EPA slow-walks unpopular mandate – again

It may not have been such a bad idea at the time, but the thought of adding corn-based ethanol to automotive fuel to stretch the oil supply seems rather silly in retrospect given our recent prowess in finding new supplies of black gold. In 2005, under the George W. Bush administration and a Republican Congress, the EPA was given the first Renewable Fuels Standard (RFS) mandate to include ethanol in motor fuel. It was at a time when many still believed in the theory of “peak oil” and determined we had to look past this resource in order to meet our growing needs.

Fast-forward to the present day and we find that, because of issues with decreased consumption of gasoline combined with increasing statutory requirements for the inclusion of ethanol in automotive fuel, the EPA took the unprecedented step of reducing its mandated amount of ethanol for this year; meanwhile, the RFS which was supposed to come out in November of last year is still on the EPA drawing board.

In reading a summary of energy news I receive daily from the American Petroleum Institute, it was revealed that retailers and other petroleum marketers have their own concerns about the prospect of E15 fuel being approved for use in order to achieve the mandated amount of ethanol required for these increasing RFS numbers.

Naturally, this is from the perspective of what’s derided as Big Oil – on the other side, you have officials in corn-producing states beseeching Barack Obama to stand firm on these standards, while desperately attempting to secure infrastructure to provide the even higher E85 blend for flexfuel vehicles, such as the “I-75 Green Corridor” which has a lot of gaps.

The whole flexfuel idea was popularized a few years ago by a group I gave some pixels to during the $4 a gallon price surge called NozzleRage, which was the brainchild of another group called the Center for Security Policy – their goal in creating yet a third group called Citizens for Energy Freedom was to mandate cars be equipped as flexfuel vehicles. Even though it’s essentially a free option, there are few takers for flexfuel cars as they occupy a tiny proportion of the market – about 1 in 20 cars sold are flexfuel cars (although that number is higher for government vehicles.)

Obviously the hope for ethanol proponents is to expand the number of facilities where E85 can be purchased in order to eliminate the need to go to an unpopular E15 blend while simultaneously being able to ratchet up the RFS figures. If even 15 percent of the cars can run on E85 and the price is competitive, then corn growers would be happy. (Never mind the folly of using food for fuel.)

Personally, though, I’m hoping they scrap the RFS altogether. It was an idea which may have had merit (and a lot of Congressional backing from farm states) a half-decade ago, but we can do better because our oil supplies are much more plentiful thanks to new technology. That’s not to say that technology can’t eventually be in place to use another source for ethanol (like the sugar cane Brazil uses for its much more prevalent ethanol market) but how about letting the market decide?

And while it’s unrelated to ethanol, I thought it was worth devoting a paragraph or two to note that North Carolina – hardly a conservative state – is getting closer to finishing the rulemaking process for fracking in the state. Most noteworthy to me in my cursory reading of the rules is that North Carolina is looking at a fairly sane setback distance from various impediments – nothing more than 650 feet. They also seem to lean heavily on industry standards.

On the other hand, Maryland was looking to set rules which would require a completely arbitrary 2,000 foot setback and require plans for all wells proposed by a drilling company, rather than single wells. In short, we would do to fracking in Maryland what Barack Obama is doing to the coal industry nationwide – strangle it with unneeded and capricious regulations. That should not stand in either case.

It’s been my philosophy that an area which doesn’t grow will die. It may take a while, but killing growth will sooner or later kill the economic viability of a city, county, region, state, or nation. Putting silly regulations in place because a minority believes the debunked hype about a safe process is a surefire way to kill a vital region in the state, not to mention impede the possibility of prosperity elsewhere. We can do much better when common sense prevails.

Climbing rather than digging

I saw Delegate and Senate candidate Mike McDermott at a tri-county Republican Central Committee meeting the other evening, and he updated us on his campaign – in a nutshell, he said turnout would be key. Pretty basic stuff.

Unfortunately, that basic stuff seems to elude Maryland Democrats when it comes to the economy, as McDermott explained in a separate statement I received Wednesday:

As Americans, we understand that people can make mistakes. As we grow up, we learn from our mistakes so that we do not stumble a second time. Wise people do not often make the same mistake twice.

There is an old proverb which states, “Those who cannot remember the past are condemned to repeat it.”

Governor O’Malley and Senator Mathias are not exceptions to this rule.

Eight years ago when these two men took office together, Maryland enjoyed a billion dollar surplus at the end of Republican Bob Ehrlich’s first term as governor. Our state played host to 11 Fortune 500 companies. We were #25 on the list of “Business Friendly States,” poultry operations were expanding, and the future of agriculture in Maryland looked bright. Our people were happy to live here and most had no thoughts of moving away.

Eight years with O’Malley and Mathias have shown the devastating effects of their big government economic policies and made it clear that they do not learn from their past or their mistakes. Their shared philosophy promoting government as the answer to any problem has turned our surplus into deficits. While every state experienced the recession, Maryland has struggled to regain its footing, and some of our counties are simply not recovering. It is a failure of policy, not our people.

Of those 11 Fortune 500 companies…only 1 remains in Maryland and that is McCormick Inc. Based on recent news accounts, even the folks who gave us “Old Bay” seasoning are soon to relocate to Pennsylvania. These companies have not gone out of business, they just cannot afford to operate in a state run by folks who do not know how to be “business friendly.”

Being known as a “Business Friendly” state should be our goal. O’Malley, and his apologists like Mathias, have moved us from #25 all the way down to #42. We are surrounded by businesses that have closed shop, companies that simply do not exist anymore, and large retailers that have boarded up and moved away. Business has a thin bottom line that liberal lawmakers have never understood. Every increase to the cost of doing business must be passed on to consumers who have less money to spend. Liberals apparently skipped their Economics 101 class to attend Advanced Hole Digging 301.

It’s obvious that Maryland’s not doing it right. Just look at the survey of small business people I cited yesterday and compare us to Texas or even Virginia. We could do far worse than to replicate the business climate of Virginia or Texas – although every aspect may not be a perfect fit, the overall change would likely steer us in the right direction. Just look at North Carolina as another example – while they ranked 44th in State Business Tax Climate (Maryland was 41st in the same survey) the Tax Foundation study authors noted:

While not reflected in this year’s edition, a great testament to the Index’s value is its use as a success metric for comprehensive reforms passed this year in North Carolina. While the state remains ranked 44th for this edition, it will move to as high as 17th as these reforms take effect in coming years.

A leap like that would take North Carolina from a ranking which lags behind all its adjacent states and vault them into second behind Tennessee.

And while McDermott doesn’t get into policy specifics, let me whisper something into his ear: a complete elimination of corporate taxes would only “cost” the state $1.011 billion, or less than 3% of its budget. The year-over-year increase was larger than that! If Larry Hogan has that $1.75 billion of waste in his pocket, someone should get that corporate tax elimination proposal on his desk before February is out. It would be nice to have the first session after an election be devoted to major tax cuts rather than big hikes like 2007 and (to a lesser extent) 2011 were. (See update below.)

It truly is Economics 101: if you take a smaller slice from business, their profitability grows and they can be larger players in supporting the regional economy by investing in new workers and equipment. Those new workers and equipment provide more value, which builds the tax base and allows government to cut rates just a little bit more.

At one time, Maryland was booming – a condition I can attest to because that’s why I came here in the first place. Let’s see what we can do to get back to those conditions.

Update: In a subsequent release, McDermott gave me half a loaf, advocating for a 50% reduction in corporate taxes. Not bad. On the economic front he also calls for cutting income taxes, streamlining bureaucracy and relieving the regulatory burden to give Maryland ”an attitude as a state that our job is to ‘permit’ not ‘deny’,” and allow the first $50,000 of retirement income to be tax free.

Yes, it’s still “drill, baby, drill”

I ran across an interesting piece of polling thanks to the Energy Tomorrow blog. Their American Petroleum Institute parent group commissioned a Harris Poll of likely voters in four states – Florida, South Carolina, North Carolina, and Virginia – and asked them a series of questions to gauge their support for offshore drilling. As I would expect, the topline numbers showing support for the practice are quite solid, ranging from 64% in Florida to 77% in South Carolina. (Virginia weighed in at 67% and North Carolina at 65%, so it worked out to roughly 2/3 overall.)

But before you assume this is going to be another shill for offshore drilling (which I indeed support) I wanted to point out a glaring flaw in the poll methodology. For example, read through the Virginia polling data and see if you can figure out what’s missing. I’ll give you a second.

The first piece of the puzzle I would have liked to see would be a breakdown of support in coastal areas vs. inland. Using Virginia as an example, it would be nice to know how the question did in the 757 area code, which covers the Norfolk area and the Eastern Shore of Virginia. I would bet that support in that particular area was closer to 50-50, if not slightly negative.

But the key omission was the question: “Would you support offshore drilling off the coastline of your state?” The API’s point is that much of our coastline is off-limits to drilling because of shortsighted policies which ignore the overall safety record of the industry as well as the “peak oil” hysteria helped along by those same environmentalists who wouldn’t mind putting aquatic birds at risk with offshore wind turbines. But their point would have been buttressed even better if they had a clear majority of Virginians (or any other affected state) indicate that drilling off their coastline was an acceptable practice.

While these particular states were probably selected due to the length of their coastline, I wonder how Maryland and Delaware would feel with the same question posed to them. Granted, between the two there’s just 59 miles of Atlantic coastline but they indeed have oceanfront within both states so they could be hosting oil exploration and extraction in their waters someday. My guess is that they would still fall in the 60 percent range as far as drilling support, but only run 30-35% for drilling off their coastline. (A large part of that might be because so much of it is state- or federally-controlled parkland.)

Certainly it’s reassuring that offshore drilling still enjoys support after all its bad press over the last half-decade, but I’m not convinced the impetus is there yet for much motion on the issue. Fortunately (or unfortunately), the question is pretty much moot until 2017 at the earliest so we have time to create the necessary shift in public perception.

George vs. Perry

Subtitled, Don’t Mess With Move To Texas.

Speaking in a radio commercial aimed at Maryland businesses, Texas Governor Rick Perry blasted the state’s business climate and invited commercial entities to consider his state, an effort interpreted as a slap at Martin O’Malley and his 2016 hopes.

In response, Republican gubernatorial candidate Ron George exhorted Free Staters to fight, not switch:

Delegate Ron George, Republican candidate for Governor, has a simple message for Maryland voters. “Don’t Move, Vote.”

Delegate George is asking Marylanders to reject Texas Gov. Rick Perry’s advertisement seeking to lure Maryland businesses to the Lone Star State.

“This is a response to the failed business policies of the O’Malley/Brown administration that have led to Maryland losing over 93,000 private sector jobs from 2007 to 2011,” George remarked. “While private sector jobs continue to disappear under O’Malley, we can still turn our state around.”

Delegate George will be releasing the results of an internal campaign investigation Thursday morning to illustrate the statewide impact of the O’Malley/Brown administration’s disastrous tax and budget policies. This investigation will highlight the huge disparities in job growth and education both within Maryland and compared to the rest of the nation.

Today is Friday; in reality I’m writing this late Thursday evening. Unless Ron is talking about next week, I haven’t seen this internal investigation nor has he mentioned it on his social media.

But aside from that unforced error, let’s examine both what George is alluding to and what Perry’s real aim is.

It’s no secret that certain parts of the state have basically full employment while others often flirt with double-digit figures. The closer you get to Washington, D.C. the more likely it is you have a job, because right now – even with the dreaded sequestration – the federal government is fat and happy. The nation’s capital is almost a perfect black hole of tax dollars, but just enough escapes the vortex to prop up the regional economy around the Washington/Annapolis area. So they have no incentive to change and don’t mind paying a little more to insure their overall well-being, coerced from taxpayers around the country.

On the other hand, once you get outside commuting distance to the Beltway corridor you’ll find the rest of us grasping at economic straws. I’m thinking that Ron’s campaign team has found a way to harvest the data which shows that we are far from being one Maryland, and I’ll be interested to see if I’m correct.

As for the Perry radio spot: in finding that video (which was also posted in the Mark Newgent Watchdog Wire post I linked above) I found that the originator of the video’s YouTube Channel (apparently a woman named Jennifer Beale, listed on LinkedIn as the communications manager for the state’s economic development and tourism office) has also done videos tailored to other states, specifically Missouri and New York, along with a more generic piece featuring onetime Dallas Cowboys running back Emmitt Smith. In that respect, what Perry and his state are doing isn’t a whole lot different than the commercials I see touting the state of New York’s new attitude toward business or the tourism ads they run. The state of Michigan also seems to be a heavy local advertiser in that respect (“Pure Michigan.”) Even Maryland does the same thing for their job creators, but only with certain selected environmentally-correct businesses.

Still, the idea that Ron George is pleading with the business community to give him time to get elected is an interesting one. Obviously he has some “skin in the game” as the owner of a jewelry business; moreover, getting a business to pull up stakes and relocate to Texas is no small feat, regardless of the size. On the other hand, individuals can easily move – and they have, many to Virginia, Delaware, the Carolinas, or Florida; in fact, according to the group Change Maryland, Virginia and North Carolina were the destinations of choice for many who have already left. Texas wasn’t high on the list, but it was good enough for a recently-departed state senator.

Until this state straightens out its priorities, though, don’t be surprised if other successful governors come a-callin’.

Hot air or black gold?

I found this to be interesting; unfortunately the omission is not surprising. Last week on the Energy Tomorrow blog, a map showing all the areas placed off-limits to oil and natural gas exploration was posted; meanwhile, as the piece by Mark Green points out, the governors of Virginia, North Carolina, and South Carolina called on the federal government to allow drilling off their coastlines. Needless to say, I didn’t see Martin O’Malley’s name on that letter because he’d rather waste time and money tilting at windmills, and “can’t imagine” anyone would want to drill for oil off the coast of Virginia. Better think a little harder there, governor.

The naysayers also would tell you there’s only a limited supply of oil off our coast, anyway. But who really knows? The estimates of Outer Continental Shelf energy resources are over 30 years old, created at a time when people believed in “peak oil” and that energy resources in this part of the country were pretty much played out. Hundreds of massive deepwater oil finds and millions of cubic feet of natural gas unlocked through fracking later, we know better.

Yet our governor swears up and down the market is there for offshore wind, and insists it would cost us no more than a couple bucks a month. But why can’t we have both?

It seems to me there are vast swaths of ocean area being debated about here, hundreds of square miles. How much space (and height) does a deepwater drilling platform really take up? Wouldn’t it be possible for the oil platforms and the windmills to coexist? I honestly don’t see how one would affect the other, with the possible exception of being careful to drill away from the underground infrastructure needed to transmit the electricity produced to shore. Aside from that, there’s a lot of ocean out there. Certainly the purists who like to look out over the ocean and gaze at the stars at night would object to the lights of oil platforms within their line of sight, but the same can be said for wind turbine towers (they have to be lit as well, so planes and boats don’t run into them.)

You know where I stand. But if we can have both and the market will support them, I say go for it. Bet I know which would be built first.

Entitled to their own facts

There are two sides to (almost) every story, and after being raked over the coals by a Change Maryland study which received national attention and offended the sensibilities of our governor – you know, the one who’s already mentally measuring the drapes in the Oval Office? – the empire struck back today with a meaningless bunch of mumbo-jumbo about “partisan organization,” “decisive actions taken,” and “third lowest state and local tax burden adjusting for income.”   Shoot, at least I parsed the actual study instead of picking out items which have little to do with Change Maryland’s point, although I thought it was telling that the O’Malley retort conveniently forgot to mention that those 2007 tax increases came with millions of dollars of additional spending.

Now that I’ve managed to get a breath in after that first paragraph, allow me to decipher what this really means: it was a direct hit to the O’Malley 2016 battleship. Obviously, the Change Maryland piece making it to CNBC – which, coincidentally, today put out their annual ranking of the top business-friendly states where Maryland only ranked 31st (a decline of 2 spots from last year) – had to be interpreted as a shot across the bow by O’Malley and Maryland Democrats. That’s why they had to make sure to paint Change Maryland as a “partisan organization.”

Yet it’s no surprise that Virginia and North Carolina, two states that Change Maryland highlighted as recipients of Maryland’s tax base loss, ranked #3 and #4 respectively in the CNBC survey. (Texas and Utah were first and second, while North Dakota rounded out the top 5. I also found it telling that right-to-work states comprised the top 7 in the rankings, 9 of the top 10, and 14 of the top 16; meanwhile, closed-shop states comprised the bottom 4 and 7 of the bottom 10.)

But there’s something that Governor O’Malley and his administration cannot paint over, and that’s the mounting frustration of many of Maryland’s working families who continue to see tax and fee increases to support higher and higher spending on those they see as not contributing to society, especially illegal immigrants. All around them, they see their cost of living going up with one exception: the value of their homes, which continues to plummet.

Maybe it’s not so acute in other parts of Maryland, like downtown Annapolis, but out here there’s a lot of worry. And the numbers don’t lie: on much of the Lower Shore – where good-paying jobs are hard to come by in a roaring economy, let alone the POR (Pelosi-Obama-Reid) economy we’re under now (h/t to Tom Blumer of Bizzy Blog for that acronym) – those who left Wicomico, Dorchester, and Somerset counties had higher incomes than the arrivals did. I would also bet that if the northeastern quadrant of Worcester County (Ocean City, Berlin, and Ocean Pines) were excluded that county’s numbers would be similar.

My fellow Salisbury blogger Julie Brewington took less than 3 minutes while driving back from Ocean City to explain the quandary many thousands of not-so-Free Staters find themselves in. She well represents the producers of this economy:

I would guess that she and her husband, if they left, would tilt the income scale of the outgoing a little bit upward from the $37,000 or so figure that I gleaned for Wicomico County from the Change Maryland study. And it’s not just that, as her family has fairly deep roots in the area.

But if people don’t feel economically welcomed to a place, they will leave. Of course, that’s only my opinion but it seems to be an option more and more of those private-sector job creators in Maryland seem to be considering, to the detriment of those of the rest of us who choose to stay and fight. Who can blame them, though?

Good for Indiana (and North Carolina, too)

The TEA Party’s political obituary may have been written a little too soon, despite the presumed nomination of moderate Mitt Romney as the GOP Presidential standardbearer.

Senator Richard Lugar will be ‘Back Home Again in Indiana’ come January as he was defeated in their Republican primary. After 36 years in office, the 80-year-old Lugar became a poster child for establishment, RINO Republican insider and out-of-touch politician. State Treasurer Richard Mourdock, a TEA Party favorite, defeated the incumbent and will likely be elected come November. While Obama won the state in 2008, his campaign concedes Indiana will likely be a Republican win six months from now and Mourdock has twice won a statewide campaign.

Mourdock and other conservative Republicans have important races in the eyes of the TEA Party, with the hope being they would drag Mitt Romney to the right if he’s elected. (Of course, if Obama is re-elected the composition of Congress may not really matter.)

North Carolina voters also performed a valuable service, showing Maryland how it should be done and enacting a constitutional amendment banning same-sex marriage by a comfortable 16-point margin. This should hearten Maryland advocates of traditional marriage, who now claim to be past the halfway point in gathering the required number of signatures to place the state’s same-sex marriage legislation on the November ballot. Supporters of gay marriage remain 0-for at the ballot box, although many believe Maryland could break their slump. (Let’s hope not.)

I’ll grant that not all TEA Party supporters are interested in social issues, believing they detract from the necessary push for fiscal conservatism that is the backbone of the TEA Party movement. But I believe that social conservatism goes hand-in-hand with fiscal conservatism, and this is an easier sell with a society based on traditional values. I really don’t care who sleeps with who, but I believe bending the definition of marriage in that manner would only lead to other problems and even more odious partnerships, like adult-child relationships or polygamy.

We’re about six months away from perhaps the most pivotal election in our history, and a chance to perhaps steer the country back in the right direction after four years of runaway spending, consolidation of executive power, and corporate/government cronyism gone rampant. Needless to say, we would have to have several elections in a row fall in the correct manner to undo all the damage done over the last century but 2012 has to be the first step on the journey. Let’s see whether the trends continue in the right direction.

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    First District - Congress

    Andy Harris (R)
    Bill Tilghman (D)

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    Maryland General Assembly (local)

    Senate District 37

    Addie Eckardt (R)
    Chris Robinson (D)

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    House District 37B

    Republican

    Christopher Adams (R)
    Johnny Mautz (R)
    Rodney Benjamin (D)
    Keasha Haythe (D)

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    Senate District 38

    Mike McDermott (R)

    Jim Mathias (D)

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    House District 38A

    Charles Otto (R)
    Percy Purnell, Jr. (D)

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    House District 38B

    Carl Anderton, Jr. (R)

    Norm Conway (D)

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    House District 38C

    Mary Beth Carozza. (R)

    Judy Davis (D)

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    Wicomico County

    County Executive

    Bob Culver (R)
    Rick Pollitt (D)

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    County Council at-large

    John Cannon (R)
    Matt Holloway (R)
    Laura Mitchell (D)

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    Council District 2

    Marc Kilmer (R)
    Kirby Travers (D)

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    Council District 3

    Larry Dodd (R)
    Josh Hastings (D)