I missed the State of the Union last night. Well, not missed so much as avoided. Go figure, a political blogger who actually didn’t want to watch the president’s speech. I suppose it’s because my interest, and thus this blog, tend more to the state level. Besides, how many national bloggers will write about the speech?
However, I heard a bit this morning that President Bush asked Americans to reduce our consumption of gasoline by 20% in 10 years.
Tonight, I ask Congress to join me in pursuing a great goal. Let us build on the work we have done and reduce gasoline usage in the United States by 20 percent in the next ten years — thereby cutting our total imports by the equivalent of three-quarters of all the oil we now import from the Middle East.
To reach this goal, we must increase the supply of alternative fuels, by setting a mandatory Fuels Standard to require 35 billion gallons of renewable and alternative fuels in 2017 — this is nearly five times the current target. At the same time, we need to reform and modernize fuel economy standards for cars the way we did for light trucks — and conserve up to eight and a half billion more gallons of gasoline by 2017.
The president is asking for more ethanol, more hybrid technology, and higher fuel economies from car manufacturers. He also asks Americans to conserve, most likely by not driving as much (car pool, rapid transit, etc).
Making it a priority
So, how can Florida achieve this goal? Can we, in a state so dominated by the motor vehicle, reduce our gasoline consumption by 20% in the next ten years?
I believe it is possible, if we – as a state – decide this is an important value.
To be sure, reducing gasoline consumption is good for the environment. Less gasoline means less emissions from automobile exhaust. Less gasoline means less need for oil exploration, and less of a need to put oil rigs off the coast of Florida or in the Arctic National Wildlife Reserve.
But reducing gasoline is also good for our economy. Less gasoline means we would be less susceptible to swings in the price of oil, especially when a hurricane reduces domestic production capacity. Less gasoline means we would be less dependent on volatile regions (Middle East) or nations (Venezuela) for oil imports. It could end our addiction to foreign oil.
Where do we start?
Well, there are two sides this coin: supply and demand. First, we need to find ways to create a sufficient supply for our 17 million residents and 40+ million visitors. Second, we need to find mechanisms to instill a demand for less gasoline.
Here is what I propose:
To start, we need ethanol production facilities in Florida. The state should build the facilities, through tax-free revenue bonds, and bring in the private sector to manage and operate the facilities. The private companies would pay the state to cover the debt service on the bonds. Also, excess ethanol, if there is any, could be sold outside the state of Florida, providing an incentive for private companies to become involved.
Next, we need to create a distribution network to get the ethanol into the system. Since petroleum refining is not my forte, I don’t know if additives can be added after gasoline is produced in refineries. If so, then the ethanol only needs to get to the various ports in Florida where gasoline is imported. To provide enough capacity, pipelines will need to be built across the state; freight trains could be used in the interim, as capacity is ramped up.
The permitting for these pipelines, and even the production facilities, should be expedited and controlled at the state level. This would prevent local governments from blocking the production and distribution of ethanol.
If we want to really go all out, then Florida should push toward E-85 use as much as possible. However, that will require the retrofitting of most – if not all – of Florida’s gas stations.
To accomplish this, I would provide a “phased-in” tax credit program for ad valorem (property) taxes. The program would allow a station that renovates its pumps to participate, as long as at least 25% of their new pumps are E-85. They would get credit for 100% of their property taxes for two years, then phase 25% per year for the next three years; this should cover most of the costs of retrofitting their stations. New stations would also be able to participate in this program, if they are built before 2014.
So, we now have a plan (good, bad, or otherwise) to get more ethanol into Florida vehicles. Now we need to make people want the ethanol.
The first step would be a mandate that all government vehicles (state, county, or city) must convert to E-85 or biodiesel engines. If the people are being asked to cut gas consumption, shouldn’t the public vehicles do the same? If necessary, some law enforcement vehicles needed for traffic enforcement could be exempted from this requirement.
The second step would be to provide tax credits for companies with large fleets that convert to E-85 or biodiesel engines (such as rental car companies, telecommunicatons companies, etc). Companies who make the switch could get a credit toward their corporate income taxes – perhaps as much as 100% if the switch occurs before, say, 2012.
The third step would be to make E-85 and hybrid cars exempt from state sales taxes. Since hybrid models tend to be priced higher, exempting them from sales taxes would have the effect of giving the buyer a cash rebate. An additional tax credit could be provided to dealers who sell these cars, providing an incentive to stock them; or perhaps the cars could be exempt from the tangible personal property assessment.
Is this feasible? Certainly. Is it expensive? Maybe. Some will argue that tax dollars should not be spent like this – but I would say that is not necessarily the case.
Our society, and our state, has various priorities. We want parks and recreation opportunities, so tax dollars build parks. We want beautiful beaches, so tax dollars replenish sand as it slowly erodes away. We want to protect the environment, so tax dollars buy land through programs like Florida Forever. We want to clean up the land, so we have brownfield programs and an Everglades restoration plan funded by tax dollars. We want to help families, senior citizens, and those in need, so tax dollars are spent on various welfare programs.
I am not saying this should be done, only that it could. If we, collectively, understand that it is good for our pocketbooks, our economy, and our environment, then it might happen.
Of course, promoting the growth of rail and mass transit would be another alternative. (Rail would solve another problem – the inability for road capacity to keep pace with growth. But that is for another blog.)