Congress, conundrums and crumbling infrastructure
VAIL — Federico Pena says Washington’s collective lack of political courage leads our federal government into short-sighted silliness like this:
The federal government is required to store enough oil reserves to last around 77 days. Congress ordered the oil taken out of those salt caverns and sold.
“It cost $88 a barrel to put it into the ground, and they pulled it out and sold it for $28 a barrel,” Pena said.
The buffoonery is bipartisan. When Pena was energy secretary, he had to blow the whistle on fellow Democrats trying to do the same thing.
“You’re selling it for less than it cost me to put it in there,” Pena told them.
Pena is a former Denver mayor and served as U.S. served as secretary of energy and transportation. He has a road named after him. You’ve been on it if you’ve driven to Denver International Airport. Now he’s with Vestar Capital.
Pena was part of the Vail Symposium’s financial speakers series. He spoke to crowd in Vail’s Sonnenalp Hotel on Thursday.
“We have a political system that responds to crises. Unlike China that thinks 20 years ahead, we think three months ahead,” Pena said.
Where are the good people?
Why can’t we find rational people to run for political office? Pena was asked.
“It is my opinion that reasonable, good people are not running for office,” Pena said. “They think it’s a waste of their time and nothing will get done.”
Debate is not debate; it’s shrill and nonsensical sound bite swapping.
“There is no more middle ground,” Pena said.
To stop it, he said, we all have to get more involved and stop giving money to candidates we don’t believe in.
“We have to start demanding more. Compromise is not a bad word,” Pena said.
We also need to be better informed, he said, and more aware of biased information.
“One of the very sad things is that the news networks have become very partisan. Now everyone has an ax to grind,” Pena said. “It’s going to take all of us. We cannot go along lockstep any longer.”
State of infrastructure
The Society of American Engineers says if we had invested $1.8 trillion in our infrastructure, it would be adequate by 2020, instead of critical.
Those engineers say 20 percent of bridges are “structurally deficient.”
“It means they’re ready to fall down. That’s what this means,” Pena said.
The University of Texas and Texas A&M put the cost of delays at $160 billion a year.
The problem is perspective, Pena said.
“When you’re in Washington, a billion doesn’t always sound like that much money,” Pena said.
If we wanted to maintain our highways, it would cost $90 billion to $100 billion a year or $160 billion to $180 billion a year to improve them.
Improving mass transit would cost $11 billion a year
“We spent $3 trillion on two wars. Give me one-sixth of that total investment and I could have solved that problem,” Pena said.
Last summer, congressional Republicans proposed a 10-cent per gallon gas tax increase for the transportation fund, but it quickly died in the House.
Because gas is relatively cheap, this would be the least painful time to increase the gas tax, Pena said.
“This is what candidates are talking about when they say Congress and the federal government is broken,” Pena said.
Trustworthy trust fund?
President Dwight D. Eisenhower created the interstate highway system, and the Highway Trust Fund to pay for it, funded by a federal gas tax. States have passed their own gas taxes.
Congress has not increased the federal gas tax since 1993, which Pena calls a “lack of political courage.”
“Congress keeps kicking the can down the road,” Pena said.
The money to fix highways and bridges is borrowed from other funds and that increases the federal deficit, Pena said.
For example, Congress took money out of the Federal Reserve fund and the general fund, and put that money in the highway fund. In five years, the deficits will be bigger and they’ll be out of money again, Pena said.
“That means the states have had to increase their gas taxes. Now, we’re relying on the private sector to build roads and transit systems,” Pena said.
Meanwhile at the federal level, the FAST Act — Fixing America’s Surface Transportation — ironically took seven years to pass.
Free trade is not free
Oil does not trade freely in the world like other commodities, Pena said. Cartels such as the Organization of Petroleum Exporting Countries, which is made up of mostly Middle Eastern countries and Venezuela — manipulate both supply and demand.
Saudi Arabia, for example, has made their goal crystal clear, Pena said.
“Saudi Arabia will drive down the price while increasing production, to bankrupt American companies and make us more dependent on them,” Pena said.
The technological strides in U.S. energy production — things like natural gas and fracking — are nullified because the Saudis are flooding the world with artificially cheap oil. Plus, the Saudis are upset about America’s deal with Iran, Pena said.
“At some point we have to do something with OPEC. And it has to be a very tough conversation,” he said.
Relationships between nations can be complicated, Pena said. As energy secretary he went to Saudi Arabia to ask King Fahd bin Abdulaziz Al Saud to buy U.S. airplanes. Oil was selling for about $12 a barrel at the time, and oil producing countries were going bankrupt.
“We want their land to build military bases, but we don’t like it when we have to buy their oil. Most people don’t want to think about that,” Pena said.
Staff Writer Randy Wyrick can be reached at 970-748-2935 and email@example.com.
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