WMC Begins To Unravel

Wisconsin Manufacturers and Commerce (WMC) is in the very early stages of an epic collapse. For some time, years, they will be a major political force in Wisconsin. The re-election of Louis Butler to the Wisconsin Supreme Court is not a certainly and WMC may defeat a thoughtful, knowledgeable jurist within the next year.

For several months I have talked to business leaders in the Madison area. The message is evident. The one-pony WMC show of no taxes and electing right-wingers at all costs is beginning to take its toll on the membership.

Now come the Wisconsin Transportation Builders Association (WTBA). They are a separate business organization from WMC but the two groups have overlapping membership.

WMC was running ads supporting the oil lobby and attacking Governor Doyle's proposed tax on gasoline as a means of funding transportation infrastructure.

WTBA had enough, and in an unprecedented move, is now running their own radio spots (if I transcribed it correctly):

...A state report says the five largest oil companies made more than $113 billion dollars last year. That's about $310 Million dollars a day.

The State's Chamber of Commerce (WMC) is running ads and wants you to believe that doing nothing is good for Wisconsin.

You know better. It is time for Wisconsin to turn the tables on big oil.

Governor Doyle's state budget currently calls on big oil to pay a percentage for every barrel of oil coming into Wisconsin..and..he'll prohibit oil companies from passing the cost on to consumers...

We know that public investment in infrastructure is critical to a healthy economy. We must build schools, transportation systems, public parks, and convention centers. Some of us might disagree on how much must be spent on roads versus rail or schools versus parks but we make the connection that public investment is a critical step towards leveraging private investment.

WMC is a strong healthy organization that will be a major influence in state and local politics. But with education and alternative voices, responsible business and community leaders can break its stranglehold on the private sector wallets that fund a reckless and dangerous agenda. An agenda that is dangerous for Wisconsin citizens, the economy, and businesses.

Comments

[scott]

I'll be curious to learn how Doyle plans to prohibit oil companies from passing this cost on to consumers. Will it work? I'm wholly in favor of increasing gas taxes, but taxing big oil in this way sounds like a dangerous experiment in commerce regulation and accounting bureaucracy (ahem, i say that w/o doing any of my homework...). If big oil is colluding, price-fixing, gouging, or whatever, that needs to be addressed via existing regulations and we need to let the free market do its job. Big oil's profits are up? Who's surprised by this? Supply is tight and demand is steady, of course they are doing well. Big oil is not a middle-man operating on tight margins. They have major investments end-to-end in the supply line. They buy some oil from OPEC, but lots of it they pull out of the ground themselves at relatively fixed costs. They don't pass it along at cost + margin, they pass it along at the price the market will bear. When the price is up, they win.

But here to me is the root problem: gas is much more expensive to society then the pump price. When my car burns gas, it creates pollution, increases traffic, deteriorates roads, (injures pedestrians, clogs lungs, contaminates ground water), etc. These things are expensive and many of them are already being paid for via other revenue streams. Why not pay for these things directly at the pump? The market will naturally make better decisions when true costs are involved. For example, if you are trying to minimize the environmental costs of your grocery habits, you might be weighing local produce vs. a similar item shipped from california. Which item took more resources to get to market? Honestly, it depends on a lot of factors and unless you are an expert in every transaction you engage in, you just have to take your best guess. Ideally, the price tag offers some clue, but with subsidized shipping, it's sure hard to tell. Want to support local farmers? Stop subsidizing inefficiency. Want to reduce our oil consumption? Charge the true cost at the pump.

Probably a terribly hard sell when gas is already breaking some people's bank but, the average consumer would break-even, paying more at the pump but less of the taxes that are used to fund road construction, pollution costs, etc. Instead of subsidizing road transit, why not level the playing field and have the heaviest users pay the heaviest costs? This is true-costing, and to me, represents free-market capitalism at its best.

all the best,
scott.

[don]

The Europeans, long ago, recognized the price of portable fuels, e.g. gasoline, aviation fuel, diesel,etc., was going to go higher due to limited supply.

They also reasoned that there would be a limit to demand once prices reached a high, but unknown, level.

Rather than let the oil industry obtain all of the pump price, they levied very high taxes on these fuels. That limited the amount of increase the industry could apply -- there was only a small distance to the point where intense conservation set in on the part of the public.

Those very high taxes pay for a very superior road and public transit system.

[An undergrad who got into a better grad program than Hughes because I am smarter than him]

watch out, Charles Hughes might call you a racist.

[Anonymous]

Oh good...now we'll have both the goverment and the oil companies digging deeper into our pockets. C'mon, there is no oil shortage and the refinery problem could have been solved years ago.