Don’t Jeopardize Montana’s Energy Security

By: Carl Graham, President, Montana Policy Institute

Tom Mullikin, Senior Partner, Moore & Van Allen PLLC

 

Energy. It is the lifeblood of the American economy. For this reason, it is no surprise that energy policy discussions receive a great deal of attention. Done wrong, energy policy can significantly harm the economy. That is a real concern as the U.S. Congress and individual states debate legislation that aims to address climate change and potentially overhaul our country’s energy system.

Montana is blessed with abundant natural resources that help fuel the economy. As a provider of North American energy sources, Montana contributes to our nation’s energy security. Increasing our energy security should be a central goal of any energy policy. However, policy proposals being considered in Congress and by the Western Climate Initiative (of which Montana is a member) would put our energy security and our economic prosperity at risk.

One such policy proposal is called a Low Carbon Fuel Standard (LCFS), which targets transportation fuels. The LCFS is being billed as a way to ensure development of clean, secure energy while reducing greenhouse gas emissions in the United States.

Here’s how it works. Under an LCFS, fuels are assigned a carbon intensity “score” based on the energy required to bring them to market. Fuels with a high score are discouraged while lower scoring fuels are encouraged. In the end, proponents argue, we will have fewer greenhouse gas emissions from vehicles and an incentive for industry to develop cleaner forms of transportation energy. But LSFS proponents only tell one side of the story and ignore significant long term negative impacts on our environment and our economy.

Here’s what LCFS proponents fail to tell you. First, the LCFS is an unproven standard relying on undeveloped technology. In Montana, this policy will put the entire region’s energy security at risk. According to the Energy Information Agency, crude oil from Canada makes up over 90 percent of the crude oil refined in Montana. Canada is the top importer of crude oil into the U.S., and an increasing amount of Canadian crude is coming from Alberta’s oil sands. Because this oil is heavier, it will receive a higher carbon intensity score under an LCFS, which will discourage its use.

If this happens, Montana and other states that use Canadian crude, particularly in the Upper Midwest, will be forced to rely on lighter crude from the Middle East instead of crude oil from a friendly, neighboring country. An LCFS will also guarantee volatile gas and commodity prices, the loss of U.S. refinery and pipeline jobs, and, ironically, an increase in global greenhouse gas emissions.

That’s right, an LCFS will actually increase greenhouse gas emissions. If we don’t buy crude oil from Canada, the crude will be shipped overseas, greatly increasing transportation emissions. Then it will be processed in countries like China and India which have weaker environmental regulations. China recently demonstrated its intent to use oil sands crude with a major investment in a Canadian oil sands project by a Chinese oil company. It defies common sense to send Canadian crude oil 6,000 miles to China, instead of sending it next door to Montana.

Our elected officials have an opportunity to look beyond “feel good” knee-jerk policy reactions and consider the real implications to Montanans of LCFS. This policy is bad for national energy security, bad for consumers, bad for the environment and bad for Montana.

 

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An Open Letter to President Obama as You Visit Our Great State

By Carl Graham

President, Montana Policy Institute

 

Dear President Obama,

I just heard that you’re coming to Bozeman.  It’s great that you’re willing to get out of the D.C. echo chamber and come out to where us regular folks live.  And I think most Montanans will take pride in a Presidential visit regardless of political affiliations or policy differences.

It’s been rumored that you might also hold a health care town hall while in Bozeman.  If so, may I make a suggestion?  Both political Parties have pretty much turned town halls into fawn-fests with packed audiences and planted questions that result in little more than preaching to the choir and sound bites for the 24 hour news cycle.  I’d like to offer you an alternative, and a way to reach the very people who I assume you’d like to convince that your health care reform proposals are worthwhile.  I mean, of course, those of us who do not think that your proposals would fix the current problems with health care, and that they would even create another whole set of problems that will have to be addressed down the road.

As it turns out, our little nonpartisan think tank – the Montana Policy Institute – has been planning a Free Market Health Care Reform forum in Bozeman since June, and it happens to fall on the very day you’ll be here.  We’ll have national health care policy experts and statewide health and insurance industry leaders talking about what needs reforming, and how we can do it in a way that tackles what’s wrong with health care without harming what’s right with it.  And frankly, I think they’d like to hear from you as well.  We’d be more than happy to make room in our agenda if you want to drop by.

This is a serious forum with expert panels and policy discussions.  Participants are concerned that what’s being proposed is nothing more than the nationalization of one-sixth of our economy and the removal of individual choice from one of the most important aspects of our lives.  You could tell us why we’re wrong by addressing some pretty basic questions:

–          You say that people can keep their own insurance if they like it, as the overwhelming majority of Americans do.  But why would people stick with their current plans if the public plan is cheaper, and what’s the point of a public plan if it’s not?  Isn’t this really just a ruse to get people out of private insurance and into a government-run system?

–          How will private insurers compete with a public option that gets taxpayer startup funding, doesn’t have to show a profit, has the ability to literally print money, and can regulate competitors to increase their costs and decrease their profits?  Can you help us understand by providing another example of a taxpayer-owned enterprise that competes on a level playing field with private sector companies?

–          Nearly 85% of Americans are satisfied with their current coverage.  Do we really need to overhaul or nationalize one-sixth of our economy to address the 15% of Americans who are not satisfied?  Couldn’t we just help the 15% and preserve everyone’s ability to pick the coverage that’s best for them by allowing more innovation in insurance products, or even by just providing a voucher for those who really can’t afford insurance?

–          The government already accounts for nearly 50% of all medical spending, as compared to about 25% in 1960.  Isn’t it reasonable to argue that costs have gone up pretty much in proportion to the government’s increased involvement already?

–          Medicare waste, fraud and abuse are estimated to account for as much as 30% of its costs.  That was $700 billion dollars in 2007, or about $2,300 for every legal U.S. resident.  Can we expect that 30% figure to continue as government-run medical spending goes into trillions upon trillions of dollars?  If not, what will be the new incentive for bureaucrats whose salaries are tied to hours worked rather than customers satisfied to cut costs, innovate, and increase efficiency and customer satisfaction?

–          The Congressional Budget Office says plans currently under consideration will increase the deficit by around $200-$300 billion over the first ten years and then really start picking up after that.  Who gets that bill, and how are they going to pay it?

This is just the beginning of what is a long list of our very serious concerns with the approach the Congress and you are taking in reforming our health care system. We’ll have a convention center full of Montanans.   We may not agree with your plan, but we’re prepared to listen.

 

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By Carl Graham

President, Montana Policy Institute

 

 

Dear President Obama,

I just heard that you’re coming to Bozeman.  It’s great that you’re willing to get out of the D.C. echo chamber and come out to where us regular folks live.  And I think most Montanans will take pride in a Presidential visit regardless of political affiliations or policy differences.

It’s been rumored that you might also hold a health care town hall while in Bozeman.  If so, may I make a suggestion?  Both political Parties have pretty much turned town halls into fawn-fests with packed audiences and planted questions that result in little more than preaching to the choir and sound bites for the 24 hour news cycle.  I’d like to offer you an alternative, and a way to reach the very people who I assume you’d like to convince that your health care reform proposals are worthwhile.  I mean, of course, those of us who do not think that your proposals would fix the current problems with health care, and that they would even create another whole set of problems that will have to be addressed down the road.

As it turns out, our little nonpartisan think tank – the Montana Policy Institute – has been planning a Free Market Health Care Reform forum in Bozeman since June, and it happens to fall on the very day you’ll be here.  We’ll have national health care policy experts and statewide health and insurance industry leaders talking about what needs reforming, and how we can do it in a way that tackles what’s wrong with health care without harming what’s right with it.  And frankly, I think they’d like to hear from you as well.  We’d be more than happy to make room in our agenda if you want to drop by.

This is a serious forum with expert panels and policy discussions.  Participants are concerned that what’s being proposed is nothing more than the nationalization of one-sixth of our economy and the removal of individual choice from one of the most important aspects of our lives.  You could tell us why we’re wrong by addressing some pretty basic questions:

–          You say that people can keep their own insurance if they like it, as the overwhelming majority of Americans do.  But why would people stick with their current plans if the public plan is cheaper, and what’s the point of a public plan if it’s not?  Isn’t this really just a ruse to get people out of private insurance and into a government-run system?

–          How will private insurers compete with a public option that gets taxpayer startup funding, doesn’t have to show a profit, has the ability to literally print money, and can regulate competitors to increase their costs and decrease their profits?  Can you help us understand by providing another example of a taxpayer-owned enterprise that competes on a level playing field with private sector companies?

–          Nearly 85% of Americans are satisfied with their current coverage.  Do we really need to overhaul or nationalize one-sixth of our economy to address the 15% of Americans who are not satisfied?  Couldn’t we just help the 15% and preserve everyone’s ability to pick the coverage that’s best for them by allowing more innovation in insurance products, or even by just providing a voucher for those who really can’t afford insurance?

–          The government already accounts for nearly 50% of all medical spending, as compared to about 25% in 1960.  Isn’t it reasonable to argue that costs have gone up pretty much in proportion to the government’s increased involvement already?

–          Medicare waste, fraud and abuse are estimated to account for as much as 30% of its costs.  That was $700 billion dollars in 2007, or about $2,300 for every legal U.S. resident.  Can we expect that 30% figure to continue as government-run medical spending goes into trillions upon trillions of dollars?  If not, what will be the new incentive for bureaucrats whose salaries are tied to hours worked rather than customers satisfied to cut costs, innovate, and increase efficiency and customer satisfaction?

–          The Congressional Budget Office says plans currently under consideration will increase the deficit by around $200-$300 billion over the first ten years and then really start picking up after that.  Who gets that bill, and how are they going to pay it?

This is just the beginning of what is a long list of our very serious concerns with the approach the Congress and you are taking in reforming our health care system. We’ll have a convention center full of Montanans.   We may not agree with your plan, but we’re prepared to listen.

 

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Enough Already! – Unsustainable

Unsustainable: New Chart From Mercatus:
The graph compares spending by state and local governments to spending in the private sector by graphing each as a multiple of its 1950 level (all numbers are adjusted for inflation). The differences are startling: since 1950, private spending has increased 5-fold while state and local government spending has increased nearly 10-fold.

State and local governments, of course, receive their revenue from the private sector. In a word, this is unsustainable.