The Oil industry's long history of exaggerating costs
President George H.W. Bush signs 1990 Clean Air Act amendments (photo credit EPA.gov)
October 14th - When we talk about new law or regulation we tend to present it in a cost vs. benefits framework. But when it comes to environmental policy we don't always know the answers to the equation right off the bat. Costs are in the present, while benefits are in the vague future.
This is a dilemma the oil industry has a habit of exploiting. Over the last several decades, the United States has enacted health and environmental regulations that we now know saved hundreds of thousands of lives and improved countless others. These decisions are something we should be proud of, but there is more work to be done. Here in the Northwest we have new measures being proposed to continue this legacy of improving health and decoupling pollution from economic prosperity. In Oregon there is a ballot measure to end coal use in the state for good, while simultaneously upping our renewable energy use to 50% of our overall mix. In Washington, Governor Inslee has asked the Dep. of Ecology to cap and regulate pollution and there is a separate ballot measure to charge polluters for the burden they put on the rest of us.
Opponents of these potential measures will undoubtedly try and tell Northwesterners that this will cost us far too much. But history tells a different story.
Every time major new regulations have been placed on oil and coal, their industries have been dead wrong on costs. In 1990, President George H.W. Bush signed the Clean Air Act amendments that upped standards to reduce pollutants and toxins from oil and coal-fired power plants and major industrial generation. Both industries lobbied hard against the provisions, claiming that these improvements in health and quality of life would come at much too high a cost. But their accusations turned out to be pretty far from reality. Today we know the end results and Clean Air opponents over estimated by 373%.
The 1990 Clean Air Act additions were in part also enacted to fight the then growing phenomenon of acid rain. Along with these changes to emit-able levels of pollutants, our nation’s first cap and trade program was put in place. This market-based solution has been sited as inspiration for nations across the world using this style of program to cut pollution in the most cost effective way possible. But did the oil and coal industry applaud this novel solution to a serious health and safety risk? No, once again, they lobbied strongly against the landmark program and vastly over estimated potential costs to the tune of 436%.
But the most blatant exaggeration of cost came from an initiative that hit emissions right at the source. Urban smog and pollution is still an issue many cities in the US are trying to address. If left unchecked, it can cripple a city’s productivity and gravely sicken those that live near by. One piece of the solution is to reduce toxins from transportation fuels. Reformulated gasoline, a program to reduce air pollution by blending traditional gas with less polluting fuels helped greatly reduce pollutants in major US cities. This program is required for any city with smog levels that are deemed beyond safe levels and voluntary everywhere else. Again, the oil industry dramatically over estimated the programs costs, this time by 945%.
Oil companies clearly have an agenda when it comes to framing debates over health and environmental safe guards put on their industry. Locally this past summer, we saw this same tactic with blatant misrepresentations of Oregon’s Low Carbon Fuels program and it is sure to come up again when oil companies file their measures to try to repeal clean fuels at the ballot. Bias and purposefully distortion undoubtedly played a role in these exaggerations, but their estimates are rooted in a fundamental confusion we can all fall into. We have to think of these programs with benefits front and center. Perhaps more importantly, we have to remember that costs are always framed in the status quo. Static unchanging circumstances are never what we see in practice. These types of predictions are grounded in a lack of faith in our natural ability to create new and better ways of doing things. Regulations are simply a means to spur that development forward. We will ways change, innovate and build things better if given the right conditions.
Next time we get this cost vs. benefits question lets remember how the equation really works.
Below is a graphic with these examples and associated benefits during the same time frame. Please feel free to share, with a nod to Oil Check Northwest.
Nick Abraham - Editor, Oil Check Northwest
[email protected] @oilchecknw