Natural Gas is Important to Virginia

Posted on October 31, 2018 by matt ohern
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The U.S. Labor Department announced that Virginia added nearly 5,000 jobs in August. We’ve added almost 50,000 new jobs over the last year. One reason for this is Virginia’s commitment to expanding our energy resources. U.S. natural gas exploration and distribution has helped transform both our nation’s and Virginia’s economy. The current two pipelines being built through Virginia to Hampton Roads and North Carolina will help our state and local economies as well as improve our environment since natural gas is cleaner than burning coal.
The natural gas industry has created jobs and put money into the pockets of our state residents. Some of the men and women who work in the industry have college degrees, but many don’t. This industry offers many family-sustaining jobs for high school graduates and those with associate degrees.
The natural gas industry pays $7 billion in wages to Virginians annually, and, according to the U.S. Bureau of Labor Statistics, oil and gas industry workers earned an average of more than $100,000 in 2015. With rapidly declining national and state jobless rates, and an increasing demand for cleaner energy, the need for natural gas workers will likely increase. This could mean that there will likely be even higher wages for those who work in Virginia’s expanding energy industry.
Supporting the expansion of natural gas use in our state simply makes economic sense for our families and will likely improve our environment as well.
And let’s look at other advantages of natural gas. It allows Americans to pay some of the lowest energy costs in the world, and Virginia consumers have found significant savings by switching to natural gas. The average household can save more than $1,300 annually on their home heating costs by switching from propane to natural gas and about $800 to switch from heating oil to natural gas. According to the Economic Policy Institute, the average family of four in Roanoke pays nearly $846 month in housing costs. A savings of $70 to $100 a month helps these families pay for other basic needs.
The natural gas industry also contributes $12 billion annually to our state’s economy. Companies within the industry and their employees pay hundreds of millions in taxes to our towns and cities helping to pay for public schools, law enforcement, welfare programs and more.
Natural gas is one of the cleanest sources of energy in the world. It can be transported underground and does not need to be transported by diesel-powered 18-wheelers. In fact, as natural gas production has increased in the United States, our greenhouse gas emissions have fallen. And unlike other sources of clean energy, such as water, solar, or wind, this energy source is available to Virginians on demand. The recent storms have made it clear how important energy reliability is to our households, hospitals, and nursing homes.
Our public officials should continue to explore and facilitate renewable energy development, but natural gas, because of its availability, reliability and cost effectiveness, should continue to be an important part of our energy mix.
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Sensible water discharge policy waiting for Congress to act

Posted on October 17, 2018 by matt ohern
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On April 26, 1607 Captain Christopher Newport and the Virginia Company colonists first set foot on Virginia’s shore just west of Cape Henry, at the mouth of the Chesapeake Bay. Soon afterwards, these men and women established Jamestown and our incredible history began. Since then, Virginia has been a maritime leader.
The movement of goods and people on Virginia’s navigable waterways helped lay the foundation for America’s identity as its own nation with its own economy. And since then our rivers and coastal areas have served both as a hub of critical economic activity and as a major component of our national defense. Indeed, our port is a major part of our state’s economic infrastructure.
I support sensible and reasonable standards for the protection of the marine environment. I helped found and continue to serve on the Board of Directors of the Occoquan Watershed Coalition in Fairfax County. The purpose of the OWC is to protect and maintain the viability of the Occoquan Watershed environment, which guides water into the Chesapeake Bay, and ultimately the Atlantic Ocean, via the Occoquan River.
That’s why I am concerned about what the U.S. Senate will do when it soon examines the Vessel Incidental Discharge Act (VIDA), which deals with the cumbersome and confusing patchwork of federal and state vessel discharge regulations. VIDA wants to create a single, environmentally stringent federal standard for ballast water and other vessel discharges. VIDA is critical for maintaining Virginia’s leadership in maritime commerce and setting a high bar for protecting the quality of the marine environment on which that activity depends. It will replace a hodge-podge of regulations that differ from state to state and causes huge problems to our maritime industry.
As President of the nonpartisan Thomas Jefferson Institute for Public Policy, I’ve had the privilege to witness firsthand the commitment, focus, and determination that Virginia’s congressional delegation, from both sides of the political aisle, have in supporting sound public policy for the benefit of our state’s economy. Both Senators, during their tenures as Governor, demonstrated a steadfast commitment to our state and worked to position Virginia as an economic powerhouse. These U.S. Senators have the opportunity to ensure that Virginia benefits from the sound solution VIDA offers to the current regulatory maze which has hampers economic and environmental improvement. In so doing, they will reaffirm their commitment to the state’s maritime commerce and protect Virginia’s marine environment.
The Thomas Jefferson Institute has worked side-by-side with Virginia’s State and Federal elected officials to provide Virginia’s political, business, academic, community and media leadership with thoughtful, realistic, useful and non-partisan analysis of public policy issues. Under Republican and Democrat Administrations, we’ve remained committed to ensuring that government legislation, regulations, and policies encourage economic growth and job creation while promoting a dynamic and vibrant Virginia economy and protecting our environment.
The balanced, commonsense approach that VIDA takes to drastically improving the efficiency of maritime commerce while maintaining the highest standards for marine environmental protection has earned this legislation a diverse range of supporters. This support includes marine terminals and port authorities, vessel owners and operators, labor unions, national business organizations, and industries that rely on efficient maritime shipping operations to transport vital cargoes throughout our nation. VIDA’s clear benefits for our economy and the environment have also earned it support from both sides of the aisle in both the U.S. Senate and U.S. House of Representatives – a rare distinction in an increasingly polarized Washington, D.C.
VIDA is sensible policy that strikes the right balance between protecting the environment and ensuring a regulatory framework that allows functioning waterway navigation. Hopefully, Senators Warner and Kaine will support VIDA so that our maritime industry can better continue to grow and prosper. Virginia’s maritime legacy needs their support.
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JLARC Report on Licensing: Useful, But a Missed Opportunity

Posted on October 17, 2018 by matt ohern
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As the old saying goes, you find what you look for. And in its examination of occupational licensing in Virginia the Joint Legislative Audit and Review Commission (JLARC) largely found what it was looking for — inefficiencies and overcharges. Conducting the review was worthwhile, but the exercise was small ball — it missed the opportunity to examine much bigger issues.
In 2017, JLARC instructed its staff to study the Department of Professional and Occupational Regulation (DPOR) staffing and organization, its processing of occupational licenses, and its enforcement of occupational rules. Staff also assessed the affordability of fees and the processes for adjusting fees.
Here’s what JLARC did not study: To what extent does licensing create barriers to entry into the regulated occupations and professions? To what extent do regulated professions use regulations to protect their occupational turf and boost their earnings? To what extent does the public suffer from these legalized labor monopolies?
To its credit, given the limited scope of its inquiry, JLARC did come up with some interesting findings in “Operations and Performance of the Department of Professional and Occupational Regulation“:

  • No legal justification for regulating 11 occupations. Eleven occupations regulated by DPOR appear not to meet the criteria for regulation established in the state code. These include community managers, opticians, residential energy analysts, soil scientists, landscape architects, waste management facility operators and others. Regulation of these occupations does nothing to advance the public health, safety and welfare of the public.
  • Excess fees. DPOR is funded by the fees it charges to applicants. DPOR’s method for calculating fees has over-projected agency expenses leading to unnecessarily high fees in the past. Fees have been reduced since, but the balance still has grown $27.2 million — up from $15 million ten years ago, and far more than needed.
  • Many complaints go unexamined. Staff closed 71% of the disciplinary cases it opened in FY17. Staff do not investigate all potential violations.
  • Poor use of IT. DPOR does review and approve licensing requests in a timely manner, but it would make the process more user friendly by making it more accessible online and by automating key processes.

These are all useful findings, and the report makes some 36 recommendations on how to improve the system. While the goal of improving administrative productivity is laudatory, however, making a flawed system work more efficiently doesn’t do much to build a more prosperous, equitable Commonwealth.
Conservatives have long targeted occupational licensing for creating barriers to upward mobility. Do the state’s 73,000 barbers and cosmetologists really need regulating? Do they really need formal education and credentialing? Is the public health and safety truly harmed if someone gets a bad haircut or cracked fingernail? The crafts of hair cutting, cosmetology and hair-braiding, which provide an avenue of occupational mobility for lower-income Virginians, could be taught perfectly adequately in informal apprenticeships. Why burden people with educational costs and licensing fees?
Of greater concern is the regulation of the medical professions. In theory, the system is designed to protect the public from frauds, charlatans and malpractice. The system does do that, so some form of licensing is necessary. But the system also carves out occupational turf, protecting doctors from competition from nurse practitioners, and nurse practitioners from registered nurses, and registered nurses from licensed practical nurses, and so on down the line. That may not be a big problem in major metro areas, but it is a huge problem in large swathes of rural Virginia that have trouble recruiting medical professionals.
Indeed, it is fair to say that the crisis of access and affordability in rural health care is largely the result of rigid occupational licensing rules that prevent nurses from performing a high percentage of the routine procedures, and dental hygienists from cleaning teeth and filling simple cavities. No health care, it appears, is better than health care not delivered by doctors and dentists.
I would love to think that the General Assembly might get serious about tackling these issues. But I don’t see it ever happening. As the Richmond Times-Dispatch editorial page observes today, only one in twenty jobs required government certification a half century ago. Today, one in four does. It should come as no surprise that highly compensated professions, intent upon maintaining their occupational monopolies, have become major campaign contributors. According to the Virginia Public Access Project, physicians have donated $347,000 to political campaigns so far in 2018-19, dentists $223,000, optometrists $114,000. Nurses? Only $33,000. Don’t expect rural healthcare reform unless it involves paying doctors and dentists more money.
(This article first ran in Bacon’s Rebellion on October 15, 2018.)
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Family Incomes Doing Well

Posted on October 17, 2018 by matt ohern
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Families in the Richmond region saw the rate of their inflation-adjusted incomes having the second fastest growth among all 383 metro areas in the nation.
Median household income rose 5.3 percent in the Richmond metro area in 2017 compared with 2016, according to data released in mid-September by the U.S. Census Bureau.
That growth rate is much faster than the 2.6 percent for the nation over the same period.
Household incomes in the San Diego area grew the most across the U.S. in 2017 – up 5.4 percent. Hartford, Conn., had the biggest decline, with household income falling 3.6 percent.
Such a high ranking for the Richmond region is impressive.
Yet an analysis of the underlying data shows some positive trends and raises some concerns.
On the positive side, among ethnic groups, black households registered the largest inflation-adjusted percentage increase in household income in 2017 (growth rate of 8 percent in the Richmond area compared with 2 percent in the nation).
The median income of black households in Richmond stood at $47,663 in 2017, while Asian households had the highest median income of $92,886.
Also, more than 14,000 additional households in Richmond were making an estimated income of $60,000 or more in 2017 when compared to the prior year.
More than 8,000 more households in the area had an estimated income of at least $150,000 when compared to the prior year.
As of 2017, the Richmond area’s median household income was $67,633 compared with $60,336 for the nation.
On the negative side, the Richmond metro area had 5,318 fewer households in 2017 when compared to 2016.
Even more concerning was the loss of more than 10,000 one-person households, many of whom are young adults.
If the loss of these one-person households is a result of them getting married and forming two-person households, then we would expect the census data to show about a  5,000 gain over the same period in two-persons households.
But the number of two-person households in the Richmond area actually fell by more than 1,000 in 2017.
Based on this analysis, it appears that the loss of low-income, younger households contributed to the fast growth in median income for the area.
The median household income is the benchmark where half of the region’s households earn more than this amount. When low-income households move out, this benchmark will go up even if everyone earns the same income as in previous year.
The preferred driver would be a gain in the number of households and income increases across age cohorts.
The GINI Index, a gauge of economic inequality measuring income distribution, declined from 46.5 in 2016 to 45.3 in 2017 in the Richmond area. That points to decreased income inequality.
The national index remained constant at 48.2 over this period. An index value of 0 indicates perfect equality where there is equal distribution of income.
Viewing income from this level of detail shows the need to go deeper than the average in assessing the overall health of households in the Richmond metro area.
Remember the adage: “With one foot in a bucket of ice water and one foot in a bucket of boiling water, you are, on the average, comfortable.
(This column first ran on October 1, 2018 in the Richmond Times Dispatch.)
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Unconventional Vehicles: Two Radically Different Visions

Posted on October 17, 2018 by matt ohern
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There is no question that personal transportation will undergo significant changes in coming decades. Three such changes will be the advent of affordable electric vehicles, fully autonomous vehicles, and mobility as a service (MaaS) in which people opt to rely on shared vehicles rather than individually owned vehicles. These are separate changes, which may well arrive on different time scales and with different degrees of market penetration.
Several times in recent months, various people have sent me a report that links all three together via a dramatic scenario. The report comes from RethinkX and is called “Rethinking Transportation 2020-2030,” released in May 2017. Its headline claims include the following:

  • Fully autonomous vehicles (presumably SAE Level 5) will achieve regulatory approval and be on the market in 2020.
  • By 2030, those AVs will provide 95% of all [surface] passenger miles of travel.
  • Those 95% will all be in shared vehicles (Mobility as a Service), rather than in personally owned AVs.
  • These AVs will all be electric, and will last 500,000 to 700,000 miles on their initial battery pack.

These assumptions are shared by virtually no one actually working on AVs, whether at technology companies or traditional auto companies. The past year has seen a growing number of articles explaining that full autonomy (on all kinds of roads, in all kinds of weather, etc.) is turning out to be a much harder problem than many researchers expected. Most expect gradual introduction of AV features in the next decade, with full Level 5 not being likely until at least 2035 or beyond.
As I wrote in a recent column for Public Works Financing, there is no necessary connection between electric propulsion and autonomy: neither one depends on the other. The current generation of EVs costs nearly twice as much as comparable non-EV vehicles, seriously limiting mass-market appeal. Likewise, as of now, autonomy itself requires a large array of costly sensors and very complex artificial intelligence software, Hence, RethinkX’s idea that electric AVs will be cheaper than conventional cars by 2020 looks to me like a pipe dream. In addition, the idea that the original battery pack will last 500,000 to 700,000 miles (a key to Rethink’s lower ownership cost estimate) is unproven. (The Toyota Prius battery pack has a 10-year or 150,000-mile warranty, while the Tesla Model 3 warranty is for 8 years of 100,000 miles.)
A far more realistic assessment of future mobility was released in May 2018 by S&P Global Ratings, “The Road Ahead for Autonomous Vehicles.” S&P’s analysts conclude that “mass adoption of driverless autonomous vehicles (AVs) [is] still decades away.” By contrast, they expect a faster penetration rate of electric vehicles (EVs), especially if there continue to be government “incentives” (subsidies) for those purchasing them. (S&P’s EV projections are somewhat exaggerated by including plug-in hybrids.)
S&P developed three scenarios (low/medium/high) for AV penetration, depending on a array of assumptions about technology, the price premium over conventional cars, extent of government “incentives,” growth in ride-sharing/ride-hailing (Mobility as a Service), etc. For the 2020 to 2030 period, the fraction of AVs in the total light-vehicle fleet by 2030 is projected at <1% in the low scenario, <5% in medium, and <10% in high. In Phase 2 (2030-2040), the AV fraction of the vehicle fleet would be <5% in low, <15% in medium, and <35% in high.
I find the assumptions underlying the three scenarios to be reasonable, and a number of implications for highways and travel emerge. First, even in the high (“disruptive”) scenario, only 35% of the light vehicle fleet will be AVs by 2040. So that means our roadways and highways are going to have to deal with a mixed fleet for many decades. That is far different from popular media visions of a near-term all-AV future. Second, S&P suggests that the early impacts of Level 5 AVs will be felt most by transit agencies and parking enterprises. Between 2020 and 2030, S&P expects an increase in urban traffic congestion, due partly to the continued growth of ride-hailing. (Incidentally, a new paper by Alejandro Henao and Wesley E. Marshall, “The Impact of Ride-Hailing on Vehicle Miles Traveled,” projects that “ride-hailing leads to approximately 83.5% more VMT” than would have existed had ride-hailing not emerged.) As connected AV market penetration increases beyond 2030, S&P expects “lane capacity could increase by 5% to 7% by 2030-2035 [due to] an increase in platooning.” That would partially offset the impact on highways from increased VMT due to ride-hailing and increased personal travel by those who cannot drive today (very old, very young, and disabled).
These are still early days for EVs, AVs, and MaaS. The sober analysis from S&P is a far better guide to thinking about the implications of these developments than the blue-sky vision of RethinkX.
(This column first ran in the October issue of Surface Transportation Innovations.)
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