Sage advice for left-leaning policy folks: when it comes to benefits and entitlements, keep it simple and take credit. Jack Meserve argues that, “either Democrats complicate their initiatives enough to be inscrutable to anyone who doesn’t love reading hours of explainers on public policy, or else they don’t take credit for the few simple policies they do enact.” He unpacks a suite of recent policies to offer some striking comparisons—between Obama’s tax cut and Bush’s; and between Roosevelt’s WPA and the stimulus package—to demonstrate that some worthwhile ends of progressive policy have become hopelessly mired in the means of technocratic wonkery. For example:
This “benefit through tax cut” idea is far from unusual, unfortunately. Here’s a partial list of programs based on federal tax credits, many started by Democrats:
Got those? Ok, now don’t forget tax-preferenced savings accounts—for retirement, there are IRAs, Roth IRAs, 401ks, and 4013bs. For your kid’s college, start a 529. And if you’re eligible, don’t forget to create a health savings account.
Instead of making retirement benefits more generous, or college cheaper, or health care universal, we’ve created accounts upon accounts, each of which you have to have enough money to contribute to, remember to pay into, and jump through all sorts of other hoops to maintain.
Implementing these kinds of policies are also no road to electoral success.
Exactly. File his argument under “reasons to support a national basic income.”
Project Syndicate had an interesting interview with Jeffrey Sachs, head of the UN Sustainable Development Solutions Network, about current national and international trends. He talked about the rise in right-wing populism around the world, different countries reactions to refugees and immigration, and said this about the wall between the US and Mexico:
The left doesn’t have a language that acknowledges the need for borders and the need to police them. I’m not in favor of a wall, per se, but I am in favor of regulated borders, not an open door to unregulated migration. All high-income countries need borders. Borders do not mean closed doors or bans, least of all religiously based bans, which are deeply offensive and self-defeating. But borders do mean enforcement of limits to migration.
He also made also this interesting point:
Africa’s demographic trajectory is deeply worrisome because it is built on an extremely high fertility rate that will hinder its own sustainable development. In Sub-Saharan Africa, the average fertility rate remains more than five children per woman, and the resulting population trajectory is roughly a quadrupling of the continent’s population by the end of this century…. Africa’s own economic, social, and environmental health depend on achieving a rapid and voluntary reduction of fertility rates, mainly by enabling Africa’s girls and boys to remain in school.
OpenWork is a new nonprofit encouraging employees and employers to step outside the box of a 9-5 office. They link to great resources showing flexible workplaces boast greater productivity, happier employees, and employer cost savings. They have a lot of short case studies, including one for Buffer (whose product I use). Buffer has a 100% remote workforce, so they have a thorough hiring and on-boarding process to make sure new employees integrate into the culture, make liberal use of Google Hangouts, and use their precious in-person time to hang out and bond with each other, not just work near each other.
My favorite “truth to power” news show, Democracy Now!, has continued to cover immigration matters and the situation with the Dakota Access Pipeline, and ran segments on both topics on its show this Wednesday.
On a more positive note, Yes! Magazine’s Winter 2017 issue covered 50 of its “favorite inspiring solutions” around the country. It is also introducing their new executive director, Christine Hanna, who years ago was managing director and director of strategic initiatives at Sightline. Congratulations, Christine!
The New Yorker also has a profile of Oregon’s feminist governor, recently elected in her own right. Among other topics, she gives her advice to progressives for this new era.
On a related topic, The Stranger maintains a running list of Resistance and Solidarity Events. Speaking for myself, I already marched this year to save healthcare and Medicare, then in support of women. So I can empathize with folks who might be worried about “outrage fatigue.” My own strategy is to pick and choose events as my schedule allows. After all, I am a senior citizen, and my doctors have recommended more exercise; marching for democracy seems to fit the bill. Besides, some of the events on The Stranger’s calendar are benefits and fundraisers, so folks can relax and have some fun at the same time.
Anna
Check out this On The Media podcast. First up: Wisdom from language and cognitive linguistics guru George Lakoff on keeping control of winning frames in the face of fake news and presidential tweet storms. He offers a “Tweet Taxonomy” with ideas for how to deal with each type. There’s:
the Preemptive Framing Tweet—a way of getting ahead of and controlling how things are interpreted;
the Tweet of Diversion—head fakes and outrageous statements that bend everybody’s focus from the real story at hand; and
the Trial Balloon Tweet—putting something radical or new out there to see how people will react.
Overall, Lakoff suggests we (and particularly media) talk about what kind of tweet we’re dealing with, call it what it is, and name the strategy. And, that we stick to substance and the truth. Don’t just repeat the tweet! Give context and focus on what’s really going on.
Next up, in the same show, an incisive take on fake news from Craig Silverman, media editor for Buzzfeed. He authored a study on fake media stories during election season, finding that people (that’s you, that’s me) overestimate our ability to detect a hoax. Silverman says, “We think ‘I’m not going to get fooled,’ but we are all susceptible.” The combination of social media algorithms and our human biases can be deadly. We are drawn to stories that feed our emotions and worldview, just like eating junk food. I’ve been trying to live by his words of advice in the past few weeks. He says, “when I read something that makes me feel good, I try to question why that is.” A reminder to retain a little emotional skepticism resulted in a new Facebook policy: I only “share” stories that I’ve read. It’s slowed me down a little—and I’m better for it.
Another important language tip from George Lakoff: we should consistently refer to regulations as protections. People respond differently to the two concepts. And the words—a.k.a. frames—define the viewpoint prioritized in the conversation, either the corporate one or the people/community/public one:
The term “regulation” is framed from the viewpoint of corporations and other businesses. From their viewpoint, “regulations” are limitations on their freedom to do whatever they want no matter who it harms. But from the public’s viewpoint, a regulation is a protection against harm done by unscrupulous corporations seeking to maximize profit at the cost of harm to the public.
John Abbotts is a former Sightline research consultant who occasionally submits material for Weekend Reading and other posts
Listen In: Sightline on the Next 4 Years of US Energy Policy
“You say ‘America First’ and your first move helps Canada.” – Clark Williams-Derry
On Monday, Sightline’s director of energy finance, Clark Williams-Derry, joined KBOO Community Radio‘s Barbara Bernstein to discuss what the next four years of US energy policy may look like. The two discussed the future of the Dakota Access Pipeline (DAPL), legally, politically, and financially, given various divestment efforts around the US.
Clark also detailed the inconsistencies in President Donald Trump’s competing promises to different segments of the US energy sector, as well as the domestic and international market forces that are actually shaping what is feasible for America’s energy future. “You say ‘America First’ and your first move helps Canada,” he said of Trump’s support for DAPL.
Finally, Clark also emphasized the need for transparency in Trump’s overall energy strategy, which would be aided by Trump releasing his tax returns so the public could understand his business interests’ financial stake in our energy policy decisions.
Is all this what Trump’s 61 million American voters bargained for?
Recent public opinion research shows that Trump may be out of sync with his voters on climate change. Yale University’s Program on Climate Change Communication looked at data from its recent Climate Change in the American Mind survey to assess Trump voters’ views about global warming and clean energy. While Trump voters’ attitudes are less favorable to climate protections and clean energy progress than overall national opinion, Yale finds that about half to a majority of Trump voters understand global warming is happening and support a variety of climate and clean energy policies.
The polling comes from a survey of 1,226 Americans, 401 of whom voted for Trump, conducted shortly after the November 2016 election. Here are top findings along with comparisons to national attitudes overall:
About half of Trump voters (49 percent) acknowledge global warming is happening, while fewer than one in three (30 percent) think global warming is not happening. For comparison, overall, seven in ten Americans (70 percent) understand global warming is happening, and about one in eight (13 percent) say global warming is not happening. In other words, Americans who understand global warming is happening outnumber those who think it is not by more than 5 to 1.
Almost half of Trump voters (47 percent) also say the US should participate in the Paris COP21 international agreement to limit climate change. By contrast, only 28 percent say the US should not participate. Overall, seven in ten registered voters (69 percent) say the US should participate, compared with only 13 percent who say the US should not.
More than six in ten Trump voters (62 percent) support taxing and/or regulating the pollution that causes global warming, with a plurality—nearly one in three (31 percent)—supporting both approaches. In contrast, only about one in five (21 percent) support doing neither. Taking US voters altogether, Yale found that nearly eight out of ten Americans (78 percent) support taxing global warming pollution, regulating it, or using both approaches, while only one in ten opposes these approaches.
More than three in four Trump voters (77 percent) support generating renewable energy (solar and wind) on public land in the US, and 72 percent support more drilling and mining of fossil fuels on public land in the US. For Americans more broadly, Yale finds high levels of support for producing solar and wind on public land: 83 percent of all registered voters, 87 percent of Democrats, 76 percent of Independents, and 79 percent of Republicans. Comparatively fewer support drilling or mining fossil fuels on public land (47 percent of all registered voters, 27 percent of Democrats, 46 percent of Independents, and 69 percent of Republicans).
Seven in ten Trump voters (71 percent) support funding more research into clean energy and providing tax rebates to people who purchase energy-efficient vehicles and solar panels (69 percent). By comparison, looking at US voters overall, there is strong bipartisan support for funding more research into renewable energy sources such as solar and wind power (82 percent of all registered voters, 90 percent of Democrats, 76 percent of Independents, and 74 percent of Republicans).
Over half of Trump voters (52 percent) support eliminating all federal subsidies for the fossil fuel industry, nearly half (48 percent) support requiring fossil fuel companies to pay a carbon tax and using the money to reduce other taxes by an equal amount, and almost half or Trump voters (48 percent) support setting strict carbon dioxide emissions limits on existing coal-fired power plants to reduce global warming and improve public health, even if the cost of electricity to consumers and companies would likely increase. By comparison, seven in ten registered voters overall (70 percent) support setting strict carbon dioxide emission limits, even if the costs would likely increase, including Democrats (85 percent), Independents (62 percent), and Republicans (52 percent).
Half of Trump voters say transitioning from fossil fuels toward clean energy will either improve economic growth (29 percent) or have no impact (21 percent). That’s compared to 72 percent of voters overall. Yale found that half of registered voters (51 percent) think government policies intended to transition away from fossil fuels and toward clean energy will improve economic growth and provide new jobs. An additional one in five (21 percent) think it will have no impact on the economy or jobs. Only about one in four (27 percent) think it will reduce economic growth and cost jobs.
Nearly three in four Trump voters (73 percent) say that, in the future, the US should use more renewable energy (solar, wind, and geothermal). One in three (33 percent) say that the US should use fossil fuels less in the future. In general, most registered voters think the US should use more renewable energy (81 percent) and less fossil fuels (55 percent). Support for using more renewable energy cuts across party lines (it is supported by 85 percent of Democrats, 78 percent of Independents, and 76 percent of Republicans).
Climate change is likely not a top concern for those who voted for Donald Trump. It’s frankly not top of list for many US voters of any stripe. But what’s clear from these findings is that even for those who cast their ballot for him, and far more significantly for majorities of American voters overall, Trump’s views on climate and his moves to roll back environmental standards enacted under Barack Obama, including the Clean Power Plan and higher fuel economy standards for vehicles, are far from mainstream.
Fighting Fossil Fuels at the Local Level
Local communities have many of the tools they need to protect the health and safety of their residents.
As the Trump Administration looks to new federal energy policy, state and local authority, especially the power of regulating land use, will likely play an increasingly important role in protecting regions like the Northwest from the risks of coal, oil, and gas. Indeed, threatened by a tsunami of energy export projects, a number ofcities and counties in the Northwest are defending themselves from new energy export projects by reforming their land use and development codes. It’s a strategy that has paid dividends forthe Thin Green Line, Cascadia’s resistance to ill-conceived fossil fuel export schemes, which is likely to be increasingly important in the next few years.
Of course, the Northwest is not the only region where cities, counties, and states have tried to constrain the reckless advances of the fossil fuel industry. Local governments across the US are experimenting with a variety of opposition strategies to protect themselves from volatile oil trains, widespread fracking, and offshore oil drilling—strategies that we explore in this second installment. Although many of these localities have been confronted with legal challenges, it’s increasingly clear that local communities have many of the tools they need to protect the health and safety of their residents. They just may not know it yet.
Oil shipment regulations
In February 2016, the city of Benicia, California, denied the oil company Valero a key permit to build an oil train unloading facility. The company challenged Benicia’s decision on the grounds that the City based its permit denial in part on the anticipated environmental impacts of increased rail traffic to serve the site, a move that the company argued was in effect a regulation of Union Pacific’s railroad and was therefore preempted by federal law. Railroads are by law largely exempt from local and state oversight and are instead almost exclusively regulated under the authority of the federal government.
Several oil companies supported Valero’s petition to the USSurface Transportation Board (STB), the federal agency that resolves railroad service disputes. The companies asked the Board to conclude that the City had engaged in “impermissible indirect rail regulation.” The STB sided with Benicia, finding that federal law does not deny local governments land use permitting discretion over oil companies’ proposed oil train projects. Specifically, the STBprovided guidance that because Valero is neither a “rail carrier” nor an agent of the rail carrier Union Pacific, Benicia’s ruling was not preempted by federal law and did not interfere unduly with the railroad’scommon carrier operations.
Earlier, in September 2014, the STB had decided a related case in Grafton, Massachusetts, this one pertaining to a liquefied petroleum gas (LPG) rail-to-road transfer facility proposed in the city. In that case, the STB ruled against Grafton, stating that local requirements were preempted by federal law because the trans-loading operation at the site was explicitly a rail business. In the Benicia decision, however, the STB clarified that “localities retain their reserved police powers to protect the public health and safety so long as their actions do not discriminate against rail carriers or unreasonably burden interstate commerce.”
Many observers are keenly awaiting the outcome of a lawsuit over crude oil facilities in Portland, Maine. On July 21, 2014, the Portland City Council passedan ordinance amending the zoning code to prohibit the bulk loading of crude oil onto marine tanker vessels within city limits. The ordinance drafting committee noted in its recommendation that bulk oil loading operations are a type of land use that “has never been a traditional land use within the City” and that significantly impact “future development of the City’s waterfront, air quality, scenic ocean views, and land-use planning vision.” The measure passed 6 to 1.
In February 2015, Portland Pipe Line Corporation filed a lawsuit arguing that the ban was unconstitutional. The suit claimed the ordinance interferes with interstate trade, discriminates against Canadian interests, devalues the company’s pipeline, and is preempted by federal government authority. In February 2016, in a blow to the city, a judgedeclined to dismiss the corporation’s suit. The City has so far spent more than$748,000 defending the ordinance and expects that costs could reach $1 million before the matter is settled. A judge mayresolve the case by summary judgement in early 2017, but if all the legal issues are not fully resolved on the summary judgement motions, it will likely proceed to trial.
Fracking bans
Hundreds of localities, mostly along the East Coast and in California,have acted to limit fracking through land-use provisionsto varying degrees of success. Several state governments have even waded into the fray. Maryland has atemporary ban on fracking in place. So does New Jersey, where the legislature passed a permanent ban that was vetoed by Governor Chris Christie, who thenissued an executive order establishing a one-year moratorium on fracking while state and federal agencies reviewed the issue. Most prominent is New York, where lawmakerspassed a fracking ban in 2015, seven years after the state first put a moratorium on the practice. Meanwhile, North Carolinalifted its ban on fracking in 2014, though a federaljudge put a hold on issuing permits for fracking while a legalchallenge proceeds.
It’s at the local level, though, where efforts to ban fracking are most prolific and also most uncertain.
It’s at the local level, though, where efforts to ban fracking are most prolific and also most uncertain. For example, in November 2016, voters in Monterey County, California, passedMeasure Z, a ballot initiative that prohibits new fracking operations and other high-intensity extraction techniques. It is theseventh county fracking ban in California, but the first in a county that’s a major oil producer. The measure’s reach is limited, though. It does not apply to offshore oil and gas operations, nor does it prohibit operations at existing oil and gas wells in the county, which number over 1,500. Moreover, ananalysis by the Monterey County Council found the measure may actually allow replacement wells.
The County Council expressed uncertainty about whether the measure may be preempted by California state law, a concern based on the state’s exclusive right to regulate underground drilling operations (local governments can regulate only surface land uses in California) and argued that litigation would be likely. Indeed, just weeks after the measure passed, Aera Energy filed a lawsuitclaiming that Measure Z is preempted by state law. Aera also claims that implementation of the measure would amount toa “taking” of property without just compensation, in violation of state and federal law, because it would result in the loss of its ability to produce oil in Monterey County. The legal action blocks the County from implementing part of Measure Z, but Monterey will proceed with implementing other components of the measure, and itplans to vigorously defend the initiative.
Also on the local level, in May 2016, Commissioners in Boulder County, Colorado, replaced a four-year-old moratorium on applications for oil and gas development in unincorporated areas of the county with anew, more durable ban on oil and gas operations. The new ban took note of a finding by Colorado’s Supreme Court that similarbans in nearby Fort Collins and Longmont were preempted by state law. One of the primary problems with the Fort Collins and Longmont resolutions was the duration of their moratoriums, and Boulder County was in a similar situation with its original temporarymoratorium. First imposed in 2012, the county had extended and amended it several times, so that it was not set to expire until 2018. But the new Boulder Countymoratorium is part of aresolution that establishes a temporary ban while county staffers formulate amendments to county land use and zoning regulations that govern oil and gas development. The newresolution recommends that the commission continue the ban until safety concerns are better understood, although it notes that the County is preempted from a multi-year moratorium.
Overall, some state supreme courts have affirmed local zoning rights to prohibit fracking, while others have found that some or all local actions are preempted by state law. For example, the Pennsylvania Supreme Court in 2013 affirmed the right of municipalities toregulate fracking through local zoning laws. And in June 2014, the New York Court of Appeals, the highest state court, alsodecidedthat towns may ban or limit oil and gas production through zoning ordinances. On the other hand, in February 2015, the Supreme Court of Ohio, in a narrow and contentious 4-3 decision, ruled that cities and towns cannot enact fracking bans through their zoning laws, determining that under the state constitution, thesole and exclusive authority over oil and gas production resides with the state.
In 1987,the Western Oil and Gas Association sued San Diego County and other local governments on the basis of federal preemption and the value of energy security. Thejudge in the case ruled against the oil industry, finding no basis to its claim that the local ordinances violated federal supremacy. The laws may cause additional expense and inconvenience, the court argued, but werenot true obstacles.
Another tool in communities’ toolboxes
State and local land use authority may be a redoubt for communities against what appears to be a reckless advancement ofcoal,oil, andgas development by the new Trump Administration and the GOP-controlled Congress. Although there are some legal uncertainties, as well as a risk that some approaches are preempted by federal law, there is good reason to believe that zoning and related authorities will allow local governments—and the public they represent—to chart their own course toward a cleaner and safer future.
Did Trump Just Kill a Northwest Oil-By-Rail Project?
The deeply controversial Dakota Access Pipeline, also known as DAPL, got another boost last week after lawmakers claimed that the Secretary of the Army had ordered the Army Corps of Engineers to “proceed with the easement needed to complete [it].”
By boosting DAPL’s prospects, the Trump administration may have doomed Vancouver Energy.
The 470,000 barrel per day pipeline, which would connect North Dakota oil fields with Midwestern oil hubs, isn’t yet a done deal. The Corps has not yet granted the pipeline’s final easement, and at least one of the project’s financial backers has threatened to pull out of the project if an “acceptable non-violent solution” doesn’t emerge. However, the new administration’s vocal support for new pipelines has probably boosted the likelihood that some version of DAPL will eventually come into service.
Curiously, though, finishing DAPL might be bad news for some parts of the US oil industry. As I mentioned last week, one of the big winners in the short term would likely be the Canadian tar sands industry—which is not only one of the most polluting sources of oil on the planet, but also a direct competitor to US oil producers.
At the same time, one of the biggest losers from the administration’s pipeline-approval frenzy could be the proposed Vancouver Energy oil-by-rail facility in Vancouver, Washington.
If completed as proposed, the Vancouver Energy facility, backed by oil refining conglomerate Tesoro and logistics firm Savage Services, could handle up to 360,000 barrels of oil per day—more than double the amount that the entire state of Washington now receives by rail. Time and again, Vancouver Energy boasted that it would bring “lower-carbon fuels” to the West Coast—clearly indicating that the facility would rely on “light, sweet” crude oil from the Bakken region of North Dakota to supplement the sludgier, more carbon-intensive oils that the state currently receives from Alaska and Canada. Oil industry analysts agreed that Tesoro Savage would most likely source much of its oil from the Bakken.
But Bakken oil production has faltered since the Vancouver Energy facility was first proposed in 2013. The collapse in global oil prices that started in mid-2014 forced steep production cutbacks in the Bakken region: the US Energy Information Administration estimates that the Bakken will produce a little less than 1 million barrels of oil per day this month, down from 1.24 million barrels of oil per day at the December 2014 peak. But even as Bakken production collapsed, new pipelines and refineries came into service in the region, providing a more cost effective alternative to shipping oil by rail.
The combination of falling production and cheaper transportation options squeezed the Bakken’s oil-by-rail industry: by last November, total oil-by-rail shipments from the Upper Midwest had fallen by more than two-thirds from their peak two years earlier. Today, Vancouver Energy would struggle to find enough barrels of Bakken oil to justify the project.
DAPL would just make that problem even worse. Most of the remaining Bakken oil-by-rail shipments come from regions with limited access to pipelines—but those are precisely the regions that DAPL would serve. So a completed DAPL would shift most of the Bakken’s remaining oil-by-rail shipments over to pipelines—leaving precious little oil for projects like Vancouver Energy. Which means that, by boosting DAPL’s prospects, the Trump administration may have doomed Vancouver Energy, all but guaranteeing that the oil terminal would stand as a superfluous “stranded asset” and a waste of both money and port space.
It’s one of many ironies in the Administration’s surprisingly incoherent energy policy: by “helping” the fossil fuel industry, the Trump administration could be simultaneously undermining the finances of major US oil companies and bolstering the Northwest’s burgeoning resistance to fossil fuel exports.
Weekend Reading 2/3/17
Serena
I was lucky to acquire a ticket to the fully sold-out talk by Tim Wise last week at the University of Washington (thank you, SSH!). Wise is an anti-racist educator and activist, as well as an artful and entertaining orator, and he reflected on the US election results and white supremacy in America in a manner both incisive and gripping. (I’ve described to friends that at the end of his talk, I felt weirdly exhausted, just concentrating so hard for that hour or so to try to fully soak up every point he made.) Anyway, Seattle public radio station KUOW has posted the talk in full for anyone to have access to hear. I (obviously) recommend you do so.
This powerful Radiolab podcast talks about how Ben Franklin started America off on the “rags to riches,” “up by your bootstraps” myths about poverty and social mobility that continue today.
It’s officially February, which means it’s Black History Month! I’m celebrating by compiling an ongoing list of books by Black authors and (hopefully) carving out time to read a handful of them this month.
Kindred, Octavia Butler
Freedom is a Constant Struggle, Angela Davis
The Fire Next Time, James Baldwin
Communion, Bell Hooks
Bone, Yrsa Daley-Ward
Sister Outsider, Audre Lorde
Recitatif, Toni Morrison
Other books I’ve recently read and recommend:
Homegoing, Yaa Gyasi
Between the World and Me, Ta Nehisi-Coates
Brown Is the New White, Steve Phillips
Have reading recommendations? Add them to the comments below!
Tarika
The House voted Wednesday to end a rule that stops coal mining debris from being dumped in streams. State and local governments will now need to step up on this issue to protect public and ecological health. Congress is also considering rolling back transparency laws for energy companies. Cascadians should make sure their voices are heard on the issue.
John
In a previous Weekend Reading, I mentioned the New Yorker’s re-posting of its 1962 serialization of Rachel Carson’s Silent Spring, and mentioned an upcoming PBS special on her life on January 24. Well, the American experience piece on her life, time, and motivations, is now online. IMHO, it is excellent, and its resonance today is clear.
John Abbotts is a former Sightline research consultant who occasionally submits material for Weekend Reading and other posts.
How to Fix Seattle’s MHA Proposal For U District Highrises
In previous articles on Seattle’s proposed Mandatory Housing Affordability (MHA) program, I explained the program’stheory andrisks, gave abroad critique of the math, and presented acase study of MHA for two types of mid-rise buildings, finding that MHA as currently drafted would suppress homebuilding and jeopardize the city’s affordability goals. Today: MHA’s high-rise upzones.
Seattle plans soon to launch MHA in theUniversity District (U District), wherethe proposal includes upzones from mid-rise heights (65 to 85 feet) to high-rise (240 to 320 feet). You might think that tripling or quadrupling building heights would justify relatively high MHA requirements.
But applying the same kind offeasibility analysis I explained last time tells a different story. In large part because high-rise construction is so expensive, with today’s typical rents in the U District, new high-rise apartments conforming to the city’s draft MHA proposal would yield zero return on investment. In other words, adopting MHA as currently drafted for the U District would mean that for the foreseeable future it’s unlikely that anyone will build high-rise housing, denying the neighborhood much needed new homes—both market rate and subsidized.
To be fair, even without MHA requirements, high-rise apartments are typically not feasible in the U District today, and won’t be unless rents in the neighborhood escalate over time sufficiently to offset the big price tag of high-rise construction. The catch is this: the greater the net costs imposed by MHA, the higher the rents necessary for projects to pencil, and the longer homebuilding will be delayed. And during this waiting game of worsening scarcity, competition for what’s available, and rising rents, more low-income families and individuals will be displaced from Seattle.
Erring on the moderate side is the lower-risk path to keeping home prices down for everybody, citywide.
If passed as proposed, the U District high-rise MHA upzones will not only backfire on affordability by stalling high-rise homebuilding in the U District; they will also hinder the city’s progress on concentrating new homes around the U District’s future light rail station, and thwart equitable access to the neighborhood’s rich employment and educational opportunities. Furthermore, if the city sets the wrong precedent in the U District, it will likely “lock in” the same affordability-defeating MHA requirements for other neighborhoods, such as Northgate, where high-rise construction is at best marginally feasible today.
City policymakers have it within their power to avoid that lose-lose outcome for Seattle neighborhoods and local families: they can dial back the mandates. Fortunately, erring on the moderate side is the lower-risk path to keeping home prices down for everybody, citywide.
Where the U District numbers now stand
Because the U District is one of Seattle’s six designated Urban Centers and the site of a future Sound Transit Link light rail station, the city has been working toupzone the neighborhood since 2011. One ofthe plan’s primary objectives is to enable high-rise construction and “put more homes and jobs in the area directly served by light rail.” In the eleventh hour of the rezone process, planners integrated the city’s 2015 proposal for the new MHA program. Planners estimate that MHA in the U District will produce between 610 and 920 homes subsidized for lower-income affordability over the next 20 years. A final City Council vote on the U District rezone may come as soon as mid-February.
Under theoriginal MHA proposal, all housing development in the U District would have been required to offer either 6 percent of homes at below-market-rate rent or pay a “fee in lieu” of $13.25 per square foot of building floor space. In Fall 2016, plannersraised the requirements for the U District’s high-rise upzones to 9 percent inclusion and $20 per square foot (detailshere). The Seattle City Council is currently considering anamendment that would push the mandates even higher, to 10 percent and $22.25.
High-rise housing construction under theproposed U District rezone is also subject to the city’sVoluntary Incentive Zoning (VIZ) program that requires developers to build or fund amenities such as open space and historic preservation. Good ideas but these also factor into the cost of the project and must be part of the calculation (the city’s MHA feasibility study did not account for VIZ’s costs). Because builders can choose different VIZ options, the cost of meeting the requirements can also vary. For this analysis, I assume a cost of $5 per square foot of building capacity that exceeds the U District’s baseline floor-area-ratio (FAR) of 4.75 (see appendix for details).
Case study: NC65 to SM-UD240
Following thebefore-and-after method I used previously, I applied simple, static pro formas—the standard process for real estate feasibility assessment—to analyze the proposed MHA upzone from the existing NC65 designation (“Neighborhood Commercial” up to 65 feet) to SM-UD240 (“Seattle Mixed – U District” up to 240 feet). Pro formainput assumptions and SM-UD240 building parameters are from the city’sMHA feasibility study. I adjusted land price to yield a baseline return on investment of 15 percent for a six-story mixed-use building that conforms to existing NC65 zoning. I then applied the same land price, parking ratio, and other inputs to a high-rise apartment building conforming to the MHA upzone.
Pro forma results for percent return on investment are summarized in the table above. Under the city’s assumed existing medium market-strength conditions for the U District, compared to the baseline NC65 building, return on investment is totally wiped out for an SM-UD240 high-rise that meets MHA requirements. As shown in the far right column of the table, even without the added cost of of the MHA requirements, return on investment for the 240-foot high-rise is just 5 percent, a return that would not convince any investor to risk his or her millions of dollars.
What if the U District’s average rents got higher at some point in the future? The bottom row of the table shows the return on investment under the city’s assumptions for rents in a high market-strength area. Compared to the medium market-strength case, in the higher rent scenario, the baseline NC65 building can support a land price about 2.5 times higher (see pro forma tables in the appendix). And in this scenario, MHA causes much less damage to return on investment for an SM-UD240 high-rise, demonstrating how higher rents can absorb more of the costs imposed by the MHA mandates.
Though improved by the higher rents, the high-rise returns are still much lower than the 15 percent yielded by the baseline NC65 building: the MHA upzone reduces returns by 48 percent and 32 percent for the inclusion and in-lieu fee cases, respectively. Both cases would be marginally feasible, if that. In contrast, without MHA, the 17 percent return exceeds the baseline case and falls well within the feasibility range.
The pro forma results show that under current conditions, the proposed MHA upzone from NC65 to SM-UD240 is not really an upzone at all, in practice. The value gained through the additional building capacity doesn’t come close to balancing the added expenses of the MHA affordability mandate, the greater cost of high-rise construction, and the VIZ charges. Surprisingly, even though the upzone grants a 111 percent increase in building capacity, the extra rent the larger building would yield isn’t nearly enough to make up for all the added costs. It’s hard to imagine how such a valueless upzone could meet thestate’s legal standard for an “incentive” in conjunction with affordability mandates.
A 100-year lost opportunity for affordability
If implemented as proposed, the SM-UD240 upzone will result in fewer new homes built than if the zoning were left unchanged as NC65. Without MHA, a 240-foot high-rise in the U District would be extremely difficult to make pencil in the first place. MHA as drafted would drive the infeasibility nail deep into the high-rise coffin. The proposed SM-UD320 upzone is likely to exhibit similarly dismal feasibility performance, especially since it crosses the 240-foot threshold that triggerscostly and time-consuming structural peer review.
In the near term, any housing built in the SM-UD240 zone would almost certainly be six-story mid-rise construction, like the baseline NC65 building analyzed above. But the same MHA requirements apply to smaller buildings, too, and the 9 percent inclusion rate would knock down the return on investment by about 30 percent—enough to kill many projects that would otherwise be feasible today (see pro forma tables in the appendix for results on NC65 under the high-rise MHA requirements).
Adding to the downside, any new housing development so much smaller than what zoning would allow is a 100-year lost opportunity twice over. It’s a loss for affordability simply in terms of fewer new homes to ameliorate Seattle’s housing shortage. And it simultaneously compromises the city’s planning goals to concentrate new high-density housing near the U District’s future high-capacity transit station, the primary reason for pursuing high-rise upzones in the first place. Using the two prototypes analyzed here as examples, every time a new apartment is underbuilt to 65 feet instead of 240 feet, the city loses the potential to gain another 166 homes without consuming any extra land.
Eventually, rents in the U District will increase enough such that high-rise housing development will start to reliably pencil. Will that take five years? Ten years? More? It’s difficult to predict, and land values and construction costs will rise over time as well. The 2021 opening of the Link light rail station will make the neighborhood more desirable and accelerate upward pressure on rents. Also, as rents escalate, the absolute return that a large high-rise project can yield will start to eclipse smaller mid-rise projects, boosting relative feasibility. In absolute terms, a 15 percent return on a $200 million dollar project is three times bigger than a 20 percent return on a $50 million dollar project.
Without MHA, many high-rise projects would likely pencil once U District rents have risen to the city’s high market-strength benchmark. But if subjected to the exaction imposed by MHA as it is currently proposed, that higher rent benchmark is still likely to be a mixed bag for high-rise development: a significant share of projects won’t justify investment, impeding homebuilding and thwarting the city’s affordability and transit-oriented development goals. All told, stalling high-rise homebuilding until rents “get there” is a backslide that will permanently widen the gap between homes available and people who want to live in Seattle, a gap that will hit hardest those residents with the least.
How to fix it: Less is more
Like the NC65-to-NC75 MHA upzone Ianalyzed previously, the MHA mandates on high-rise in the U District are simply too high. And they are too high for the same reasons. City planners are using more guesswork than analysis.
MHA has a sweet spot. If the mandates are pushed beyond it, the resultant loss of homebuilding feasibility means the policy will be worse for affordability than doing nothing.
MHA has asweet spot. If the mandates are pushed beyond it, the resultant loss of homebuilding feasibility means the policy will be worse for affordability than doing nothing. Under these circumstances, dialing back the mandate to the sweet spot will deliver more subsidized homes and more market-rate homes. Counterintuitively, less yields more. The present analysis indicates that the proposed MHA rezone for SM-UD240 needs exactly that sort of correction.
How much of a mandate reduction is warranted? For a precedent, we need look no further than the city’s MHA proposal forhigh-rise zones in downtown and South Lake Union (SLU). The MHA requirements for downtown and SLU were negotiated as part the “Grand Bargain” compromise hammered out between private developer interests, nonprofit affordable housing providers, and city officials. Achieving this compromise necessarily hinged on MHA requirements that all parties could recognize as generally well balanced.
The proposed MHA inclusion rates for high-rise upzones in downtown and SLU range from 2 to 5 percent. While many of the downtown/SLU upzones are relatively small, certainzones in SLU would allow net capacity increases under MHA that are comparable in scale to the SM-UD240 upzone (see appendix for details). These particular SLU upzones require 4 percent inclusion or an in-lieu fee of $10 per square foot. At the same time, rents in downtown and SLU are the highest in the city, so certainly the U District deserves an MHA requirement no higher than 4 percent or $10.
For the SM-UD240 high-rise apartment example I discussed above, 4 percent inclusion in a high market-strength area yields a return of 12 percent. That’s down a bit from the 15 percent baseline, but on the plus side, the absolute return is $15.6 million compared to $9.1 million for the NC65 project. For the highrise example, dropping the inclusion rate from 9 to 4 percent would yield 15 affordable homes instead of 34. But 15 is better than zero, which is what Seattle would most likely get under the current MHA proposal.
To assuage concerns that the requirements would become too lenient as rents climbed over time, the city could consider a provision tying the metrics to rent inflation or for a performance review at given intervals. In Seattle’s political climate, once the MHA mandates are established, raising them will always be easier than lowering them.
Getting to the MHA sweet spot—now
High-rise construction is a paradox. It enables efficient use of urban land but is also inherently expensive. If Seattle hopes to reap the benefits of high-rise housing in neighborhoods such as the U District where the economics are challenging, policymakers must avoid trying to squeeze too much out of MHA. Unfortunately the feasibility analysis presented here indicates that MHA as proposed will inhibit high-rise homebuilding in a Seattle neighborhood where there is great transit access lots of jobs but where there aren’t currently enough places to live.
The solution? Lower the mandates to the level the math tells us is an MHA sweet spot, where we maximize production of both market-rate and subsidized homes so that a neighborhood like the U District can be a place for those who work and go to school nearby can actually live. Based on my feasibility analysis and the proposed mandates for high-rise in downtown and SLU, cutting the current U District high-rise requirements from 9 percent (or even 10 percent) to 4 percent or less is a prudent place to start.
Dialing MHA down to the sweet spot that produces more homes of all kinds may be counterintuitive but it makes all the difference between more inclusive or more exclusive neighborhoods. And the time to fix MHA is now, while it’s still a draft proposal and before it’s baked into the U District upzone. The alternative is an MHA mandate that will fail to deliver on its promise to leverage the city’s growth for affordability—that will, in fact, produce less housing than would doing nothing—and that will be vulnerable to legal challenge.
Next time: How does the draft MHA proposal measure up for the city’s low-rise multi-family zones?
(Correction: This article originally included a statement about underbuilding at Yesler Terrace that was inaccurate.)
Pro forma input assumptions were taken from the city’sMHA feasibility study and are summarized in the two tables below. Based on feedback on my previous MHA feasibility article that the construction costs were too low compared to current norms, I raised concrete and wood frame construction costs by 10 percent, corresponding to the upper limit the city’s study applies in its sensitivity testing. I also increased the per-stall cost of underground parking from $35,000 to $40,000.
The city has not documented the estimated costs of the meeting the VIZ requirements under the proposed rezones, and the city’s feasibility analysis on the U District upzones apparently did not include the costs of VIZ. For this analysis, I assumed $5 per square foot payment on capacity above the FAR 4.75 baseline, based on the following examples. The proposed land use code (SMC 23.48.622) specifies that VIZ must compensate for 35 percent of the building capacity above the base. If the developer chose to meet the VIZ requirement through purchasing historic TDRs for $15 per square foot, that would translate to about a $5-per-square-foot payment on the capacity above base. If the developer chose to meet the VIZ requirement by building a public plaza at a cost of $105 per square foot, that would also translate to about a $5-per-square-foot payment on the capacity above base.
Pro forma data are given in the two tables below, one showing results for medium market-strength rents, and the other showing results for strong market-strength rents. Parameters defining the high-rise building prototype were taken from the city’sMHA feasibility study. The NC65 building was scaled to fit on the same size lot as the high-rise. To maintain consistency between the before-and-after MHA prototypes, the present analysis assumes a consistent parking ratio, as opposed to the single full floor of underground parking assumed in the city’s analysis.
The number of required affordable units was based on an assumption that all of the increased development capacity granted by the upzone would go to residential use (the retail floor space remains constant on both buildings). Because the math never yields an exact integer number of required affordable units, the leftover fractional part of a unit was converted to an in-lieu fee, according the city’s method, documentedhere.
The pro forma results reveal that the in-lieu fee option becomes more attractive as rents and construction costs rise. This relationship is inherent to the math the city uses to convert between the inclusion percent and the in-lieu fee, and it is reflected in the city’s assumption that 90 percent of projects in downtown and South Lake Union will opt to pay the in-lieu fee.
In addition to return on investment, the pro forma tables below also show yield, which is the building’s net operating income (NOI) divided by the total cost of developing it. A rule-of-thumb target for yield is 6 percent. A drop in yield of just one- or two-tenths of a percentage point can flip a project from “go” to “no-go.” The yield results are qualitatively similar to the return results.
Regarding the comparison to MHA upzones in downtown and South Lake Union, for zones that currently have VIZ, meeting the MHA requirements grants the developer 60 percent of VIZ capacity above the base. Developers earn the remaining 40 percent by providing other amenities or by paying the in-lieu fee. While the MHA upzones tend to be relatively small, the VIZ capacity is often quite large. After this 60/40 split, in the case of three upzones, MHA requirements—4 percent inclusion or $10 per square foot—are “paying” for capacity boosts of around 100 percent, roughly similar in scale to the 72 percent boost (111 percent times 0.65) of the SM-UD240 upzone.
154,000 Barrels of Crude-by-Rail Each Day to Puget Sound
#WA refineries supplied themselves with +150,000 barrels of oil per day by rail delivery.
Last week, the Washington Department of Ecology published itsfirst quarterly report on oil transport in the state, including important new information on oil train shipments. Although the publication presents the data in a confusing manner that makes it difficult for the public to understand exactly how much oil is moving, and where, it nonetheless adds considerably to our understanding of oil-by-rail in the Northwest. By piecing together the figures in the new report withwhat we already know about the industry, we can develop a clearer understanding of how oil trains move throughout the state.
We now know that in the last quarter of 2016:
Quantity: Oil trains delivered more than 14.7 million barrels of crude oil via 21,603 rail cars to Washington’s 5 refineries. Overall, these refineries supplied themselves with an average of 154,469 barrels of oil per day, roughly one-quarter of their total refining capacity, by rail delivery.
Rail Corporations: It appears that BNSF Railway dominated oil train movements in Washington, handling roughly 96 percent of the cargo. Union Pacific (UP) contributed only about 4 percent and likely delivered that oil solely to the refinery at Tacoma.
Origins and Destinations: No loaded oil trains transited the mountain passes over the Cascades. Nearly all the oil, 94 percent, originated in North Dakota, passed through Spokane, and ran along the Columbia River Gorge before turning north to destinations on Puget Sound. A minor fraction, 6 percent, came from Alberta and entered Washington by way of Whatcom County before traveling south along the Sound to the Tesoro Refinery at Anacortes.
All oil trains in Washington are destined for one of the state’s five refineries located on the shores of Puget Sound. The smallest of these, US Oil, is located in the heart of Tacoma’s industrial area. It accepted an average of 24,355 barrels per day, supplying roughly 58 percent of itsrated capacity of 42,000 barrels.
Original Sightline Institute graphic, available under our free use policy.
Tacoma was the only site that took delivery of oil trains moved along UP rail lines, the railroad responsible for thecatastrophic explosion in Mosier, Oregon, in June 2016. In fact, the wrecked train was bound for Tacoma.
The report also reveals that Washington shipped out 135,000 barrels of crude oil by marine vessel, roughly the amount that would be carried byone standard tank barge. This shipment may have originated from Tacoma in November, when during week 48 the small US Oil Refinery there received the equivalent of 47,000 barrels per day, considerably more oil than its refining capacity could have handled.
Most oil trains continued north, passing through the state’s biggest population centers en route to refineries on the north Sound. The first destination along the way is the Tesoro Refinery at Anacortes, which accepted about 5 million barrels of crude oil by rail—more than 64,000 barrels per day on average—that originated in North Dakota and arrived in Skagit County from the south. Tesoro was the intended destination forthe oil train that derailed under Seattle’s Magnolia Bridge in July 2014.
Original Sightline Institute graphic, available under our free use policy.
The Tesoro Refinery was the only facility that accepted oil trains from Alberta and therefore the only site to accept rail deliveries of medium and heavy crude oil. (All of the oil that Washington received from North Dakota was classified as light crude.) Based on the reported gravities of the oil, it does not appear that Tesoro accepted any rail deliveries of tar sands oil, a very dense (and very polluting) oil extracted in Alberta.
There is evidence that Tesoro may be selling a portion of its oil-by-rail deliveries to the neighboring Shell Refinery, so we don’t know whether all this oil was ultimately refined by Tesoro. Shell had intended to construct an oil train unloading facility, butits plans were scuttled by a robust opposition movement, procedural delay, and worsening economic conditions. Moreover, the future of oil train deliveries to Tesoro remains uncertain, as the local Swinomish tribe is suing BNSF in federal court for breaching the terms of an easement that the railroad obtained across tribal land. In January 2016, a judge allowed the suit to proceed, ruling that BNSF has breached its contract.
The remainder of the oil trains continued north to the BP and Phillips 66 Refineries in Whatcom County. Together these refineries accepted 6 million barrels of crude oil, an average of nearly 66,000 barrels per day. All of it was light oil from North Dakota that moved along BNSF’s rail lines in Washington.
Original Sightline Institute graphic, available under our free use policy.
Notoriously hazardous—prone to derailments, spills, and occasional explosions—the Northwest oil-by-rail industry is scarcely more than four years old. Only now with the publication of Washington Department of Ecology’s first ever quarterly report does the public have a reasonably accurate sense of just how much oil is moving by rail, and where. Going forward, we can expect to see updated oil transportation reports once per quarter, summaries that will provide the public with important insight into pipelines and marine vessels, as well as oil trains.
Notes and methods: Sightline’s analysis counts data only from weeks 41 to 53; we exclude the partial-week data for week 40 that is included in the Ecology report. We converted Ecology’s weekly figures into barrels per day, consistent with industry standards. More of Sightline’s leading analysis of Northwest oil-by-rail can be found in our blog series and in our July 2015 report on the industry’s plans.
Weekend Reading 1/27/17
Alan
Some of Sightline’s staff, fellows, and I have been reading voraciously and swapping articles as we try to draw the right lessons from the November US elections. We must have circulated, read, and debated a hundred articles as we sought to understand the implications of the astounding events to Cascadia’s east.
Today, my personal highlights from this reading blitz, starting with pieces from inside the blue bubble: George Packer wrote a superb portrait of the US political zeitgeist just before the election and Dave Roberts wrote a summation of many post-mortems just after it. They are the best syntheses I read for capturing what people like me think happened.
Now I want to get to my real recommendations: things from outside. I’m not saying I agree with everything the following sources say. Not at all. I’m saying I learned a lot by reading them. They challenged me. So if you’re game, you might try clicking X on the New York Times/Guardian/Nation/Economist/Globe and Mail/whatever-exact-flavor-of-blue-bubble-outlet fills your Facebook feed and consider these arguments in addition. They’re made by people who are wickedly smart but may not share your worldview, or at least they don’t share mine.
One of the clearest lessons of the election was just how powerful groupthink is. The entire political-media establishment of the United States was convinced it knew what would happen. It was completely wrong. A powerful antidote to groupthink is to pay attention to reasoned and documented critiques of your group’s thinking, such as these:
Will Wilkerson’s “A Tale of Two Moralities,” published by the libertarian Niskanen Center, documents the emergence of two somewhat independent but interlacing politico-cultural archipelagos:
“The United States may be dividing into two increasingly polarized cultures: an increasingly secular-rational and self-expression oriented “post-materialist” culture concentrated in big cities and the academic archipelago, and a largely rural and exurban culture that has been tilting in the opposite direction, toward zero-sum survival values, while trying to hold the line on traditional values.”
This blogger, no fan of President Trump, challenges the blue bubble’s assumptions about the president’s racial politics. Relatedly, Glenn Loury, a decorated scholar and professor at Brown University, offers in his online video interviews progressive but bracingly non-conformist perspectives on the campaign’s racial politics.
Among the figures most reviled by the left in the Trump Administration is Steve Bannon, who advises the president. (You can find the in-bubble interpretation in this New York Times profile.) You’ll find his own words in this interview and this speech. His thinking is a heterodoxy of left, right, and unexpected. He attacks crony capitalism, financial and cultural elites of “The Davos Party,” even capitalism itself (for dehumanizing workers).
Best for last: this extraordinary piece by Dominic Cummings. It’s not even about the US election. It’s about the Leave campaign in the UK’s Brexit referendum, which Mr. Cummings managed. Well, it’s sort of about that. It’s also about lots of other things, like democracy and public opinion and elites and the media and physics and political science and management. Still, by analogy, it may be the most insightful of pieces for understanding what happened in the US election. The whole thing is worth pushing through, despite the patches of inside-baseball commentary on UK politics. Here’s a taste:
“Generally the better educated are more prone to irrational political opinions and political hysteria than the worse educated far from power. Why? In the field of political opinion they are more driven by fashion, a gang mentality, and the desire to pose about moral and political questions all of which exacerbate cognitive biases, encourage groupthink, and reduce accuracy. Those on average incomes are less likely to express political views to send signals; political views are much less important for signaling to one’s immediate in-group when you are on 20k a year.”
Because I’m committed to continuing to challenge my own groupthink, I welcome readers’ suggestions of what to read.
Serena
I finished Robin DiAngelo’s What Does It Mean To Be White?: Developing White Racial Literacy this weekend and highly recommend it to anyone trying to better understand racism and white supremacy, their pervasive and systemic nature, and how to interrupt and work against them.
Also see Rachel Aviv’s devastating account of the long solitary confinement of Angola 3 member Albert Woodfox. It is a gripping and upsetting testament to the way America’s prison system treats people of color, perhaps with particular cruelty for those who are determined to advance the power and dignity of Black people.
Aven
Inspired by the success of the Women’s March on Washington, a group of scientists and science advocates are planning a Scientists’ March, with the goal of “address[ing] issues including government funding for scientists, transparency, climate change and evolution”.
“There are certain things that we accept as facts with no alternatives,” according to the organizers. “The Earth is becoming warmer due to human action. The diversity of life arose by evolution. … An American government that ignores science to pursue ideological agendas endangers the world.”
And speaking of scientists speaking out, in response to the Trump administration’s gag order on several federal agencies, a number of “rogue” twitter accounts have popped up, to spread the facts and information that the administration is trying to silence. The rogue accounts include NASA, National Park Service, US Forest Service, and the EPA, and they have taken advantage of the opportunity to unabashedly tweet out information related to climate change and the internment of Japanese Americans during WWII, among other things. The resistance, apparently, is social.
Keiko
Are you getting a bit overwhelmed by the political climate but still want to stay engaged and active on issues you care about? There are apps for that!
Countable gives you clear, concise summaries of bills going through Congress. And you can take action and call/email your reps with one click.
And Swing Left is a way to find your closest swing district to focus your energy where it might count more.
Have another resource? Please share in the comments below.
And here’s more proof that urbanists and climate hawks need to work together to fight against climate change. Well-crafted density is a key tool to reduce energy use in a rapidly urbanizing world.
Seattle Mayor Ed Murray called Wednesday “the darkest day in immigration history” since the internment of Japanese-Americans as President Trump signed an order cracking down on sanctuary cities for undocumented immigrants. Worried about the United States’ exclusionary history repeating itself, I went down a rabbit hole this week and learned more about Japanese-American experiences during WWII and the decades of discrimination that lead up to it. A great resource is Densho, a local Northwest nonprofit that collects stories of Japanese Americans incarcerated during WWII.
The 75th anniversary of the Executive Order 9066 (the WWII order that lead to internment in America) is coming up in February. KUOW posted a great interview with Mayumi Tsutakawa, a local writer and Humanities Washington speaker who shares her personal connections to internment and how this terrible time in US history can help educate about modern prejudices. My grandpa was incarcerated during WWII and I never had the chance to ask about his experiences. It’s important to revisit this troubled history now, more than ever, as deep concern grows for our immigrant and Muslim neighbors in America.
Kelsey
There are books that you connect with, and then there are books that pry you open, take out your insides, rearrange, and fit you back together again. Milk and Honeyby Rupi Kaur is the latter. Her debut book of poetry is a pure and vulnerable reflection on femininity, abuse, love, loss, and healing.
I read Milk and Honey directly after participating in the Women’s March on Washington, and thus it tore through my soul in the most beautiful way. It had me weeping on an airplane of all places! If you enjoy poetry, love, women, or just beautiful words then add this to your reading list as soon as possible.
Would the Dakota Access Pipeline Help Canadian Oil Producers?
As you may have heard, the Trump administration recently signed orders designed to pave the way for two controversial oil pipelines, Dakota Access (DAPL) and Keystone XL. Surprisingly, though, the main beneficiaries of this move may be Canadian, not American.
This seems clear enough the case for the Keystone XL pipeline, which was explicitly designed to move cheap, sludgy crude from the tar sands plants in Alberta, Canada, into the US market. It may seem surprising, though, that DAPL—which connects North Dakota oil fields to an oil distribution hub near Chicago—would benefit Canadian oil producers. Yet a close look at the numbers suggests that much of DAPL’s capacity could be used to move Canadian oil into the US market.
That’s because:
After DAPL, the Bakken will have more pipeline than it has oil. The entire Bakken region currently produces a little less than 1 million barrels of oil per day, and that number could actually fall during 2017. The North Dakota Pipeline Authority estimates that the Bakken’s existing pipelines and refineries currently can handle 851,000 barrels per day (bpd) of that oil. If completed, DAPL would add 470,000 bpd of new pipeline capacity, leaving the region with a total of 1.321 million bpd of total “takeaway” capacity—meaning that Bakken pipelines and refineries could have more than 300,000 bpd of spare, unused capacity if DAPL is completed.
Some oil-by-rail shippers probably won’t switch to DAPL. Barrel for barrel, shipping oil in railroad cars costs significantly more than shipping it by pipeline, so Bakken oil producers who currently ship their oil in rail cars may be particularly eager to switch over to DAPL. But oil-by-rail shipments have collapsed over the past two years: after peaking at more than 800,000 bpd at the end of 2014, Bakken oil-by-rail shipments fell to only about 330,000 bpd as of last November. And it looks likely that much of this remaining oil will stay on the rails. RBN Energy (subscription required) finds that Bakken producers have significant contractual commitments to ship oil by rail to Puget Sound oil refineries, and cannot easily back out of those obligations. A separate RBN Energy analysis (sorry, subscription again) finds that Puget Sound refiners make more money from refining Bakken oil than they do from refining Alaska oil—suggesting that they’ll continue to buy oil-by-rail shipments even if DAPL comes online. In the fourth quarter of 2016, Washington state refineries took in about 151,000 bpd from rail cars originating in the Bakken. If that holds up, Bakken producers would be able to shift only about 180,000 bpd from rail to DAPL—just 38 percent of the pipeline’s capacity.
Existing pipeline shippers won’t switch to DAPL either. Oil producers in the portion of the Bakken that’s south of the Missouri River already have access to oil pipelines. Shifting from existing pipelines to DAPL doesn’t improve the economics much, if at all. Worse, switching pipelines could expose oil producers to some significant penalties under their existing pipeline contracts.
In short, if DAPL is built, the Bakken region will have a lot more pipeline capacity than it will have oil to fill it.
So who will wind up filling the pipeline with oil? As it turns out, the most likely customers are companies operating in the Alberta tar sands, which is some of the most polluting oil on the planet because of its high carbon intensity. This sludgy, hard-to-transport oil currently sells at a $15-per-barrel discount to lighter, “sweeter” crudes in major US distribution hubs—which could make it profitable to ship tar sands oil by rail to North Dakota, and then feed it into DAPL.
At this point, the potential for Canadian producers to ship oil via DAPL remains speculative. But if this thesis holds, it will be Canadian producers, not American oil companies, who win big from both DAPL and Keystone XL. And the resulting flood of Canadian crude in US markets could actually undermine the profitability of US oil producers—which would be a paradoxical result from an allegedly “America first” administration.
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Pro forma data are given in the two tables below, one showing results for medium market-strength rents, and the other showing results for strong market-strength rents. Parameters defining the high-rise building prototype were taken from the city’s
