Susan Pendergrass speaks with Andy Smarick, senior fellow at the Manhattan Institute, about Missouri’s education leadership shake-up and what comes next. They discuss how to find the right commissioner of education, why outside reformers tend to succeed where insiders struggle, what the dismantling of the US Department of Education means for state accountability systems, why public complacency about poor academic outcomes persists, and more.

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Episode Transcript

Susan Pendergrass (00:00):
Thank you so much, Andy Smarick, for joining once again on the Show-Me Institute Podcast. We love having you on and I appreciate you taking the time. You’re a busy man, so it’s really wonderful to have you back.

Andy Smarick (00:06):
I love being here. It’s a treat. Thank you for having me. I always like talking to you, but also anytime I get to talk about state-level education policy, it’s a treat.

Susan Pendergrass (00:19):
Well, I know that you have experience serving on a couple of state boards, both K-12 and higher ed. Just to bring you up to speed on what’s happening in Missouri: we have a relatively new governor, about a year in, and we had a state board of education where people stayed in expired seats, rubber-stamped decisions, and were very complacent, I feel comfortable saying. Our governor shook up that group and appointed new people who came in and said, what do you mean we don’t have bylaws? It was like, this is bananas. At the same time, the governor issued an executive order requiring letter grades on schools and districts, new school report cards. I don’t know exactly how everything went down, but our Commissioner of Education resigned, our Deputy Commissioner resigned, and our president of the state board of education resigned, all in about one week. So we are now straightening things out and there is a new board president. But this new, relatively new board now has the task of finding a commissioner. The way things have happened in Missouri is we always get a new commissioner from the ranks of the state education agency, maybe from the legislature, always from Missouri. Just a real this-is-how-we’ve-done-it mentality. And we have not been big reformers. No Chiefs for Change in Missouri. Like a lot of states, our reading scores for young kids are tanking, forty percent below basic for third and fourth graders. We have a state accountability system called the Missouri School Improvement Plan in which 516 of our 520 districts are fully accredited and about four are provisionally accredited, none unaccredited. So we have this meaningless accountability system where every district is fully accredited, even St. Louis, which I can’t even go into. So here we are, and I want to know a few things from you. Number one, if you were on the Board of Education in Missouri, how would you go about finding a new commissioner? What would you look for? And then later I want to get into what’s happening at the national level. We are not doing well academically, we have never had a bold reformer in charge, we keep doing the same thing and getting the same result. What would you do if you were in their spot?

Andy Smarick (02:59):
So in education, I’m going to wind up to this answer, so just bear with me for a second. Conservative can mean two different things. One is the traditional conservative view, which is to preserve, to stand athwart big, swift, dramatic, perpetual change. You’re trying to keep things the way they are because there’s a lot of wisdom that has gone into it and people are accustomed to it. In education, there’s also this other right-of-center conservative view, which is we have to be much more open to choice, competition, accountability metrics, and so on. And it seems that Missouri has been one of those very red states that has tended to believe in the first kind of conservatism: protect our traditional school districts, protect the hierarchies we have, protect the tradition of you grow up as a professional, as a teacher, then a superintendent, then maybe go to the state education agency. A lot of people believe that’s the way to do it.

There probably is an ethic among a lot of people to keep it that way. The only way you get out of that is if there’s a recognition among leadership that we can’t continue to preserve the status quo, that we have to change some things. That is a big step for a place that has elevated the idea of preserving for a very long time. If they get to that step, then they have to do the very tough things, which is start to pull out the Jenga pieces of that conservatism. The most important one is having board leadership and having a state superintendent who come from outside the state, and then having a board chair or board president who is not going to just do what the staff of the state education agency says or what the district superintendents say. We saw this work quite well about fifteen or twenty years ago. There was a big movement nationwide in educational reform led at the state level, and a number of states chose out-of-state superintendents and commissioners of education who did a terrific job of shaking things up and advancing a bunch of important proposals. The downside is a lot of them were so brash and so young, and I have to say so cocky, that they made unnecessary waves and kicked a lot of people in the shins in the states where they landed. So my view is a place like Missouri should pick someone from out of state for a state chief, someone with a long track record of success, but someone who isn’t so green as to think he or she knows everything. Someone with enough humility and enough time on task to know what they don’t know, and who can come in and be bold enough to make some changes, but not think that everyone in the state is a dummy who needs to be ignored. That’s how I would think about it. And if you have a board chair and board membership who get all of this, it makes things a whole lot easier. But that might be the hardest part of all. Who is your board president? Who are the board majority going to be? They have to be the ones with the backbone.

Susan Pendergrass (05:57):
Yeah. I feel like we’ve had people come in and say, well, I’m only the commissioner, it’s not my fault that the kids don’t read. And then people say, well, we’re a local control state, so it’s really the local guys’ fault that the kids can’t read. Then the legislators are like, well, who’s supposed to be making sure the kids can read? And technically, kind of they are, but them plus the board, and there’s just fingers pointing every different direction with nobody really taking responsibility. If we had the capacity for hard things, we would not have all of our districts be fully accredited. There’s even pushback on the letter grade idea because folks will say, well, then the teachers in those F schools feel bad and the parents feel bad and the kids who go there feel bad. I’ve seen some states change it to colors or something where nobody feels bad. I’ve also heard folks say it’s racist because a lot of the D and F schools enroll large percentages of students of color. So there are just all of these reasons to resist. It’s going to happen because there’s an executive order, but I feel like we’re going to have a hard time finding somebody who’s willing to do those things.

Andy Smarick (07:17):
Well, your state, like every other state, has a state constitution that makes the state ultimately responsible for education. Your state, like others, has both tradition and some laws that give a number of powers to local districts. The weird thing, and I’ve seen this in a lot of different states, is the state government ends up in a very weird position. The state can get sued and state leaders can get criticized if kids aren’t learning, because the state actually has constitutional authority to make sure kids are learning. But as a matter of practice, and often of state statutes, a lot of this power is delegated to districts. States then try to recapture some of that power through the accreditation system. It’s the way the state can say, okay, districts, you have the power to do these things, but we’re going to hold you accountable for results and we’re going to accredit you or not. And then it turns out it’s virtually impossible to take away the accreditation of these districts because of legislative pushback, and the state typically doesn’t have the capacity to run a district if it does take away accreditation. It just becomes a complete hot mess. That’s why you need state leadership who has some experience but also some backbone to say, this is how we’re going to thread the needle of state authority, state responsibility, local control, and still making sure that kids learn. This is not easy, other states have gone through it, but it isn’t the kind of thing that someone who has lived in Missouri all their life and grown up professionally there can do easily. It’s going to be hard for that person to get out of that box. Having someone from the outside who can start to do some bold things, including hiring smart, tough lawyers, having board leadership who’s going to stick by it. But I just want to emphasize this point: every state I ever talk to begins by saying, well, you know, we’re a local control state, our districts have all the power. Everybody says that. Go back to your state constitution. The state is the one that’s going to be responsible. And if the state has the backbone, it can do a whole lot. But whether it has the backbone is the operative phrase.

Susan Pendergrass (09:41):
Yeah. So about seven years ago we developed our own school report cards with letter grades, called MOSchoolRankings. I’ll just plug it. It was with GPAs, and this year for the first time I just took the GPAs and converted them to letter grades because folks found GPAs tricky. I put up the methodology. I took all the data from our state education agency, DESE, and just tried to make it a map you can zoom in and out on, easier to navigate. And my thinking is you have to do these things, make sure you say how you do it, and then people can argue with you and debate whether it’s right or wrong or good or bad. And many people have. A lot of people don’t like that the average is a C. I’m open to discussing why the average should be anything other than a C, but you have to at some point just make the move and then be confident enough in what you did that you can defend it and change it if people point out flaws. But this is where I think we struggle at DESE. They struggle to just put that out there because they worry about every negative outcome and consequence. And it’s like, yeah, but at some point to not do it is worse than to do it.

Andy Smarick (11:10):
For sure. And I’ve gotten to the point of realizing that if you have been in a system at different ranks for thirty or thirty-five years, all of your friends, your reputation, your pension, your income, everything about your identity is wrapped up with that system. Expecting these folks to suddenly turn the corner and say, you know, we’ve messed up, tens of thousands of kids are not learning right now today in classrooms, and we have to start holding the adults accountable for that, including teachers and principals and local school board members and local superintendents, and we have to be courageous about it. That’s asking a lot of people who are of, by, and for the system. It can be a whole lot easier if you just get someone from the outside with the courage to do it.

Susan Pendergrass (11:54):
Yeah. So can you think of an example of a state that has done this well?

Andy Smarick (12:02):
Definitely during the late No Child Left Behind era and then the Race to the Top era, a number of states found people from outside. Tennessee was famous for this. Arne Duncan ended up going to a couple of different places, including Rhode Island. New Jersey ended up picking Chris Cerf. There was a movement where probably ten or fifteen states did this quite well. My state, Maryland, brought in the superintendent of Mississippi after Mississippi had had so many gains, so she could carry some of those especially reading reforms to our state. This is not uncommon. Texas did something like this for a while. Louisiana became very famous during the John White era for doing this. But in all of these cases it began often with a governor, and then some members of a state legislature who said, we just can’t keep doing things the way we’ve done in the past. We have to do things differently. Once the governor says something like that, he or she can appoint people to the Board of Education who will do things differently, and the legislature, at least his or her party, will start to fall in line, and the media then starts to understand how serious it is. It is hard to do this without the governor leaning forward and giving the blessing to the bureaucracy to do things differently. So the question for you is, is your governor going to spend any political capital on this and say things are messed up and we have to do things differently?

Susan Pendergrass (13:29):
I don’t know. I hope so. But I haven’t seen evidence of that. I suspect, though I could be wrong, that they’re looking more internally than externally. However, I just want to add one wrinkle to this context that we’ve been thinking a lot about at the Show-Me Institute. If you’re following the US Department of Education, I believe you used to work there. Is that right?

Andy Smarick (13:54):
Yes, back in the day.

Susan Pendergrass (13:55):
Last week they moved the Office of Special Education over to the Department of Health and Human Services. They moved the Office of Civil Rights over to the Department of Justice. The building where the Department of Education used to be is now vacated. All those people are over at an old Department of Energy building. It’s a significantly reduced staff. Without touching the Every Student Succeeds Act, they are effectively dismantling most of the structure over there, at a time when the current president said that sending education back to the states was one of his priorities. I’m particularly concerned that at a time when Missouri has this vacuum, we could be looking at the apron strings being cut, states being told to sink or swim from the federal perspective. You don’t have to maintain the accountability systems. The Secretary is encouraging states to submit requests to waive parts of the law. I don’t really know exactly where it’s headed, but that concerns me. Do you think they’re going to let off the gas on mandated accountability systems in exchange for flexibility?

Andy Smarick (15:15):
Such a good question. To begin with just some editorializing: it is astonishing that Congress has allowed this to happen. In general I’m a big fan of decentralizing education power to the states, but that they’ve been able to administratively dismantle a department without Congress doing anything about it is just shocking to me. Even members of the Republican Party twenty years ago, let alone forty or sixty years ago, who jealously guarded the prerogatives of the legislative branch to create departments and fund departments, would have been appalled at this. There would have been unanimous consent to stop this from happening. So that says a lot that Congress has just sort of excused itself from the discussion. It has been remarkable the extent to which that building where we used to work, and the thousands of people there, is just empty, and they are handing off all the tasks to other places. I don’t know how this is legal, but I guess they’re figuring out a way to do it.

Now, the people who are leading this from inside genuinely believe that education will be better off if Uncle Sam isn’t meddling in it so much. That requires a theory of action, or at least a theory, that the reason why things are bad is that Uncle Sam is causing them to be bad, as though if Uncle Sam backs up there’s going to be a sunnier future ahead. Or it requires believing that it is just morally wrong for Uncle Sam to get involved, and whether states sink or swim after he gets out, that’s up to them. That’s a theory, it’s an ideological approach, and they have the right to pursue it. Donald Trump was elected and he gets to hire who he wants to. But then, to your point, it starts to implicate the Every Student Succeeds Act, which still requires the federal government to do some things related to state accountability systems. And if you believe you have the power administratively to undo a cabinet department, I suspect you probably believe you have the power to ignore some federal accountability provisions and just allow states to do what they want. So we’re going to be left in this position of saying, all right, the federal government is getting out of the business of accountability, therefore the states need to do it well. And then anyone who cares about kids learning will ask, okay, are states going to do this well? And so I turn to you as a state leader. Is Missouri going to

Susan Pendergrass (17:23):
Yeah.

Andy Smarick (17:47):
kick butt and take names?

Susan Pendergrass (17:48):
I’m concerned. I mean, No Child Left Behind was difficult and a lot of people didn’t like it, but test scores went up. Strict accountability, test scores went up. As we backed off, the Race to the Top era with waivers, and then Every Student Succeeds, which allowed more waivers, states were able to lower a lot of bars. Some states raised bars, like you mentioned, Mississippi and Louisiana. Some states are doing a great job, especially with early literacy. Others are not. And so Missouri, I think of it like this: you have a college student and you’re paying all their bills. You’re writing the checks, ordering their textbooks, doing all that work. Then one day you say, you know what, instead of that, I’m going to give you $3,000 a month: you pay your rent, your utilities, get your own books. There are going to be kids who step up and do fine. And there are going to be a lot of kids who take that $3,000 and immediately go to Cancun. We know this. It kind of depends on what you’ve done with the kids so far. And I feel like we have lulled the states into a feeling of compliance. If we just tell you how we spend our Title I dollars, fill out this form, and report that our test scores keep going down, no one cares. There’s no stick. They don’t withhold the money. We just say our test scores this year are lower than last year, and they say, good to know, here’s your

Andy Smarick (19:14):
Yep.

Susan Pendergrass (19:22):
check. So if that’s how you were raising your kids so far, why would you expect them to step up and become suddenly responsible?

Andy Smarick (19:31):
Okay, I have to admit that I have learned a hard lesson in my years doing education policy, which is that I was wrong that the political system of its own volition will always push for big action to make sure schools are great. I believed that if we had accountability systems showing that schools were underperforming, there would be a perpetual energy within the public to say we have to fix this, that it was just a matter of making the knowledge available and then everything else would take care of itself. It turns out it just doesn’t work that way. You need leaders at the top to constantly push and say, we are not doing well enough, we have to do dramatic things to make sure kids are going to be better off. Otherwise, No Child Left Behind is in place for a while and then people get sick of it. Or you have some interesting testing regimes and then there’s pushback to that, or just resistance to Uncle Sam in general. And people like the two of us say, but kids aren’t learning anything anymore. We are seeing a cratering of student learning since the peak of No Child Left Behind’s learning gains. This is horrible. Kids just aren’t learning anymore. The Andy of twenty years ago would have assumed the nation would revolt and say, how dare we do this to our schools and our kids, we have to do something differently. Instead, I don’t want to say it’s crickets, but there has not been a major wave of energy to change things again. The only way to do this is for governors or presidents to say this is not good enough and keep pushing. It is the ultimate dog that didn’t bark. The story is why something isn’t happening. If things are so bad in student learning, why is there not a dramatic energy within the public to do things differently? So maybe I look to you. In Missouri, are people just satisfied? Do they just not want the hassle?

Susan Pendergrass (21:28):
Why do you think? Yeah, they are like, we love our schools. All the time: we love our schools. We love, love, love our rural schools. It’s hard, kids show up with a lot of baggage, it’s just hard. But we love our schools. God forbid we have tiny districts getting below fifty kids. We love it. There isn’t an appetite to say, well, thirty-some percent of our rural high schools don’t offer calculus, and we don’t think we need it. It’s like, well, those kids are going to join a world where a lot of other kids had access to these things. It’s just, I don’t know the word. Complacency for sure. And it gets exhausting to continue to talk about it because it feels like

Andy Smarick (22:20):
Yeah. So this is why it can feel that way. And listen, if I were a state superintendent, based on the things I have learned, I would always begin a big reform movement by saying, first, all of the things you just said, but sincerely, because I believe this. I would say I love our public schools. I know how much they do for kids. I know that we love our teachers. I know that these schools are part of the community. I know that they help shape young people in ways beyond reading and math scores. I know that we love to go to these sports events. I know that we love to go to our fifth-grade graduation. This is an important strand in the fabric of our community. We love these schools, we love our teachers, we need to protect them, and we have to do better. What I found in that previous movement of big, dramatic out-of-state actors who came in and took over is they were awesome at the we-have-to-do-better part and absolutely lousy at the we-love-the-schools-and-teachers part. And that just caused a lot of anger. It was toxic in the long run. It is so important to a state to hear the we-love-our-schools message. That’s why they end up picking leaders, board presidents and superintendents who are of the system, who sincerely love their schools and say that. But they’re bad at the second part: we have to do things differently. The key to leadership right now is finding someone who can say both. We love these schools. We love public education in our communities. But Lord, our kids deserve a whole lot better than this. We have to do some things differently. That’s a rare leader.

Susan Pendergrass (24:00):
Yeah. Well, I think that’s a great place to end, because what else can you say? That’s awesome. That’s what we’re looking at. We’re going to find out soon, and not just Missouri. Many states have the same problems. I would love to have you come back again, Andy. We love having you.

Andy Smarick (24:16):
I love getting emails from you or Zach asking me to come on. I’m happy to give my bad opinions on anything.

Susan Pendergrass (24:23):
No, you have such a good, crystallized view of these things, and your experience on state boards is invaluable. I do appreciate it. Thank you for taking the time. I know you’re busy and hopefully you’ll come back soon.

Andy Smarick (24:40):
Whenever you call. Have a great summer.

Produced by Show-Me Opportunity

The post The Case for an Education Outsider in Missouri with Andy Smarick appeared first on Show-Me Institute.

Last year, the passage of Senate Bill (SB) 4 allowed natural gas plants to raise rates to pay for construction before plants are put into operation, a process known as construction works in progress (CWIP). Companies using CWIP under SB 4 would still be subject to cost caps (by estimated cost and completion date) and a refund mechanism (with interest) if the project is not finished. There was speculation about whether a provision in SB 4 would also allow its usage for nuclear projects.

A recent change to SB 838 would remove any ambiguity; the change explicitly prohibits nuclear energy projects from using CWIP.

But is preventing nuclear projects from being able to use CWIP really a good idea?

Some view CWIP as necessary for new nuclear projects to get a foothold in Missouri. Excluding nuclear from this flexible financing method could either drive up total costs (since loans would bear interest) or even eliminate potential projects altogether.

At the same time, the concerns surrounding CWIP are real and should not be dismissed. Charging ratepayers before a plant is operational raises difficult questions. Should utilities earn a return before delivering a service? Does this reduce incentives to control costs during construction? And what happens if a large, high-risk nuclear project is cancelled (which has happened in the United States before)?

These are not trivial concerns. However, a better solution for Missouri would be to improve the CWIP framework for all energy sources.

SB 4 already includes cost caps and refund provisions, but additional safeguards could further protect ratepayers while still allowing needed infrastructure to be built.

Virginia recently passed CWIP reform, and it instituted additional safeguards that Missouri could also adopt:

• Excluding 20% of development costs from CWIP eligibility
• Mandatory evaluation of federal funding opportunities from the Department of Energy
• Establishing a cap on residential monthly bill increases ($1.40 per 1000 kWh)

Additionally, the Missouri Public Service Commission could evaluate compensating ratepayers appropriately for early contributions and their role in risk-sharing, such as treating CWIP financing more like a bond system.

These improvements could even better protect and reward ratepayers, as well as facilitate needed power plant construction without targeting a specific technology—an effective compromise.

The post Nuclear Energy and Construction Works in Progress (CWIP) appeared first on Show-Me Institute.

While no site has yet been selected for a TerraPower reactor, lessons from Wyoming and recent federal reforms offer clues about what might come next. As I have written before, the federal government has put extensive emphasis on converting retired coal plants into advanced nuclear reactors. These conversions, according to the U.S. Department of Energy, can save up to 35% on construction costs and retain much of the existing workforce. In Wyoming, TerraPower is currently building a reactor on a former coal site, and it would not be a surprise to see Kansas follow suit. This model could highlight a potential path forward for nuclear adoption in the historically coal-dominant Missouri.

Federal Reform and Cost Savings for Coal-to-Nuclear Transitions

The concept of coal-to-nuclear has drawn bipartisan attention in Washington, D.C., and has been codified in the recent ADVANCE Act, which directs the Nuclear Regulatory Commission to develop and implement strategies to enable more efficient licensing reviews for converting former coal plants and other former industry infrastructure into nuclear reactor sites.

A report prepared by experts at the Idaho, Oak Ridge, and Argonne National Laboratories found that these projects can achieve significant savings by repurposing existing infrastructure, such as steam-cycle components, since both nuclear and coal are thermal power plants that rely on generating steam to turn a turbine.

Missouri’s Long History with Coal and Transitioning Our Workforce

Coal has long been king in Missouri. Despite recent closures, Missouri remains the fourth most reliant state on coal, with coal supplying 57% of electricity generation in 2024. That legacy presents both a challenge and an opportunity.

Missouri has several coal plant sites that could be strong candidates for advanced nuclear conversion. A study from Oak Ridge National Laboratory identified three Missouri coal power plant sites (retired or slated for retirement between 2020 and 2040) as suitable for hosting a number of reactors.

Not only is there an opportunity to make use of our physical infrastructure, but Missouri can also use our existing workforce. The U.S. Department of Energy notes that many coal-plant and nuclear-plant jobs share identical or similar occupation codes, meaning a large portion of the existing workforce could transition with minimal retraining.

A Nuclear Advisory Council Could Help Identify Steps for Missouri

Another way to better identify potential nuclear sites is by creating a nuclear advisory council. If Missouri brought together the best and brightest minds in nuclear energy to discuss our unique opportunities, analyze trends in federal regulation, and address our state’s weaknesses, the Show-Me State could become a significant player in nuclear development.

Kansas is moving along in its process. Let’s hope the Show-Me State doesn’t let this same opportunity pass it by.

Interested in Nuclear Energy in Missouri?

Read my recent report, Connecting Nuclear Energy’s Past and Present: Guiding Missouri’s Future, here.

The post Considering Coal-to-Nuclear Transitions in Missouri appeared first on Show-Me Institute.

Below are some new directives that could be relevant to our state’s energy future.

Expediting Nuclear Construction at Federal Sites

One order calls for the deployment of advanced nuclear reactors at both military installations and Department of Energy (DOE) facilities, with timelines that call for completion of the projects near the end of President Trump’s term. To support these goals, the Secretaries of Energy and Defense are required to collaborate with the Chairman of the Council on Environmental Quality to apply existing and establish new exclusions to certain requirements from the onerous National Environmental Policy Act (NEPA).

If next-generation reactors are brought online, then this could trigger a broader wave of nuclear construction across the country, as another order requires the Nuclear Regulatory Commission (NRC) to “establish an expedited pathway to approve reactor designs that the DoD or DOE have tested and demonstrated.”

Essentially, it seems the administration is trying to lighten the load of nuclear regulation for the DoD and DOE, and if they succeed with these new reactors, then utilities and developers could follow in their footsteps.

Reevaluating Longstanding Regulation and Radiation Standards

One of the primary barriers to new nuclear development has been construction costs. Many of these costs have stemmed from the adoption of NEPA and the incident at Three-Mile Island (TMI) creating new, stringent regulations.

One study notes that for reactors already under construction when the accident at TMI occurred, median costs were almost three times higher and plants took almost twice as long to complete (not including costs of interest, delays, etc.) than plants that received their operating licenses before TMI. NEPA also had a similar, yet smaller, effect on construction costs and timelines.

To address these issues, another order calls for sweeping reform of the NRC’s operations and regulations. The Department of Government Efficiency (DOGE) is directed to help reorganize the NRC in order to better support innovation and expedite licensing.

Reform is also targeted at the longstanding radiation standards established in the 1970s. To oversimplify, these standards assume there is no safe threshold of radiation exposure, even those below levels that naturally occur in the environment. Essentially, if a nuclear developer can reasonably lower its levels of radiation exposure, it should, regardless of cost or relative risk. These policies have contributed to rising costs and a lack of predictability in both the licensing and construction process. The new executive orders direct the NRC to consider adopting a fixed and predictable exposure threshold, which should improve the environment for financial investment in nuclear.

These are just some of the key changes that are occurring in nuclear energy. If Missouri is to take part in the industry’s growing resurgence, we should be paying close attention to these developments. One way to do this is by establishing a Missouri nuclear advisory council. Such a council could bring experts together to present critical information for new development, assess emerging opportunities, and identify areas for improvement within the complex and rapidly changing nuclear landscape.

Listed are all four executive orders, each issued on May 23, 2025:

(1) Deploying Advanced Nuclear Reactor Technologies for National Security

(2) Reinvigorating the Nuclear Industrial Base

(3) Ordering the Reform of the Nuclear Regulatory Commission

(4) Reforming Nuclear Reactor Testing at the Department of Energy

The post What Could New Executive Orders on Nuclear Mean for Missouri? appeared first on Show-Me Institute.

SB 4 allows utilities to recover construction costs gradually during the construction phase, rather than waiting until the project is complete and operational. This will only be explicitly allowed for natural gas projects, although there is potentially a pathway available for nuclear and other resources through the Missouri Public Service Commission (MPSC). This alternative financing strategy should be useful for future capital-intensive projects, as it would reduce financial risk for utilities and possibly lower total project costs by allowing firms to rely more on revenue instead of loans, which accrue interest.

CWIP offers benefits for needed power plant construction, but the interest of ratepayers is still vital. A blank check for a monopoly utility could lead to cost overruns and cancellations (which are issues partly tied to the monopoly system itself).

Further Ratepayer Protections and Compensation

The MPSC will still oversee utility rates, and it should continue to weigh potential safeguards to protect Missouri ratepayers. SB 4 already includes two key provisions—cost caps (limited by the estimated cost and completion date) and a refund mechanism—if the plant is not put into operation.

The State of Virginia also recently passed CWIP reform, and it instituted additional safeguards that should be considered for future projects. These include:

• A limit on the number of eligible projects;
• Excluding 20% of development costs from early recovery;
• Mandatory evaluation of federal funding opportunities from the Department of Energy; and
• Establishing a cap on residential monthly bill increases ($1.40 per 1000 kWh).

Additionally, the MPSC should evaluate how ratepayers could be compensated appropriately for early contributions and their role in risk-sharing, such as treating CWIP financing more like a bond system.

This could involve limiting or disallowing pre-operation profits or aligning profits with the operation and provision of power. Another approach might be reducing total cost recovery for utilities after the plant is put into operation, since it is a riskier investment that relies on ratepayers earlier. Potential mechanisms include offering credits for reduced rates post-operation (that could function like a principal in a bond) or shortening the depreciation period post-operation to account for profits earned during the pre-operation phase. If this strategy leads to cost savings for a project, ratepayers should receive a portion of those savings.

These provisions could help strike a balance between protecting ratepayers and facilitating needed power plant construction. Utility companies argue that CWIP is required to build more energy generation in Missouri. If that’s the case, adequate safeguards for state ratepayers are needed.

The post SB 4: Missouri’s Energy Challenge and the Push for CWIP Reform appeared first on Show-Me Institute.

Positive trends in regulation, attitudes toward nuclear power, and technology have fueled a resurgence in American nuclear power. The good news for Missouri: our state has a strong history with nuclear power and engineering. With real national momentum, Missouri has an opportunity to leverage our existing strengths to benefit from this resurgence.

A Simple First Step: Forming a Nuclear Advisory Council

A straightforward step would be forming a Missouri Nuclear Advisory Council to inform comprehensive strategies for guiding nuclear development. Tennessee’s recent experience offers a replicable model.

In 2023, Governor Bill Lee of Tennessee established a nuclear advisory council through executive order to inform legislative actions for addressing regulatory, education, and workforce barriers, as well as strategies for financing, waste storage practices, and opportunities Tennessee should pursue with federal partners and agencies. For example, the council recommended amending a regulatory statute to classify nuclear energy production facilities as Certified Green Energy Production Facilities, leveling the playing field with renewables.

Tennessee’s council serves as a model of collaboration and expertise, with membership that includes:

• Directors of interested state departments: Environment and Conservation, Economic Development, and Emergency Management
• Officials from the state legislature, congressional delegation, and local government
• Experts from higher education, utilities, workforce development, the energy production sector, and the nuclear industry
• Representation from the regional national laboratory
• Additional members as determined necessary by the governor (Tennessee opted to include more experts and scientists).

Missouri could create a similar council through executive order, establishing a platform for collaboration among the state’s brightest minds.

Potential Focus Areas for the Council

While Tennessee’s council had a partial focus on economic development, Missouri’s council could prioritize identifying best practices and potential legislative solutions without interfering in market outcomes.

To provide one example, the council could identify and evaluate suitable locations for new advanced nuclear facilities. The U.S. Department of Energy reports that repurposing coal plants for advanced nuclear reactors can reduce construction costs by up to 35%. Oak Ridge National Laboratory has already identified retired and retiring coal plants in Missouri as promising sites for new reactors. The council could assess these opportunities and recommend actionable steps.

The Potential for Missouri

Missouri has the talent, the track record, and the need to build new, advanced nuclear facilities. A nuclear advisory council could bring these elements together to inform best practices for new nuclear development in our state, catalyzing investment, attracting high-paying jobs, and securing a reliable energy supply for decades.

The post Forming a Missouri Nuclear Advisory Council appeared first on Show-Me Institute.

Missouri cannot keep putting off energy reform until the next year—change is happening now, and energy demand is growing.

For the first two decades of the 2000s, electricity consumption remained flat without significant growth, as increased demand was offset by increased energy efficiency. However, in recent years energy demand has been on the rise again.

Forbes, the Department of Energy, and The New York Times all note the same driving forces for this increasing demand—data center growth (accelerated by the growth of AI) and a boom in electrical manufacturing (batteries, computer chips, etc.). What is one thing data centers and factories have in common? They both require power 24 hours a day—something non-dispatchable resources like solar cannot effectively provide alone. (Small modular nuclear reactors are great at providing continuous power . . . just saying.)

Some prominent organizations, such as Goldman Sachs and McKinsey & Company, have forecasted that U.S. data center energy usage will double by 2030. To put it into perspective, Goldman forecasts that data centers’ share of total U.S. power demand will rise from its current 3% level to 8% by 2030. This is an enormous amount of electricity—equivalent to the power needed for over 40 million U.S. homes.

Ameren is planning to shut down all coal plants by 2045. To replace coal plants’ production and meet new demand, our state will need to build reliable, powerful, and clean power plants.

Nuclear power can check all of these boxes, but we need regulatory reform to allow nuclear to flourish in Missouri. To replace and meet new energy demand, our state should strongly consider nuclear energy.

The primary policy that has impeded our nuclear industry for decades is the construction-works-in-progress (CWIP) law. This statute prevents utilities from raising rates in order to help pay for construction-works-in-progress, making it much more difficult to develop nuclear projects. CWIP has proven fatal for Missouri’s nuclear industry, as nuclear projects are both extremely capital intensive and subject to extensive holdups in the regulatory process.

Nuclear plants do not arise out of thin air, and they will not be built in Missouri if there are too many regulatory barriers. Eliminating the longstanding CWIP statute by passing HB 1435 and HB 1804 would provide a backstop for the large upfront costs of small modular reactor construction so that utilities can work with both domestic and international nuclear developers to revive our state’s nuclear industry.

In the remaining weeks of the session, the legislature cannot forget about the need for modernization in the energy sector. Electricity demand is on the rise, and Missouri should prepare to meet this demand.

The post Missouri Needs to Be Prepared for Growing Energy Demand appeared first on Show-Me Institute.

Inflation has reared its ugly head again—hitting a 30-year high of 6.2 percent, which is more than triple the Federal Reserve’s definition of stable prices. Unfortunately, the wayward policies that have contributed to soaring prices, pervasive shortages, and sputtering growth are not going away. In fact, they are poised to get a whole lot worse.

President Biden signed the first of two giant spending bills into law on Nov. 15. That was the $1 trillion “Infrastructure Investment and Jobs Act.” The second bill is the administration’s proposed Build Back Better Act, passed by the U.S. House of Representatives a few days later and now pending before the Senate.

Taken together, we are looking at a potential tsunami of bad policymaking. Let us count the ways the two pieces of legislation threaten our nation’s freedom and prosperity:

#1. The infrastructure act is only partially about infrastructure as most people think of it. For example, the law spends only $110 billion on fixing roads and bridges—barely putting a dent in the maintenance backlog—while Amtrak alone will get 60 percent as much as all of America’s bridges and roads combined. Yes, that Amtrak—the one that has consistently run operating losses almost every year for the past 50 years. Tens of billions of additional dollars will go into public transportation even though only five percent of Americans rely on public transit in commuting to work.

#2. Also under the infrastructure act, the government says it will make “the largest investment in clean energy transmission and grid in American history,” and it calls for “building thousands of miles of new resilient transmission lines to facilitate the expansion of renewables and clean energy.” Wind and solar have been lavishly supported for decades, but still only account for 11 percent of U.S. electrical power generation, and their actual role is much less than that because they are intermittent. Does anyone seriously think they can come anywhere close to replacing gas and coal as the primary source of 60 percent of electrical power generation and be equally cheap, reliable, and easy to use?

#3. Then, too, as part of the green energy component of the “infrastructure” plan, the federal government will mastermind the building of a network of 500,000 electric vehicle charging stations, thereby not only putting taxpayer money at risk, but also putting the federal government in the position of picking winners and losers among America’s small-town communities through its choice of where to put those stations. The survival of local communities may soon depend increasingly on Washington, D.C.’s whims.

#4. The proposed Build Back Better Act would permanently and dramatically expand the welfare state and abolish work requirements as a condition for receiving aid. There would be some “free money” for taxpayers at all levels of income. The wealthy would get theirs in the form of expanded state and local tax (aka SALT) deductibility. The top current deduction of $10,000 isn’t much for a top-one-percenter living in an expensive house in a spendthrift, high-tax state like California or New York. Build Back Better includes an eightfold expansion of the maximum SALT deduction to $80,000. The typical taxpayer would get no benefit, while top earners would receive an average windfall of nearly $23,000. The Build Back Better Act would also permanently enshrine the Biden administration’s reimagined Child Care Tax Credit, which would allow a family to receive thousands of dollars a year ($3,600 per child under age 6 and $3,000 per child at 17 and under) in government cash with zero earned income and no expectation whatsoever of anyone having to seek a job.

#5. Adjusted for a lot of gimmickry, a close reading of the bill shows that it would result in nearly three trillion dollars in cumulative budget deficits over the next decade. Claims that the bill will not add a dime to deficits and debt are entirely spurious.

To sum up, what we have here is an overarching vision for transforming America. It would concentrate more decision-making power in the hands of the central government. And it would turn what has been a society of producers, workers, and investors into a society of people and institutions (including unions, businesses, schools, and an enlarged army of social workers and activists) whose livelihoods depend on what government gives them.

The post Commentary: A Tsunami of Bad Policy appeared first on Show-Me Institute.

Wind and solar power received the most subsidies in absolute terms, receiving $37 and $34 billion, respectively. When broken down by subsidies relative to the amount of electricity produced, the results are staggering.

The report concluded that wind and solar producers received nearly as much money from subsidies as they did from selling their electricity on wholesale markets.

The report does not provide state-level data, but Missouri is no stranger to these subsidies. While not having much solar power, Missouri has several wind plants. In addition to the Lost Creek wind farm that received $107 million in subsidies from the 2009 federal stimulus bill, numerous wind plants are recipients of the federal Production Tax Credit (PTC), which is the biggest provider of wind energy subsidies in the nation.

The PTC reimburses wind power producers between $15 and $24 per megawatt hour of electricity generated over a period of ten years. The PTC has been extended several times since its inception in 1992. However, it is being phased out and is set to expire at the end of 2020, although IRS rules effectively stretch this to 2022.

The latest Missouri plans to claim more subsidies is a $1 billion taxpayer-funded wind power expansion by Ameren. Construction will begin in time to claim the last of the PTC, a consideration that Ameren noted helped speed up the construction schedule.

The Energy Information Administration, the data branch of the federal Department of Energy, has repeatedly predicted a near cessation of new wind plant construction once the PTC expires. As Warren Buffett, himself the owner of several wind farms, has said: “without the production tax credit” he wouldn’t build them. “They don’t make sense without the tax credit.”

As the PTC expires, we shouldn’t replace it with a state-level program. Missouri borders tornado alley—the nation’s best region for wind power—and it’s time for the wind industry to compete without subsidies and mandates.

The post New Report Highlights Excessive Energy Subsidies appeared first on Show-Me Institute.

A steep decline in oil demand due to the economy being paused and an increase in oil production from a price war between Russia and Saudi Arabia brought oil prices to a twenty-year low. Recently, 23 countries have agreed to reduce global oil production by around 10 percent, but global demand has dropped nearly 30 percent, leaving significant surplus oil in the market. As such, many American oil producers are on the brink of bankruptcy as low prices combined with loan repayment schedules jeopardize an industry vital to the economy and national security.

Extra storage space in America’s Strategic Petroleum Reserve (SPR) could help offset this oil market turbulence.

The SPR is a stockpile of oil that helps protect American oil supplies from shortages or price spikes. Its rainy-day function deters adversaries from using oil as a weapon against America and provides more leverage for American foreign policy. Occasionally, oil from the SPR is sold to raise money for the Department of Energy (DOE), emergencies, or public works programs, although the merits of using the SPR to fund public-works programs are debated.

So how could the SPR be used at this time?

The president suggested purchasing surplus oil to fill the SPR to the top as part of the recent stimulus. Opponents blocked this idea and will likely block a new bill to purchase oil for the SPR independent of a stimulus.

In light of these developments, the DOE is leasing empty space in the SPR for companies to store surplus oil until the market stabilizes. As Congress has decided to reduce the SPR’s size (another debated matter), this would use existing space while costing taxpayers nothing. Several companies have already submitted bids to store oil, with room for more. The world is scrambling to find enough space to store surplus oil, as too much production risks sending prices further into a tailspin.

The move to lease space in the SPR could benefit taxpayers and remove some oil from an oversaturated market.

The post Stimulus Package Highlights Missed Energy Opportunity appeared first on Show-Me Institute.

The original timetable called for the Hazelwood plant to be producing vans by 2014, but that has been pushed back because the company is still searching for funding — about $160 million — to build the facility, Marble said.

In addition to some private capital, Emerald has received a $3 million loan from Hazelwood and $2 million from the Missouri Technology Corp., plus a $5 million grant from the British government’s Technology Strategy Board.

The company had hoped to snag a $100 million-plus loan from the U.S. Department of Energy’s Advanced Technology Vehicle Manufacturing Program, but withdrew that application last summer to pursue private investment options after federal energy loans stalled in the wake of the Solyndra controversy. Solyndra, a solar-panel manufacturer, went bankrupt after getting a $535 million DOE loan.

It’s never a good sign when your project, rightfully or wrongfully, gets lumped in with publicly financed boondoggles like Solyndra. The online publication Patch.com reported in July that Emerald says it will open its doors in 2015, with 600 jobs waiting in the wings. But as this process drags on, it begs the question: Is the Emerald project actually happening?  I left a message with the Missouri Technology Corporation (MTC) to find out; I haven’t received a return call.

Fortunately, Hazelwood’s office of economic development was more helpful. Hazelwood indicated that after abandoning the Department of Energy’s loan program, Emerald indeed turned its sights to finding investments from the private market and had been giving demonstrations of their product to potential investors. Although Hazelwood did not have a figure for how close Emerald had gotten to its original $160 million goal, it was pretty clear that Emerald wasn’t exactly getting close — at least not yet. Hazelwood and the MTC could take possession of some of Emerald’s patents if the company goes out of business, but as the Mamtek situation reaffirmed, there’s no telling whether the patents are worth anything close to the public loans that supported the company. That should leave us all a little unsettled.

On the positive side, I was happy to hear that the company is turning its attention to getting investments from the private market. That’s how it should have been from the beginning, and how it should be going forward. Every itemized dollar of investment noted in the St. Louis Beacon article was related in some way to government funding. That’s not how capitalism is supposed to work.

Will Emerald find the green? Time — and hopefully, the market — will tell. We’ll keep you posted.

The post Emerald Automotive Still Seeking The Green appeared first on Show-Me Institute.

However, Ameren Missouri officials may have found a solution to the dilemma: the U.S. Department of Energy’s competitive federal cost-share investment funds. Ameren Missouri and Westinghouse Electric Company recently announced that they are seeking competitive federal cost-share investment funds from the Department of Energy, which would be used to manufacture Small Modular Nuclear Reactors. If Ameren receives the funds, Ameren would then expand the nuclear power plant in Callaway County without the need for reforms to Missouri’s CWIP law. This would help Missouri generate more alternative energy without unnecessary mandates. Making this deal even sweeter is the potential for the partnership between Ameren Missouri and Westinghouse Electric Company to create thousands of jobs for the engineering, manufacturing, and operation of the Small Modular Nuclear Reactors. Finally, because portions of the electricity produced in Missouri will be shared around the nation via the electric grid, some level of federal investment is legitimate here. It makes sense that Missouri customers will not pay every penny for something that benefits more than just Missouri.

This is an exciting project that has potentially great benefits for Missourians.

The post Ameren: A Boost For Nuclear Energy? appeared first on Show-Me Institute.

Many have regarded ethanol to be the proverbial “fuel of the future,” claiming that it reduces the cost of gasoline at the pump while also emitting less pollution. Although ethanol can replace gasoline in some ways, it is less beneficial than many expect.

The Department of Energy began releasing data in 1997 determining that some of the benefits derived from ethanol don’t outweigh the costs, as researchers had previously believed. Ethanol may emit less pollution when burned in place of gasoline, but the Environmental Protection Agency reports that it releases carcinogens at far higher levels than they predicted when it’s created.

Despite the abundance of new testimonies and information, however, both the federal and state government continue to support ethanol ardently, as our country’s energy messiah.

Pointing to often-circulated claims of environmental friendliness and cost-effectiveness, Rep. John Shimkus from Illinois recently introduced new legislation that would impose further government mandates for the production of ethanol. Amid another distressing year for Detroit, this governmental decree would require that 50 percent of all new automobiles be capable of running on ethanol and other non-petroleum fuels by 2014. That number would stiffly rise to 95 percent just three years later.

So, do the advantages of ethanol outweigh the costs? The answer, simply, is no. Aside from its counterproductive environmental effects and proven efficiency loss for each mile to the gallon, ethanol is a precarious investment for the government to force on us for several reasons:

• First, it has been shown that increases in ethanol production are correlated with an increase in food prices. These effects can be felt not only statewide, but also nationally and internationally.
• Second, and as a direct result of government mandates, a cloud of pseudo–market demand now hangs heavily above the heartland. Simply put, the current supply/demand ratio did not arise naturally from the decisions of producers and consumers, interacting voluntarily in the market. Instead, the ethanol industry is artificially bolstered by government sanctions.
• Finally, both this mandate and others like it point to the essence of how government controls harm the economy. There are too many hands in the cookie jar, and, as a result, everyone’s hand gets stuck; the cookie crumbles. Automakers should not be burdened with absurd requirements such as this from legislators who seek to alter the free market for the sole benefit of their constituents, and at the expense of everyone else.

Don’t get me wrong, I support the development of renewable energies and green solutions. Markets reward efficiency. However, as both a Missouri resident and an owner of my father’s businesses, I find that legislation like our own E-10 mandate and the proposal advanced by Rep. Shimkus in Illinois are harmful — especially in the long run.

Neither supply nor demand would exist at anywhere near current levels without both federal and state mandates, both of which have propelled ethanol into the forefront of the American auto and oil industries. As it stands, the eagerly pushed supply of ethanol more than satisfies current market demand. And that, folks, is just basic economic principle.

The post New Ethanol Mandates From Washington appeared first on Show-Me Institute.

I assume this piece was not original to the Post, but it may have been. I remember about 15 years ago when a state rep from south Saint Louis County wrote a similarly themed article for the Post, and then got in a lot of (political) trouble when it turned out she had just copied it from somewhere else. I remember her name, but don’t feel like printing it. She did lose her next election, if I recall correctly. (All that stuff predated the web by a few years, so no free links are available.)

Not everything he (or she) writes here is crazy or wrong, so feel free to take my lack of comment on certain areas as being along the lines of agreement in those instances:

Dear Tea Party Members:

This morning I was awoken by my alarm clock powered by electricity generated by the public power monopoly, Ameren UE, regulated by the US Department of Energy.

All true, as it goes, but are you really that dependent on the government to get you out of bed in the morning? And didn’t the alarm clock get built in the first place by the mechanics of the free market?

I then took a shower in the clean water provided by the municipal water utility, Missouri American Water.

This is the first flat-out error: Missouri-American is a regulated, private company, not a municipal water utility.

The water was heated by the public natural gas monopoly, Laclede Gas,

Laclede Gas is a private company.

and disposed of by the the municipal sewer utility, Metropolitian Sewer District of St. Louis.

A government entity — ask Tom Sullivan about them.

After that, I turned on the TV to one of the Federal Communication Commission regulated channels to see what the National Weather Service of the National Oceanographic and Atmospheric Administration determined the weather was going to be like using satellites designed, built, and launched by the National Aeronautics and Space Administration.

This totally ignores the role that private companies and people played in all of this, and ignores the fundamental question of whether this regulation is necessary. I can guarantee you the television needs of Americans would be met just fine without government regulation.

I watched this while eating my breakfast of US Department of Agriculture inspected food and taking the drugs which have been determined as safe by the Food and Drug Administration.

This is all true, and a legitimate role for various levels of government, but let’s not pretend that nobody in America was able to feed their families before the government got involved. A nation of farmers fed itself just fine.

At the appropriate time as regulated by the US Congress and kept accurate by the National Institute of Standards and Technology and the US Naval Observatory,

Does the author really think people could not tell time before the government got involved?

I get into my National Highway Traffic Safety Administration approved automobile and set out to work on the roads built by the local, state, and federal departments of transportation,

The private provision of highways is very common in other countries.

possibly stopping to purchase additional fuel of a quality level determined by the Environmental Protection Agency, using legal tender issued by the Federal Reserve Bank. On the way out the door I deposit any mail I have to be sent out via the US Postal Service.

The Post Office versus FedEx and UPS? Enough said.

If I had kids, I would probably drop them off at the nearby public school funded by the state and federal Department of Education.

Many Americans choose private education for their children for a number of reasons, the failure of certain public school systems among them. Clearly, there are many excellent public school systems as well.

At lunch time, I pick up a bite to eat at a nearby restaurant that has been inspected by the local department of health which enforces state and federal guidelines for food safety and workplace safety. I then return to my cubical where I listen to the local FCC regulated radio station

As with television, I will guarantee you that, beyond distributing the channel spectrum as a common good, government involvement is not necessary for radio to operate, at all.

as I work on a computer that has been certified by the Consumer Products Safety Comission to be safe and compliant with FCC Part 15B regulations.

The computer industry has grown as it has during the past 40 years because of private markets, not government involvement.

Sometimes instead of work, I go on a business trip and use an airplane inspected by the Nation Transportation Safety Bureau to travel. But first I have to take off my shoes and anything metal as a walk through the the inspection station set up by the Transportation Safety Adminstration.

Watching grandpa get a body cavity inspection because he shares a nickname with a terrorist is not an argument for government success.

After checking the weather with the National Weather Service, the Federal Aviation Adminstration gives the all clear for the airplane taxi off the tarmac and to take off.

Then, after spending another day not being maimed or killed at work thanks to the workplace regulations imposed by the US Department of Labor and the Occupational Safety and Health Administration, I drive back to my house which has not burned down in my absence because of the state and local building codes

People CAN build things on their own, you know.

and the fire marshall’s inspection, and which has not been plundered of all its valuables thanks to the local police department.

It’s a sad view of society that assumes we would all descend into chaos without government force — perhaps a true view, but still a sad one. I tend to think people cooperate in many more ways without government coercion than the author does.

At home, I can call up my grandparents on a cellular telephone that is FCC Part 15B complaint and designated on a frequency regulated by the National Telecomunication and Information Administration.

As with computers, the telecommunications revolution is attributable far more to private initiative than to government control and regulation.

I then log onto the Internet which was developed by the Defense Advanced Research Projects Administration, an agency of the Department of Defense which is the parent agency of the US Army, Navy, Air Force, and Marine Corps who are defending our country so that I can enjoy my freedom to post on Freerepublic and Fox News forums about how SOCIALISM in medicine is BAD because the government can’t do anything right.

End of letter. Many of the points the writer makes are valid to varying degrees, but he discounts or ignores the role individuals and private actors played in many of the advancements he credits to government. What is also missing is any even remote debate over whether or not these things are the proper role of government as set by our Constitution. As it stands, the letter makes Americans sound like a nation of people who could not blow their nose (the closest to a clean scatological reference I could think of) without government involvement and approval.

Seriously, you thank the government for helping you get out of bed in the morning? That is not the type of life I want to live and not the type of country I want the United States to become.

The post Intriguing, Yet Frightening, Comment Over at Political Fix appeared first on Show-Me Institute.

On June 17, the Federal Railroad Administration (FRA) asked states for proposals for spending the $8 billion of stimulus money that Congress allocated to high-speed rail. Which raises a question: Would you pay $1,000 so that someone — probably not you — can ride high-speed trains less than 60 miles per year? That’s what the FRA’s high-speed rail plan is going to cost: at least $90 billion, or $1,000 for every federal income taxpayer in the country.

That’s only the beginning. Count on adding $400 for cost overruns. Taxpayers will also have to cover operating losses: Amtrak currently loses $28 to $84 per passenger in most of its short-distance corridors.

The FRA plan also has huge gaps, such as Dallas to Houston, Jacksonville to Orlando, and the entire Rocky Mountains. Once states start building high-speed rail, expect local politicians to demand these gaps be filled at your expense. And don’t be surprised when the government asks for billions more in 30 years to rebuild what will then be a worn-out system.

What would we get for all this money? Unless you live in California or Florida, don’t expect superfast bullet trains. In Missouri and most of the rest of the country, the FRA is merely proposing to boost the top speeds of Amtrak trains from 79 miles per hour to 110 mph. A top speed of 110 mph means average speeds of only 60–70 mph, which is hardly revolutionary. Many American railroads were running trains that fast 70 years ago.

The pro-rail Center for Clean Air Policy predicts that, if the FRA’s system is completely built, it will carry Americans 20.6 billion passenger miles per year in 2025. That sounds like a lot, but, given predicted population growth, it is just 58 miles per person.

Missouri’s portion of the plan will cost at least $875 million, or nearly $150 for every Missouri resident, plus tens of millions more per year in operating subsidies. For that, the average Missourian will take a round trip on the train only once every six years. Most of the rest of your $1,000 will go to California, which wants to you to help pay for a costly bullet train. Even this train will do little to relieve congestion or save energy; mainly, it will just fatten the wallets of rail contractors.

Who will ride these trains? We can get an idea by comparing fares between New York and Washington, D.C. As of this writing, $99 will get you from Washington to New York in two hours and 50 minutes on Amtrak’s high-speed train, while $49 pays for a moderate-speed train ride that takes three hours and 15 minutes. Meanwhile, relatively unsubsidized and energy-efficient buses cost $20 for a four-hour-and-15-minute trip with leather seats and free Wi-Fi. Airfares start at $119 for a one-hour flight.

Who would pay five times the price to save less than 90 minutes? Those wealthy enough to value their time that highly would pay the extra $20 to take the plane. The train’s only advantage is for people going from downtown to downtown. Who works downtown? Bankers, lawyers, government officials, and other high-income people who hardly need subsidized transportation. Not only will you pay $1,000 for someone else to ride the train, but that someone probably earns more than you.

Nor is high-speed rail good for the environment. The Department of Energy says that, in intercity travel, automobiles are as energy-efficient as Amtrak, and that boosting Amtrak trains to higher speeds will make them less energy efficient and more polluting than driving.

An expensive rail system used mainly by a wealthy elite is not change we can believe in. Missouri should use its share of rail stimulus funds for safety improvements such as grade crossings, not for new trains that will obligate taxpayers to pay billions of dollars in additional subsidies.

Randal O’Toole is a senior fellow at the Cato Institute, and author of the Show-Me Institute study “Review of Kansas City Transit Plans.”

[Editor’s note: A portion of the sixth paragraph of this op-ed originally read, “the average Missourian will take a round trip on the train only once every 12 years.” The correct figure for Missouri is “once every six years.” We have corrected this in the interest of accuracy, and apologize for the oversight.]

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The corn grower’s rep, Gary Marshall, (not that Garry Marshall) achnowledged that E-10 ethanol gasoline has reduced fuel efficiency. He said that our estimate of a 2.5-percent reduction was too high, though, for much of the gas. He also speculated that no Missourian finds a decline in mileage, which I will further speculate is wrong, and point my valued readers here and here. The most important thing is that they admit they did a study claiming cost savings by E-10 gas and did not account for the reduced fuel efficiency. The study that the MCMC commissioned is not sound public policy research — it’s propaganda.

Next, the interview got into a canard that the ethanol industry likes to use in regard to the ethanol subsidy. The reasoning goes that we should logically ignore the subsidy, because the oil industry is subsidized, too (which it is), so they cancel each other out. Is that correct? No. Let’s go to the ultimate authority on this, the Energy Information Administration with the U.S. Dept. of Energy. Just last year, they released a report about the subsidy amounts provided to the overall energy industry. The 2007 value of the Volumetric Ethanol Excise Tax Credit was just less than $3 billion dollars ($2,990,000, to be exact; figure on page 21). Let’s compare this with oil. The federal subsidies for ALL natural gas and oil prodiction (much more than just automobile fuels) was just more than $2 billion ($2,090,000, to be exact — page 23). That is almost a billion dollars more in subsidies for ethanol alone than for the entire oil and natural gas industry combined, which, again, includes home heating oil, gas for your car, etc. Now consider that the oil and gas industry dwarfs the ethanol industry, and it is inescapable that one industry (ethanol) is MUCH MORE HEAVILY SUBSIDIZED than the other industry (traditional oil and gas).

Now, to be fair, you might say we should have incorporated the lower oil subsidies into our case study analysis. But our study never stated that oil and gas didn’t get subsidies. It refuted the calculations used in the MCMC study by insisting that they don’t get to claim the 51-cent-per-gallon subsidy as savings for Missourians, as though taxpayers didn’t pay for that subsidy in the first place. The oil and gas subsidies, small and non-distortionary as they are, were fully included in the cited gas prices used by ethanol supporters in their claims to save us money.

There is much more to consider here, but this post is already too long. I have nothing against ethanol. I dislike the subsidy, in the form of the tax credit, in the same way I dislike all agricultural subsidies. But most other agricultural subsidies are not forced upon me via mandate, like E-10 gas is. It is the combination of mandating a subsidized product that I dislike, and I like it even less when supporters of the dictate use poorly reasoned and flawed studies to tell me it’s a good thing.

P.S. — I hope you all get just how ridiculously clever the title of this post is!

The post Ethanol, Millhaven, and Me appeared first on Show-Me Institute.

The Cascade Policy Institute in Portland, OR, last year reported on how government regulations squelch the efforts of the best biofuel research team the nation has — farmers:

In order to sell biodiesel one must register with, and make regular reports to, the EPA and either pay $2,500 to the National Biodiesel Board or spend millions of dollars to re-prove its environmental health safety. Otherwise one faces $25,000 daily fines.

The stifling effect of these obstacles can’t be overestimated. If it weren’t for the EPA, our family would have started a biodiesel business long ago, and so would many of the farmers I’ve spoken with. Making your own fuel is a financial solution. The incentives to plant are already there and the entire process can be done on a small-scale.

Farmers know it’s a bum deal to work through a middleman to reach customers. Fuel is sure to bring in a good price, but who can say what processors will pay for oil seed stock? If farmers can’t profit directly from biodiesel they will never plant enough crops to make a dent in America’s fuel demands and the price of biodiesel will remain too high for widespread adoption.

Biodiesel represents an enormous opportunity, not only for its environmental and economic benefits, but for its liberating potential. There is a reason the terms “fuel” and “power” also have political application. Petroleum can’t be obtained by just anyone so it is ripe for control. Biodiesel can literally put power into the hands of every person.

The biodiesel opportunity has been suppressed for over a century. Rudolf Diesel designed his engine to run on a variety of vegetable oils and thought the technology would be a boon to farmers.

Now that biofuels have finally regained the national spotlight, America is at a crossroads. We can pursue subsidies and use mandates to build on the petroleum fuel model, with large-scale agribusiness supplying a few giant processors. Or we can we remove counterproductive laws for a paradigm shift to an agrarian fuel model, where local farmers grow the industry from the ground up and reap the profits.

One of the most basic truths of government intervention in the economy is that intervention begets intervention, as the unintended consequences of government action become apparent, and then have to be "fixed" through more government action, spawning still more unintended consequences that require still more intervention, etc.

Sometimes the government’s best course of action is to stay out of the way and let the market do its work, without obtrusive regulations that kill alternative energy innovations before they have a chance to blossom.

The post Stay Out of the Way appeared first on Show-Me Institute.

The Department of Energy announced Tuesday it will fund three biofuels research centers in Oak Ridge, Tenn., Madison, Wis., and near Berkeley, Calif.

I, for one, am not sorry. Economic growth happens when entrepreneurs work to satisfy consumers’ needs, not when established organizations vie for federal dollars. If biofuel is really a good idea, it’ll be profitable to invest in it even without government funds.

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