Presidential Politics Fuel Higher Gas Prices, Dirtier Air GUEST COLUMN By Fred Gaines Could Iowa be to blame for much of the San Fernando Valley’s recent malaise? It’s It sounds improbable, but may be true. Soaring gas prices, traffic congestion and last last month’s week’s first-in-a-decade Stage One smog alert can all be traced to Presidential presidential politics and how the Valley’s best interests have once again taken a back seat to a faraway place. Few will recall when Governor Gray Davis’ name was being discussed as a Democratic Candidate candidate for President president in 2004. It was about the same time President Bush came into office. Together, their actions, meant to appeal to voters in agricultural states, like Iowa, have had unintended consequences, to the detriment of Californians. Under the 1990 Clean Air Act Amendmentsof 1990, places like Los Angeles, which fail to meet Air Quality Standards, are forced to use gasoline additives called “oxygenates”. Only two oxygenates are commercially viable ethanol, which is produced from corn, and MTBE. Although the non-carcinogenic MTBE has proven air quality benefits, it also has the tendency to reach water supplies more quickly in the case of gas station or pipeline leaks. After the City of Santa Monica found the gasoline additive MTBE in its water supply, Governor. Davis stepped in swiftly to ban MTBE in California, starting in 2003.20043. This move not only appealed to the environmental interests needed to secure his re-election in California, but would also bolster his resume in corn-growing states, like Iowa, should he wish to seek have sought the Democrat nomination for President. While Gray Davis sought wanted to appeal to Iowa voters by banning the only competitor to their home-grown ethanolproduct, President Bush courted the same constituency when California came asking for a waiver to the oxygenate requirement. Without a waiver, places like Southern California would be mandated, from 20042003, to add ethanol to gasoline. This presidential politicking has left the San Fernando Valley as the loser in more ways than one gas prices have risen, money is being diverted away from transportation projects and, despite recent gains resulting from the refining industry’s investments since 1995, our air quality has gotten discernibly worse since the transition away from MTBE. The Valley loses because all drivers have to pay more for gas when ethanol is the only available additive. The California Energy Commission, among others, predicted significant increases in gas prices if the State were forced to switch to ethanol as the only additive in its gasoline. Sure enough, after California refiners began to make when the transition to ethanol from MTBE regulation went into effect this April, prices have soared in part because of this new cost and they haven’t come down. Less transportation money The Valley loses because California gets less money to reduce traffic congestion. The real price increases would have been even more shocking if not for a loophole in Federal federal tax laws. Gasoline with ethanol benefits receives a substantial federal tax break. This reduces California’s contribution to the Highway Trust Fund, which compounded by the revenue-based funding formulas, means Californians receive less transportation money from Washington to fix our roads and build public transportation projects. The Valley loses because our air Quality quality has deteriorated since the phase-in of ethanol. Ethanol, it turns out, contributes to ozone pollution. While MTBE was proven to improve air quality, ethanol is making it worse. The Chicago area, which uses ethanol almost exclusively in its gasoline, needed a special air quality waiver from the Environmental Protection Agency because of ethanol-related ozone problems. Oil refiners are not to blame for our higher gas prices, diverted tax dollars and smog in the air. Politics specifically, Presidential Ppolitics have left California with only one choice to clean its air, ethanol, and its effectiveness is dubious at best. Maybe it’s too much to hope that officials in Washington and Sacramento will abandon politicking for practical public policy. Their past record is endangering our health, our roads and our pocketbooks. With the evidence against ethanol hanging palpably in our air, and transportationTransportation funding policies being debated in Washington, the Valley must make its case for more options in cleaning our air and be freed from the shackles of an oxygenate requirement. Fred Gaines is managing partner of Gaines & Stacey, LLP, an Encino-based law firm and is chairman of the board of the Valley Industry and Commerce Association.
