Topic: Energy and Environment

And Your Point Is?

Matthew Yglesias is somehow offended by my recent post about the huge decline in the productivity of our socialized transit industry since 1970. He never addresses or even acknowledges any of the arguments made in my article. Instead, his problem is that the article “fails to acknowledge any government role in promoting the usage of private automobiles.” Since my article was about transit, not automobiles, I don’t see why I need to acknowledge government’s role in driving any more than I should acknowledge government’s role in our failed education system or any other government failing.

It could be that Yglesias is arguing that I am somehow inconsistent because I object to socialized transit without objecting to socialized highways. If so, he would be wrong: In books, papers, and policy statements I have argued that highways should be funded out of user fees, not taxes; that states should encourage private highway construction; and that the federal government should get out of the highway business. That isn’t in any way inconsistent with my article on transit.

It could be that Yglesias is going further and arguing that “government’s role in promoting the usage of private automobiles” somehow contributed to the huge decline in transit productivity since 1970. If so, he would be wrong. Since 1970, government’s role in transportation has mainly been to steal money from the users of roads that carry 85 percent of American passenger travel and spend that money supporting transit systems that move barely 1 percent of all passenger travel. In 2008 alone, more than $15 billion in federal, state, and local highway user fees were spent on transit, which did highway users little good (see cell O17).

Yglesias says that government land-use policies have caused “regulatory impediments” to creating transit-friendly cities. I’ve previously invited Yglesias to join me in calling for the elimination of all government land-use policies, but he has remained silent about that. Instead, he would rather rant about things I didn’t say.

Since Yglesias is so fond of attacking me for things I haven’t said, let me return the favor by pointing out that one of the most common arguments that people like Yglesias use against highways (and he himself may not have made this argument) is what they call “induced demand.” That is, they say we shouldn’t build more roads (even if paid for entirely with user fees) because they will just lead people to drive more. This is supposed to be a bad thing because driving is supposed to be bad. But really, they are admitting that Americans want to use and are willing to pay for more roads, whereas in their demands for more subsidies to transit they are admitting that Americans are not willing to pay for their transit-oriented utopias.

Public Transit: A Classic Example of Government in Action

Since 1970, the number of workers needed to operate America’s public transit systems has increased by 180 percent while the inflation-adjusted cost of operating buses, light rail, and heavy rail (the only modes whose costs are known back to 1970) increased by 195 percent. Yet ridership on those modes increased by only 32 percent.

Flickr photo by Bradlee9119.

Each transit worker produced 53,115 transit trips in 1970, but only 26,314 trips by all modes in 2008. The real cost per rider grew by 124 percent, while subsidies (fares minus operating costs) grew by more than 8 times. Though capital cost data prior to 1992 are sketchy, capital costs also grew tremendously, almost certainly by more than operating costs. By any measure, then, transit productivity has declined more than 50 percent. “It’s uncommon to find such a rapid productivity decline in any industry,” noted the late University of California economist Charles Lave.

(All transit data are from the 2010 Public Transportation Fact Book, tables 1, 12, and 38. 1970 dollars adjusted for inflation using the GDP deflator.)

What accounts for this huge decline in productivity? Simple: government ownership. Prior to 1965, most transit systems were private and the industry as a whole was declining but profitable. In 1964, Congress passed the Urban Mass Transit Act, which promised federal capital grants to any government-owned transit systems. Cities and states quickly took over private transit systems, and transit agencies soon discovered that the federal government was just as willing to fund expensive transit systems as inexpensive ones, so they overbought, purchasing giant buses where small ones would do and building expensive rail lines where buses would do.

To cover their operating losses, transit agencies taxed as large an area as they could, but were then politically obligated to provide transit service to the entire taxed area. While transit’s main market is in the dense inner cities, agencies began running buses and, in many cases, building rail lines to relatively wealthy low-density suburbs that have three cars in every garage. The result of overbuying and extended service was lots of nearly empty buses and railcars: the average transit vehicle load is only about one-sixth of capacity, so if you are the sole occupant of a five-passenger SUV, you can be smugly proud that the car are driving has a higher occupancy rate than public transit.

On top of this, to be eligible for federal transit grants, Congress required transit agencies to obtain the support of local transit unions, giving unions leverage to negotiate generous pay and benefits packages. The highest-paid city employee in Madison, Wisconsin last year was a bus driver who earned nearly $160,000. The New York Times recently documented that more than 8,000 employees of the New York Metropolitan Transportation Authority (MTA) earned more than $100,000, with one collecting $239,000, last year.

Union employees reach such lofty pay levels by putting in lots of overtime. MTA even pays $34 million a year in overtime to employees who are on vacation, on the theory that if they weren’t on vacation they would probably be working overtime. When Los Angeles’ transit agency tried to save money by hiring more employees so it won’t have to pay as much overtime, union workers went on strike for 30 days and forced the agency to back down.

The American Public Transportation Association (APTA), a lobby group whose budget is several times larger than all of the highway lobby groups in DC combined, promotes increased subsidies for transit by claiming transit is better for the environment than automobiles – a claim the Cato Institute has refuted. Per passenger mile, transit and cars actually use about the same amount of energy and emit the same amount of pollution. In fact, all but a handful of transit system are far worse for the environment than cars. Moreover, cars are rapidly becoming more energy efficient, while transit has grown less energy efficient as agencies run more and more empty buses and trains into remote suburbs.

Urban transit buses are some of the most energy-intensive vehicles around because they are mostly empty. Yet private, intercity buses are some of the most energy-efficient vehicles in the country because the private operators know to run them where people want to go, and thus they average half to two-thirds full.

APTA’s other argument for transit is that it saves people money. Many transit agencies have a calculator on their web sites purporting to show how much people can save riding transit instead of driving their cars. But all these claims ignore the huge subsidies to transit.

This Cato briefing paper compared the costs of different forms of travel in 2006. Updating to 2008, auto owners spent about 22 cents a passenger mile driving, and subsidies to highways added another penny a passenger mile. Airfares averaged about 14 cents a passenger mile, and subsidies to airports added another penny. Amtrak fares averaged 30 cents a passenger mile, and subsidies brought the total to nearly 60 cents. Urban transit is about the most expensive form of travel in the United States, with fares averaging only about 21 cents a passenger mile but subsidies of 72 cents a passenger mile. This makes transit 4 times as expensive as driving.

In short, those who want to get people out of their cars and onto transit are trying to get people from an inexpensive, convenient, and increasingly energy-efficient form of travel to an expensive, inconvenient, and increasingly energy-wasteful form of travel.

The real solution for transit is privatization. Private operators would use smaller buses and would mainly serve the dense inner cities that have low rates of auto ownership. At a broader level, the transit industry offers lessons for anyone who thinks that government can do a better job at providing goods and services than the free market.

EPA on Guard against Spills

Well, at least of the dairy kind:

New Environmental Protection Agency regulations treat spilled milk like oil, requiring farmers to build extra storage tanks and form emergency spill plans….

The EPA regulations state that “milk typically contains a percentage of animal fat, which is a non-petroleum oil. Thus, containers storing milk are subject to the Oil Spill Prevention, Control and Countermeasure Program rule when they meet the applicability criteria.”

Peter Daining of the Holland Sentinel (Holland, MI) has a report, including predictions that smaller dairy producers could be driven out of business by the cost of the containment rules.

Meet the New Minerals Management Service

In a move reminiscent of the George W. Bush administration, the Obama administration is cracking down on the Minerals Management Service…by changing the agency’s name.

The MMS has fallen into disrepute because, well, as E&ENews PM put it, “employees accepted gifts from oil and gas companies, participated in ‘a culture of substance abuse and promiscuity,’ and considered themselves exempt from federal ethics rules.”  The “drug and sex abuse [occurred] both inside the program and ‘in consort with industry.’ “  The New York Times reports that MMS employees “viewed pornography at work and even considered themselves part of industry.”  Yet this government agency somehow failed to prevent the oil spill in the Gulf of Mexico.

So the Obama administration is giving MMS a makeover.  The agency formerly known as the Minerals Management Service will hereafter be known as the Bureau of Ocean Energy Management, Regulation, and Enforcement.

That’s exactly how the Bush administration dealt with the unpopularity of the Health Care Financing Administration, the agency responsible for Medicare and Medicaid: by changing its name to the Centers for Medicare & Medicaid Services.  With candor and humor – two scarce commodities in such circles – Bush’s HCFA/CMS administrator Tom Scully explained the rationale:

The health care market … is extremely muted and extremely screwed up and it’s largely because of my agency. For those of you who don’t follow CMS, which used to be called HCFA, we changed the name because it was so well loved. I always say it’s kind of like when Enron comes out of bankruptcy, they’ll probably change their name. So, HCFA—Secretary Thompson and I decided to confuse everybody. We changed the name to CMS for a couple of years so people wouldn’t realize we’re actually HCFA. So far, it’s worked reasonably well.

For more on the pervasive cozy relationship between big business and big government, read Tim Carney’s Obamanomics.

For even more candor and humor concerning Medicare, read David Hyman’s Medicare Meets Mephistopheles.

Grasping for Rationales, Feeding Conspiracy Theories

On June 13, the New York Times reported that America “just discovered” a trillion dollars worth of mineral resources in Afghanistan (HT to Katie Drummond over at Danger Room for offering some enlightened skepticism on the topic).

Of course, the U.S. Geological Survey has known about Afghanistan’s “large quantities of iron and copper” since 2007. The Los Angeles Times reported that geologist Bonita Chamberlain, who has spent 25 years working in Afghanistan, “identified 91 minerals, metals and gems at 1,407 potential mining sites” as far back as 2001. Chamberlain was even contacted by the Pentagon to write a report on the subject just weeks after 9/11 (possibly to expound upon the findings of her co-authored book, “Gemstones in Afghanistan,” published in 1996.)

Given the recent failure of Marjah, which Gen. McChrystal recently called “a bleeding ulcer,” this new “discovery” could offer Western leaders a new way to convince their war-weary publics that Afghanistan is worth the fight. Government officials are already touting this new “discovery” as yet another “decisive moment” or “corner turned” in the Afghan campaign.

In the NYT article, head of Central Command, Gen. David Petraeus, said, “There is stunning potential here. There are a lot of ifs, of course, but I think potentially it is hugely significant.”

Afghanistan epitomizes the fate of countries too dependent on foreign patronage, which over time has weakened its security by undermining their leaders’ allegiance to the state. In the long run, $1 trillion worth of mineral deposits could eventually help Afghanistan stand on its own two feet. However, two problems emerge. First, there is little assurance that revenue from mineral resources (which will take years of capital investment to extract) will actually reach the Afghan people and not be siphoned off by Karzai and his corrupt cronies–like much of the international community’s investment does now.

Second, in the short-term, this discovery may feed conspiracy theories that already exist in the region. Though unwise to generalize personal meetings to an entire population, some conspiracy theories that I heard while I was recently in Afghanistan should give U.S. officials pause before announcing that America can help extract the country’s mineral deposits. Some of the wildest conspiracy theories I heard were that the United States wants to occupy Afghanistan in order to take its resources; the Taliban is the United States; the United States is using helicopters to ferry Taliban around northern Afghanistan (courtesy of Afghan President Hamid Karzai); America is at war in order to weaken Islam; and the list goes on.

This “discovery” may force more people in the region to ask: what are America’s real reasons for building permanent bases in Central Asia?

This piece originally appeared on the Huffington Post on June 15, 2010.

Recusal Rules Impact Environmental (and Other) Litigation

Two weeks ago I blogged about the dismissal of the Katrina-related global warming case because half the judges on the Fifth Circuit were recused for having financial interests in the energy companies and utilities (which the plaintiffs chose specifically to gain recusals but mis-timed their strategy).  Well, now it seems that many judges on the Gulf Coast are recusing themselves from the nascent (and future) oil spill suits, again because they own shares of BP, Transocean, and the other companies involved.  Indeed, over half the federal district judges in the affected states – Texas, Louisiana, Mississippi, Alabama, and Florida – will not be participating in these cases, leading to calls to appoint judges from elsewhere in the country to handle them.

That’s ridiculous!  Owning a few hundred or thousand dollars worth of shares of stock is not enough to change the way a judge will behave, particularly when the public knows which judge owns which stock.  If we cannot agree that such purported “conflicts” don’t really show an appearance of impropriety – if we really doubt the integrity of our judiciary to such an extent – then we might as well throw out the ethics rules, throw up our hands, and declare the country ungovernable.  (I’m reminded of the Carrie Underwood song, “Jesus Take the Wheel.”)

Moreover, the financial conflict rules are murky.  As this AP story discusses, ”a judge does not have to step aside if the investments are part of a mutual fund over which they have no management control. Mere ties to companies or entities in the same industry, no matter how extensive, also don’t require disqualification.”  So here we’re valuing form over substance.

Look, maybe this is just a pet peeve of mine – it’s not an ideological issue one way or the other – but I think you just have to apply the “reasonable skeptic” standard.  Every judge is human and has his various biases.  It’s one thing to recuse if counsel for one of the parties is the judge’s spouse or child, or if half the judge’s wealth is invested in one of the parties.  But dinky little “abundance of caution” recusals cost the justice system more in administrative hassle, sunk attorney fees, and other wastes of time and money than they benefit it in increased integrity.

As for the oil spill litigation, the U.S. Judicial Panel on Multidistrict Litigation – which looks at complex cases on similar issues brought in disparate venues – meets July 29 in Boise, Idaho (of all places), to hear arguments on consolidation.  In light of the aforementioned recusals, the Louisiana cases may well be sent to Alabama, Mississippi, or South Florida – or a federal courthouse near you!