Ethanol bill's final form creates consumer worries

Well, the pendulum swung a bit farther the other way on SB 454 than my previous post had hoped, and Louisiana consumers potentially are the losers for it, if the House of Representatives and Gov. Kathleen Blanco as expected accept conference committee recommendations.

SB 454’s conference fate didn’t get a boost when the House picked another good old boy, state Rep. Jim Fannin who favors agriculture interests, and an advocate of the ridiculous notion that Louisiana needs a law to prevent gasoline retailers from selling below cost, state Rep. William Daniel IV, to the conference committee (in addition to the other mentioned in the previous post). Consumers suffered when these guys and the others assented to a conference report allowing a representative of the Louisiana Farm Bureau Federation on the three-member panel that determines whether consumers would have to fork over more for gasoline sold in the state, replacing the Revenue Secretary.

That politician still has some input, selecting the third member of the panel, the other being a representative of gasoline retailers, from agriculture economists available from major state university systems. But as we know the retailer representative will be (properly) biased in favor of consumers, surely the agriculture representative will be biased in favor of the special interests he represents. The tie will be broken by the choice of the Revenue Secretary’s, an official appointed by the governor.

This official does have incentive to favor the consumer and pick an economist accordingly, because higher prices at the pump caused by higher ethanol prices would result in fewer gallons sold, and thus fewer tax revenues collected. However, the choice of who is this official that appoints the economist lies in the hand of the governor, and she may wish to put a person friendly to agricultural and environmental interests in that position.

It’s hard to say in which direction the current occupant, Cynthia Bridges, would go. But one can envision scenarios in 2007 that could put a governor in office who clearly would be hostile to consumer interests on this matter, and would appoint somebody of like mind. The conference report gives only broad guidelines in terms of determining when ethanol’s price becomes equivalent to that of pure gasoline, so this selection could be crucial.

While the final form of SB 454 does not unambiguously harm consumer interests, neither does it solidly protect them. Government always behaves more mischievously than less, and so Louisianans will have to maximize their protection on this account by electing governors who understand that the government that governs least governs best, and wishes to minimize intrusion into the peoples’ economic affairs.