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Blanco bests Odom, but will consumers also win?

Finally, it seems the balance of “who pays and who benefits” is swinging into the favor of Louisiana consumers, when it comes to the aftermath of Act 313 of this legislative session. The act would commit the state’s gas distributors to make sure that at least two percent of their product is in ethanol when its production rises above 50 million gallons a year, no later than six months after.

As previously noted, existing Legislative attempts left considerable doubt whether measures could be taken that would prevent higher prices at the pump because the cost of making the ethanol vastly exceeds now and for the foreseeable future will exceed that of gasoline processing, as well as it would potentially cause environmental hazards. Even legalities that on the surface would prevent the price spike upon implementation of Act 313 were uncertain because of the large role Agriculture Secretary Bob Odom would have played in it all.

Odom fought moves to put into place a legal mechanism that would diminish his authority to declare Act 313’s provisions to be triggered, no doubt with an eye on transferring wealth from consumers to a few agriculture interests as soon as he legally could. However, a surprise consumer hero emerged to cut out Odom, state Sen. Noble Ellington whose past record tends to favor big government and special interests. He got the Department of Agriculture’s influence entirely removed, and even that of farm lobbies.

As the amendment to his SB 454 now stands just hours before it will be taken up, consumers will have a fighting chance. At this time, the amendment would have to have local wholesale prices per unit of pure gasoline and ethanol the same for 60 days, as determined by a board made up of a representative from the retailer lobby, a representative from the Louisiana State Agriculture Center, and the Revenue Secretary, before Act 313 would kick in.

You know the sellers want more of their product sold which higher prices because of ethanol wouldn’t allow and with the cost having to be passed on means this interest will vote in the consumers’ favors. The other two votes, however, are up in the air. If both the economist and politician are of the harmful good-old-boy persuasion who look out more for certain special interests that the peoples’ interests that has ruled this state’s politics for decades, consumers still will get the shaft under this regime. But an honest academician and an appointed official who puts the consumer first will make a fair assessment that will not cost the state’s consumers extra.

(Note incentive for the secretary to favor consumers: his department collects the 20 cent-a-gallon gas tax. Just as with the retailers, he would want to see more rather than fewer gallons sold which would happen by preventing ethanol blends if higher priced from being mandated, because the more gallons sold, the more the state takes in.)

The next step is a conference committee; Senate negotiators are in place, the House remains to pick theirs. One of them certainly would be Rep. Francis Thompson, a friend of agriculture interests and Odom, but not of consumers or taxpayers. The same can be said about a Senate conferee, Sen. Mike Smith. But hopefully Ellington and fellow conferee Sen. Ben Nevers with the other two house appointments will get the provision Ellington wants in submitted and back to the chambers tonight or tomorrow, and off to the chambers and then governor by 6 PM tomorrow.

Surely Gov. Kathleen Blanco will help this along. Ellington’s language makes her a big winner, for not only does it allow her to position herself as a friend of consumers and the environment, but it also gives her a rare triumph in the struggle for power of Democrats in Louisiana between her and Odom.

1 comment:

Anonymous said...

Dear Prof. Sadow,

Your comment regarding Rep. Daniel and his bill regarding the sale of gasoline could not be more inaccurate. Daniel's bill would have allowed retailers to sell gasoline below wholesale cost. Rep. Townsend's bill put a minimum cap on the price of gasoline.