our immense & increasing problems. The subsidy of the roadway for cars & trucks increases pollution & congestion while making it more difficult for any type of mass transit product to turn a profit.

Subsidies of transit such as this bus are very visible & are easy for folks to complain about. Ironically these subsidies are made more necessary by the subsidy of cars and trucks which is largely built into the way we do things and is mostly below the radar.

 

What are the elements of the

subsidy of cars & trucks?

1 Tax money raised from non-user sources to pay for the roadway.

(Note: This component would be vastly increased in Seattle by Mayor Nickel's ballot proposal, which would raise non-user-fee taxes like property tax to pay for roads. Presumably, the Regional tax (RTID) which may yet show up on the ballot this fall would do the same.)

Much of the money for county and city roads is raised from general taxes such as property and sales tax. As I understand it in King Co. at the county level alone we spend in the neighborhood of $72 million on roads that comes from sources other than the user fees (gasoline tax and tabs, etc). In what is getting to be a dated source, James MacKenzie et al estimates the national total of such expenditures to be 29 billion in 1989 (I'd love to have newer numbers for this).

If you live in CALIFORNIA, the amount of this subsidy is even worse. According to the California DoT, the gas tax covers only 62% of the cost of roads in that state.

 

2 In Washington state, sales tax is waived on gasoline, yet it is levied on other consumer products.

At first glance this seems so logical & fair, since gasoline suffers the gas tax, but if the gas tax is seen as the user fee it really is, then it becomes clear that this waiver is actually a subsidy. (Anti-tax conservatives, bear with me here, I'm not asking for a net addition to government revenue. The rate of the sales tax should be reduced so that the change--adding the sales tax to gasoline--is revenue-neutral.)

 

A train, which pays property taxes, crossing the Nisqually River. It must compete with trucks that don't have to pay any property taxes on the land they use.

3 Cars and trucks pay no property tax for the land they use, while railroads must pay this tax.

Again, I have no interest in increasing governmental budgets, just redistributing the tax obligations to create a level playing field for all market participants. Trains, which are mainly privately owned and operated, have suffered as competitive losers to the car and truck for the last 100 years. Why should they pay the property tax when their competitors, by fiat, don't have to. Property taxes could be paid through the mechanism of the gas tax, and other tax burdens, such as sales and property tax rates, should be decreased so the change is revenue neutral.

Kemper Freeman & others keep trying to push their nightmarish vision of a new freeway--"I-605"-in Eastern-Western Washington that would pave over land like this. Such a freeway would be massively subsidized by eminent domain.

4 (subsidy) Eminent Domain is a subsidy for cars whenever it is used for the roadway.

This is a factor in some cases of road-widening and the paramount issue when it comes to building any all-new highways, such as I-605, that bad idea that refuses to die. (It would be an all-new North-South highway at the foot of the Cascades in Western Washington.) Without the massive subsidy of eminent domain such a huge land grab could not even have been conceived, since acquisition of the needed land would be prohibitively expensive if accomplished in the free market. Like most people, I do not want to see eminent domain entirely eliminated, but I'd like to see its use limited, restricted and decreased rather than expanded and increased.

 

5 The Roadway infrastructure returns no profit to its owners.

Here in America, we have contradictory views on whether publicly owned assets should return a profit to us. Alaskans think it makes perfect sense (as they certainly should) that their state government sends them a big check every year simply because their state owns oil fields. Here in Washington, we citizens also take it for granted that our government should reap a return from its management of our forests to pay some of our taxes, in this case underwriting most of our school construction budget. But their is little cognitive disonance when at the same time we not only make no money but operate the public air waves we own at a loss, or when we have to actually pay taxes to keep our public Port operating here in King County even though it is a business sitting on a couple billion dollars worth of land and assets, or when we are constitutionally prohibited from getting a return on the vast roadway for cars and trucks that we as citizens own.

Why should we pay taxes when user fees can raise the money instead, and in the process restore a level- playing field to the market, thus allowing for greater efficiencies in our entire economy? Again, following through on this idea would result in lower tax rates but a higher gas tax--the first part hard to implement, and the second nearly impossible as the gas tax is certainly a reviled tax.

(Tolls are seductive for all players & could help in returning a profit to the roadway owners, but should be avoided because they'll bring a new level of unfairness to the system)

The difficulty of raising the gas tax has caused DoTs to covetously eye other forms of raising revenue for the roadway. Oregon is testing a per-mile tax, while DoTs everywhere are working on getting us in the public to accept tolls. Ironcially, tolls represent the best chance of giving the public a profit for it's ownership roll. Tolls are appealing to some sections of the public because they shift costs, and some in the public feel they will avoid the costs completely, while others who want a certain bridge or roadway feel tolls will at least get it done. But tolls for one replace a simple straightforward tax, the gas tax that costs very little to collect, with a tax that will bring us practically a whole new bureaucracy necessary just to enact and collect the tax. Plus tolls could create a whole new class of criminals--or should we just call them scofflaws. But the bigger problem of tolls is that no matter how you slice them, they are unfair. Expedience of raising capital or operating funds is the only reason people will have to pay to go from A to B and not from A to C. Unfairness is a terrible foundation for a taxation system, and I predict this unfairness will lead to all kinds of negative unintended consequences if the public gives in and lets the DoTs pursue tolls aggressively.

 

5 Car & truck users don't reimburse us for the external costs they impose upon us.

An external cost is a cost not borne by the market. Noise pollution is a classic external cost. If I set up a manufacturing operation next door to you and make you listen to loud factory noises all night, then sell my product wholesale to department stores, the buyer of my manufactured product pays me not you. Your cost is "external" to the transaction. This is where government in a free market must act as a referee, either through legislation or through the civil courts, so that the payer of external costs is either reimbursed or freed from them. Liberals and conservatives alike have misinterpreted this function by overusing the word "regulation," when "refereeing" is more appropriate.

Automobiles have some serious external costs, which at this point are mostly not being addressed.

 

Cars replacing industry as Sounds Worst foe, says the Sub head of the Seattle Post Intelligencer's lead story on Aug. 16, 2005 . Not only are cars becoming the leading cause of pollutants in the Sound's sediments, they also are leaders in creating atmospheric pollutants that scientist say are forcing changes in the world's climate systems. (Ed get specific %)

Some people claim not to care or “believe” in global warming, but there is an issue not often enough raised that could make whether we "believe" in it or not a moot point, and could affect something that concerns us all.

 

The perception that counts regarding global warming is not ours but the rest of the world's. These folks are our business & trading partners--and hopefully our friends--in our free-trading, world-traveling future. Warming is putting US taxpayers at huge risk of serious financial obligations for tort-based damages, since we are far and away the world's #1 producer of greenhouse gases. How much will we owe the Micronesians when their nation becomes a lighter green area of the Ocean? How much would we want if another nation took the land we call America out from under us? Does it matter if the legal structures are there to require us to make these payments if the majority of the world sees it as a simple moral obligation? It also doesn't matter whether science can ever prove that any change which has occurred was anthropogenic (caused by humans) or not. Because this question is so inherently complex, science no doubt will never possess the capacity to resolve it to everyone's satisfaction.

 

It is critical that the US, and Washington state and Seattle at least require of automobiles a reimbursement for the external cost of Carbon Dioxide and other gases being injected into the atmosphere. Again, these externality fees should be collected at the pump and be offset by reductions in regular tax rates such as for taxes on property and sales.

6 Parking construction requirements are gov't mandates that act as a subsidy for cars

Parking construction requirements of developers are a non-monetary "tax" on anyone who is building housing in urban areas of the country. In Seattle, developers must normally provide 1.5 parking spaces for every apartment unit they construct. Mnay people are delighted to hear this because they feel this will help them find a parking spot near their favorite restaurant. But it's a vast contributor to the escalating price of housing, and it thwarts pioneering individuals from receiving the savings due them for attempting to build a new car-free urban lifestyle. It locks us into relationship with the car that was borne of the 50s and 60s and prevents the market from helping us to solve the problems of urban auto congestion that are now plaguing us.

 

7.Zoning & construction height restrictions--at the risk of getting far afield & into a can of worms-- also act as subsidies for the car

Zoning is a strange phenomenon in America. Zoning was never voted in, it just came to be. It's widely viewed as a protection for the environment, but it probably has massive negative effects on the environment along with positive ones. On a recent radio show the author of This Land, a book deploring urban sprawl, suggested he might snap his fingers if it would get rid of all zoning. But no, I'm not making some kind of quixotic call for it's demise, and no one else seems to be doing that either. In fact, I remember going to a Hearing for a proposed new tree ordinance in Seattle and afterwards talking to a group of developers and realtors who had come to oppose it because it represented more governmental intereference in the market and in their livlihoods. I asked them what they thought of zoning, and they waved me away: "You gotta have zoning," said one and the others impatiently nodded.

But in many ways I would argue that low zoning densities near urban cores are a mandate and a hidden subsidy of the automobile. By severely limiting urban density, parking receives a non-market protection and transit, a natural competitor to cars, is handicapped. And sometimes there is no doubt that zoning and building codes favor the automobile. When Delia and I wanted to renovate and somewhat convert our garage into a building that we could enjoy, rather than one that only an automobile could enjoy, we discovered we would have to become lawbreakers to do it.

(Efforts to remove various types of land use regulation, such as Oregon's measure 37, inevitably end up affecting only the un-built, and not the already-built areas. With 37, this was explicit: an urban landowner had no recourse under 37 if they were disallowed from building a tall tower, but a rural landowner does have recourse under 37 if told not to subdivide. Therefore these measures don't un-do the negative effects of land use regulation on the environment, only the positive effects of land use regulation on the environment. That's not to say there isn't some issue here that needs to be addressed: for one thing, I strongly believe the electorate should be willing to pay, in the form of forgoing property tax receipts as a basic, for private land that government forbids developement on.)

 

The picture above is of Washington Park Plaza, a 22 story residential tower in the Madison Park neighborhood of Seattle. It offers a clue to what Seattle would look like if the market for housing in Seattle was more of a free market. Built before any regulations were there to stop it, the Madison Park Plaza looks almost out of place now to drivers on the 520 bridge. Had citizens and politicians not rushed in to change the rules, it would probably now be one of the smaller towers around Lake Washington and in neighborhoods like Capitol Hill and Wallingford. Of course I'm cringing, as many of my readers no doubt are, at the thought of all those imaginary towers around the lake, but on the other hand, think of how many other things would be different as well, and many of the differences would be for the better. One difference would be that housing prices would be lower, because there would be more alternatives to moving out to the suburbs and the price of land, bid up inflexibly under the current system, would be much less a factor in the cost of apartments or condos in these towers. Another is that the outlying areas would be greener. People who lived in those towers wouldn't be sprawling out into the relatively tiny area that is the still-undeveloped lowlands of Western Washington.

 

 

 

"Highway projects pass neither market nor electoral tests but happen anyway..."

In market capitalism, a project must pass a test in order to come into existence--it must win financing in the private sector--and then, unless it has a "sugar daddy," it must pass another test--profitability--in order to continue in existence. Thus a restaurant on the corner that used to be so convenient is gone, replaced by a bank or a Krispy Kreme. But with road construction and road widening, a bureaucracy is making the judgement about whether the project is desirable. The road never has to turn a profit in any sense, and nor does it normally have to pass any electoral test. The people who live in the communities south of Sea Tac airport probably will not get to register an opinion on whether a southern extension of State Route 509 will be built, the DoT would rather just do it. Similarly, the DoT gerrymandered the election district until it could find the right size boundaries to give it the yes vote it insisted on to build the 2nd Tacoma Narrows bridge.

 

So what is the result of all this subsidy?

"Our subsidy of cars, the winners in the market place, guarantees that the losers, such as transit, will have an even more difficult time of it, &, ironically require greater subsidies themselves."

Our subsidy of cars costs us twice as taxpayers. Once to pay for the subsidy and then again we have to dig in our pockets to pay for the extra cost of subsidizing transit.

When we decide which to take-- transit or a car--price is one of the things we factor in. When the price of driving is artificially lowered because the roadway is supported by taxes rather than user fees, we notice that it is usually not cheaper or not much cheaper to take the car. All this means that if we want transit, we have to subsidize it even more than we normally would, because fewer people are going to buy the product. In Seattle, an astonishing 75 cents of every dollar it costs to operate a bus is paid for by taxpayers. If more people used transit, investments like the monorail would look even better than they do now and we could move toward transit investments that allowed transit to turn an operating profit, and we'd all be better off.

Some people question the need for transit in the first place, but government has a natural law obligation to provide some kind of transit option for people. Why? Because driving is something that large categories of people can not or should not do. My mom quit driving this year. Us baby-boomers have about 20 more years to go before we start complaining about the lack of transit. And when people prove emotionally incapable of driving--incorrigible speeders and drunk drivers--the lack of transit options can exert pressure on them to defy driving-bans that have been placed upon them, representing horrible danger to us all.

 

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Post Script 1:

Why there'll always be a perception that highways need to be widened

In the figure above, a traditional supply and demand curve, B is the price of a good that is subsidized. A would be the "natural" price of the good, where the supply and demand curve intersect. B is lower than A by virtue of the subsidy. The quantity at C represents the amount that will be supplied, and the quantity at D represents the quantity that will be demanded. Essentially, people are sitting at D, looking down at C, and saying "that's not near enough." At a recent hearing on putting playing fields in Magnuson Park, athlete after athlete got up to say there were not enough althletic fields in the City. (Athletic fields would probably cost something like $500 per player per soccer game if they were not subsidized, just an idle guess). Meanwhile, a report commissioned by a City Council subcommittee found that Seattle had vastly more athletic fields than any city of anywhere near comparable size in the entire country. The two facts are not contradictory: there will never be a perception that we have enough of a popular good if it is subsidized.

That's why we could do with a little cynicism when motorists complain incessantly about lack of highway lanes. They always will, no matter what we do.

 

 

 

 

 

Post Script 2

Don't head into the political cul-de-sac of attacking "Price Gouging"

In the Middle Ages it was "usury." The ban on participating in "usury" held up economic development and viciously poisoned social attitudes until the reality of economic forces mostly pushed it aside. To villify usury is to say that the market should not be able to treat money as a commodity to be traded, yet money needs to be traded for the efficient functioning of the market system, in which the trading of other commodities was taken for granted.

Now we have an attack on "price gouging," whatever that is supposed to be. The fact that price gouging can not be defined for the dictionary (is it a certain percentage of increase in prices over time, which would implicate any Dept. Store that ended a sale, or is it exceeding some arbitrary profit percentage on a given unit of commodity, which would implicate entire high profit industries such as the software & drug industry?) should make everyone immediately uneasy about this new witch-hunt, which has already resulted in the fining of 5 hapless gas station owners in the state of Missouri.

At it's base, the words "price gouging," should disturb everyone. "Price Gouging," and I say this without any satirical intent, is exactly how capitalism works. When there is an unrequited need for something, the price of that something goes up. This is the universal signal for anyone in a position to produce that product to ramp up production or to make available any inventories they are sitting on, as the higher price makes this activity more lucrative than it formerly was. The increased supply that results from this signal then drives the price back down, and if there were productivity increases associated with this ramping up of production, the price will go lower than it was prior to the spike. This is what has been going on in our market economy since Day 1, and it's why we live in such a wealthy society, (among other less savory reasons.)

There are several misconceptions about gas prices in particular that are leading to charges of "Price Gouging." One is the false notion that gasoline is terribly expensive. $3 a gallon is quite reasonable for something that has to be dug out of the earth and transported from far away. Adjusted for inflation, gas has been about this price forever, and it hasn't increased in nominal price more than most or many other commodities, and less than some other commodities.

Having said all this, I should admit there are exceptions. When there is an airtight barrier to entry into a market by new producers, prices can be manipulated upward and we in society can point to something that actually can be termed as "evil." But the key factor here is the barrier. There has to be a barrier to entry, and there has to be one or so few producers that they might easily "club" together. Ususally these conditions are provided by government in markets such as electricity, telecommunications, or other utilities where the state has awarded one or a few producers sole access to a market, as was the case with Enron in California.

Some conservatives have cited the inability to build new refinery capacity in the U.S. as just such an unfair barrier, but this ignores the fact that gasoline can be imported already-refined and ignores the fact that refineries can be expanded and also leads them down a bad road of trying to "legislate away" legitimate objections to having a refinery built next to one's house. As is so often the case, this is a matter of not recognizing the huge issue of external costs. The reason citiizens oppose a new refinery next door is that they will have to pay the medical bills when their kids get sick, and they won't be reimbursed for breathing the new air, and they won't be reimbursed in any way for engaging in a grand experiment involving whether or not they eventually get cancer. These are costs that the oil and gas industry completely evades even as the current administration lavishes it with ever more subsidies and freebies. What is called NIMBYism by unsympathetic observors in these instances is merely the political crystallation of real external costs that this industry had hoped to never have to pay for.

 

 

 

 

 

Post Script 4

Our Anti-Nature Double Standard:

/ or /

Citizens should make a profit from their ownership of the roadway--just as they turn a profit from owning forest land!

Why do we expect the public asset shown above to turn a profit?

when we don't expect the asset shown above, the roadway, to turn a profit?

 

The first picture shown was Washington state forest land, Capitol State Forest south of Olympia, WA. Our ownership of this asset makes us a tidy profit, which goes into a school construction fund.

But roadway, whether federal, state or local, is a big money sump for taxpayers. These built-&-paid-for assets should be paying your taxes, not costing you.

Not only do we think it's normal that citizens of the State of Washington get a return from their ownership of the state forest lands. We think nothing of it when we hear that citizens of Alaska get a check in the mail because they, through their state government, own lands containing oil wells.

Yet by contrast we expect nothing in return for our ownership of the entire road and highway infrastructure that is bought and paid for. The roads, like the Port of Seattle, the air waves, and aquaculture sites, not only don't turn a profit, they actually cost the taxpayer more money simply to own.

Certainly this is not a get-rich quick scheme, as most of us who drive a fair amount would not be net-gainers. The changes would have to be made with great rigor so as to be revenue-neutral. Politically, certainly, it would be a monumental challenge. But heading in the direction of this goal would bring integrity to the market, remove a subsidy that is promoting pollution and congestion, and reduce general taxes which burden individuals and the economy.

 

 

A possible roadblock to this solution in WA state

It's worth noting that the Washington State Constitution appears to explicitly forbid this solution to our current predicament, by stating that all revenue earned by the gas tax must be used for the cost of road-building and maintenance. At the risk of sounding like President Clinton (that depends on the meaning of the word "is") I'd like to point out that the word "cost" could be interpreted to include a reasonable profit. The "cost" of a shovel, restaurant meal, or any other product produced in the private sector as a matter of course includes a profit for the maker and seller. If that understanding of the word "cost" of the roadway cannot prevail legally, this solution in the state of Washington would require a constitutional amendment as well as a change of heart on the part of may voters.

And one other perception problem:

The one argument against this solution that has any merit, in my view, is that it is potentially regressive. The gas tax is admittedly among the most regressive of taxes, although, as I continue to point out, it's actually a user-fee and not a tax. However, people might have a hard time supporting this solution if they felt that it would hurt the poor. The answer is that making the market more efficient through fair refereeing will ultimately help, not hurt the poor. To do this, tax rates need to be made less regressive, but user fees need to stand.

An example of a problem in the U.S. of regressive tax rates that needs to be addressed is the social security and medicare tax: it has a ceiling but not a floor, thus protecting the rich while inflicting maximum damage on the poor, including those living in poverty. This is a tax rate (and not a retirement-system-user-fee, since the revenue from this tax has been merrily lumped with other government revenue for years) and should be changed. User fees are different, and are essentially prices for a good or service, the same as are charged for private sector goods or services. Poor people may buy more peanut butter than rich people, but it is not good public policy to try to charge everyone less than it really costs to make a jar of peanut butter because the poor buy peanut butter. It's complicated, innefficient, creates unintended consequences (too many Peanut Butter & Jelly sandwiches!) and not a very effective way at arriving at fairness. Let's let user fees fall where they may on the issue of regressivity, and address these issues only in the arena of tax rates and other government policy.

For the truly poor, an increase in the gas tax will ultimately be a critical boon, as it will boost the profitabilty and therefore the efficiency of using transit. Anyone who is truly poor by definition has no car or an unreliable one, and the availability of good transportation to where jobs are is probably the single most important factor in their ultimate success or failure in the job market.

Conservative Charles Krauthammer, in an opinion piece that ran on Nov. 14, 2005 in the Seattle Times, argued for a similar idea-- instituting a gas tax immediately that will keep the price of gas at least at $3.00 "The beauty of the gas tax at $3," wrote Krauthammer, is that it obviates the waste and folly of an army of bureaucrats telling auto companies what cars in which fleets need to meet what arbitrary standards of fuel efficiency."

In a more recent column, July 2, 2007, Krauthammer reiterated his Nov. 14 2005 point and added the point I just made about the payroll tax (no, I'm not claiming credit!) His words: "The most efficient and equitable way to both increase mileage and reduce gasoline use (increased mileage alone can induce people, perversely, to drive more) is with a new gasoline tax, refunded by means of reduced payroll tax to make it revenue neutral."

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