2011

In a previous post, I bemoaned the fact that hydraulic fracturing, the technological breakthrough in natural gas production also known as “fracking,” has spurred a frenzy of rent-seeking.

By significantly expanding America’s natural gas supply in a short duration, fracking has ushered in a period of low prices. This makes natural gas more competitive relative to other energy sources. As a result, the industry is in a great position to add market share in the electricity sector. Now that $3+ gasoline is the new normal, the natural gas industry also is well-situated to gain a foothold in the transportation fuel sector. The opportunity is there, but major gas producers have been unwilling to rely on their price advantage to better compete. Instead, they’ve been trying to secure political favors. As I noted in the aforementioned blog post,

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A collective cry of outrage could be heard across the D.C. urbanista interwebs upon the announcement that Ward 6 D.C. Councilman Tommy Wells would be losing his chairmanship of the Council’s Transportation and Public Works Committee. Unfortunately given the political dynamics (read: lefty-enviro-urban-fetishists have way too much pull in this town!), less is generally more when it comes to transportation policy in Washington, D.C. Wells, in addition to being an anti-gambling nannystater, is well known for being behind many of the District’s wasteful, anti-auto “livability” programs. His official website’s tagline is even “Building a livable, walkable city.” For a brief explanation of why the New Urbanists’ social-engineering  concept of “livability” is just code for “stupid handouts to yuppies,” see my recent post on OpenMarket.org regarding the federal Department of Transportation’s TIGER 3 grants program.

As the anti-mobility, pro-gentrification-subsidy Greater Greater Washington laments (as I rejoice), this decision is worsening the already low morale among the District Department of Transportation’s most worthless bureaucrats. Chief trolley and bike-share cheerleader Scott Kubly, who announced he will be leaving his post at DDOT, doesn’t appear to have been driven out as a result of Council Chairman Kwame Brown’s committee shakeup. But this latest departure of a Fenty-era apparatchik is making clear that much of the city is sick and tired of local politicians basing transportation and land-use policies around the silly prejudices concerns of wealthy gentrifiers. Ex-Mayor Fenty’s education policy was fingered by many in the clueless media as the culprit for his loss to now-Mayor Gray, as the awful teachers’ union contributed heavily to Gray’s campaign. But ask a resident of Ward 7 or Ward 8 about what annoyed them most about Fenty’s “white-washing”: “bike lanes” are usually at the top of the list.

While I am hardly optimistic about the overall future prospects of the notoriously corrupt D.C. city government, as an advocate for sensible transportation policy that actually enhances residents’ mobility and quality of life, recent steps taken by key city politicians are a breath of fresh air after years of official pandering to well-to-do urbanists.

America is a beacon of capitalism, so it can be jarring to discover one of its largest industries operates under the thumb of the state. As my colleague Iain Murray and I noted in National Review,

The $330 billion industry has been a redoubt of state control for almost 100 years. Early in the 20th century, pro-intervention Progressives concluded that electric companies would consolidate into “natural” monopolies that would exploit consumers. This was a curious conclusion to reach at a time when electric companies were competing vigorously in many cities, but for those who put faith in the regulatory state, theory trumps observation at every turn.

The Progressives’ remedy for this theoretical drift toward natural monopoly, offered without any apparent appreciation of irony, was to establish government-mandated monopolies. States created commissions with the regulatory power to outlaw competition among utilities and set electricity rates for consumers. By the end of the Great Depression, almost all Americans bought their electricity from government-backed monopolies, and they continue to do so to this day, whatever regulation advocates might say about electricity deregulation in the 1990s.

The upshot is that your utility is controlled by your local government, so it is only as good as your local government. With that in mind, Pepco’s status as the “most hated” company in America reflects poorly on politicians in Maryland, the utility’s primary service area.

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