Republicans in Congress are floating a kooky scheme to dedicate oil royalties to address the nation's transportation needs. Under the guise of boosting much-needed federal revenues to fund transportation projects these lawmakers have simply found another excuse to "drill, baby, drill." This atrocious idea is about as appetizing as road kill.
First, let's consider the problem:
Congress is grappling with how to reauthorize and fund a new federal transportation bill. The extension on the current bill is up next March and lawmakers in both parties -- in both the House and the Senate -- insist they want to work out a deal to pass a new long-term law. A major sticking point is how to fund the massive bill, which covers construction and repair of the nation's extensive network of roads, bridges, transit, rail, runways, ports -- basically all the ways that enable people and products to move around the country.
The price tag for transportation is enormous, primarily due to the fact that the system is old and worn out. Over the years, Congress has essentially kicked the can down the road when it comes to keeping up with the burgeoning repair costs, let alone investing to expand America's transportation network to keep up with growing demand.
Traditionally, the major source of funding has come from revenues generated by a federal tax on gasoline purchases. However, the 18.4 cents per gallon gas tax hasn't been raised since 1993, leaving a funding gap every year that shows no sign of shrinking. The Congressional Budget Office estimates that the federal transportation fund could be insolvent by 2013. While everyone acknowledges that this user fee should be at least 10 cents more per gallon, few politicians appear interested in raising the gas tax. (Kudos to Maryland Gov. Martin O'Malley for having the political courage to propose doing just that as a way to tackle the state's transportation challenges.) At least at the federal level, most everyone insists in making up the funding shortfall some other way.
That brings us to the "solution" in question:
Last month House Speaker John Boehner (R-Ohio) hatched the scheme in a speech to the Economic Club of Washington in which he declared a "natural link" between energy production and transportation. Since then other GOP House members have been kicking the idea around, the gist of which is to devote one-fifth of anticipated long-term oil and gas royalty proceeds to fill the anticipated $50 billion-plus annual gap in federal transportation spending.
So, let's drill for more oil...to pay for more roads...to keep driving...so we need more oil. A vicious cycle that only perpetuates America's dangerous dirty energy addiction.
It's not too hard to see that this is a sop to the oil and gas industry, as a way to expand drilling offshore and increase Big Oil's profits. (Incidentally, Exxon Mobil just reported profits in excess of $10 billion for the third consecutive quarter.) However, there is some concern that the GOP's pro-oil idea could gain traction even among Democrats given the comments this week by House Minority Whip Steny Hoyer (D-Md), who told the press, "We’ll see what they have to propose” and that he might support “utilizing our energy resources consistent with protecting our environment.”
Hold your horses there, Hoyer! Members of Congress should not even entertain such folly. As my colleague Deron Lovaas was quoted in Greenwire today, "No doubt about it, we're facing a funding crunch for transportation. But paying for it by drilling off our fragile coasts isn't the answer. That won't fill our coffers or our cars."
Without a doubt, generating transportation revenue via more reckless offshore drilling is a dumb idea.
- First, the General Fund in the Treasury gets most oil royalty revenues and these are among the largest sources of federal revenues after taxes. Under the GOP "drill to drive" scheme, the flow of royalties would be diverted away from the Treasury to fund transportation.
- Second, promising more royalties by allowing even more drilling off our coasts is red herring, considering that oil companies have a huge amount of unused leases on land in the U.S. that they are choosing not to use. Shouldn't those areas be tapped first before opening our waters to new offshore drilling? (Seriously, have we learned nothing from the Gulf spill disaster?!)
- Third, assuming offshore drilling areas were expanded, it would take quite a few years before any oil royalties would start flowing -- likely as much as a decade in areas previously closed to drilling given all the process involved. But the funding to pay for the transportation is needed immediately. So it could take years for the new rigs to start producing revenue, at which point the transportation programs could already be dry.
- Finally, this excellent point by David Goldston, NRDC's government affairs director: "This is the opposite of the way oil revenues have been used when they haven't just gone into the general fund. The revenues have been put to uses like Land and Water Conservation Fund to mitigate or compensate for the effects of drilling. Even conservatives in the past have proposed uses like energy research and conservation programs. This would be the first time, I think, they'd be used in a way that increases the need for drilling." (David certainly would know since prior to joining NRDC he served as a top House Republican staffer for many years.)
If politicians really are interested in using oil industry revenues to help pay for transportation, I have a better idea: let's cut oil subsidies and redirects the savings to invest in America's transportation infrastructure. After all, tax breaks and loopholes for Big Oil will cost the federal treasury $40 billion over the next decade. That's not nearly enough to solve our transportation challenges but it would make a nice dent.