The market overruled by bureaucrats

In the real world, a very good indicator of whether or not a good or service is needed is if private capital is drawn to supply it. If people are willing to risk their wealth to create the capacity to produce something, chances are that product has a demand.

I know this is an unremarkable statement, bordering on "Duh!" But here in Oregon, our state officials don't understand even this most rudimentary principle of economics. Actually, it is more likely that they DO understand, but they pretend that they don't so they can exercise their political authority.

At issue here is the liquefied natural gas (LNG) terminal proposed for Bradwood Landing, on the Columbia River about 30 miles inland from Astoria. The poor company who has been trying to get the approvals necessary to bring this energy source to the northwest has gotten an object lesson in Oregon anti-business NIMBY-ism, environmentalist obstructionism, and state government bureaucratic stupidity.

The Oregon Department of Energy this week issued a study that says, basically, "We don't need no stinking LNG." Now, how do they know this? And shouldn't the fact that a private company is willing to risk hundreds of millions of investor capital on the bet that there is in fact a need for this new energy source perhaps give them a little pause in their arrogant assertion of bureaucratic certitude?

Not in Oregon. In Oregon, markets don't matter. Government judgement is far superior. According to The Funny Paper, Oregon doesn't like the federal government's deference to the marketplace:

"State leaders and agencies have decried FERC's hands-off, market-based regulatory approach to LNG terminal sitings. The [federal] agency has essentially told state officials that it intends to license all projects that meet its environmental standards, then let the market decide which projects attract financing and which get built."


That sounds pretty logical to me. Make sure the environmental standards are met, and if they can attract the investment capital, then knock yourself out.

But Oregon, things look different here. We love dreamers who dream that state bureaucrats can make better judgements about whether new energy capacity is needed than can those who put their own wealth on the line.

According to Oregon's Department of Energy:

"There is adequate gas in the Rocky Mountains, Canada and Alaska to serve Oregon's near- and long-term needs, and proposed Rockies pipelines could provide gas more economically than the LNG terminals. There is already a surplus of LNG terminals in the United States. Many can't attract LNG cargoes because other countries are willing to pay more. LNG plants in Oregon would likely be underutilized, particularly with the presence of a new LNG terminal in Baja, Mexico. "

Wonderful. It couldn't be, could it, that the DOE bureaucrats have some other political motivation for making this judgement than an honest assessment of the market for LNG? Like the fact that their chief executive has opposed every LNG proposal to come down the pike?

If the bureaucrats are wrong in their analysis, what is their punishment? Nada - in fact, whether they are wrong or right, if they are successful in stopping the plant, will not only never be known, it is entirely irrelevant, since the whole point is to use the machinery of the state government bureaucracy to stop the plant in the first place.

They are rewarded for doing the political bidding of the governor, and claiming it is based on some phony assessment of the marketplace that they are uniquely ill-situated to honestly make.

How many of these bureaucrats ever risked a dollar of their own in the energy sector? Why do they think they know better than the market if there is demand for LNG in Oregon?

In actuality, they don't. They are just doing Kulongoski's bidding. And our state's reputation as a place to do business mysteriously slides....