Tag: "Transportation"

Gas Savings Conundrum

Families planning road trips this summer, rejoice: According to a new estimate from the U.S. Energy Department, drivers can expect to see the lowest summer gasoline prices in about six years.

Before you head out to buy a gas-guzzling SUV, be forewarned: falling gas prices might not be as good for your pocketbooks — or the economy — as you might think. Low oil prices have slowed job growth, shut down drilling operations, and taken money out of the markets.

Texas, which produces 11 percent of all goods made in the United States, saw its slowest job growth since 2011 and lost 9,500 manufacturing jobs. Across the nation, the U.S. oil rig count, which is commonly used as a barometer for the oil industry, has lost 164 rigs over the past four weeks, adding onto the 276 rigs closed in February. In Texas alone, the oil industry lost 3,500 jobs in February and 4,300 in January. This 7,800 job loss is the sector’s biggest job loss since 2009.

While the industry struggles, many citizens have been celebrating. A poll run by the Iowa-based Principle Financial Group reports that while forty percent of U.S. residents are using the gas-induced savings to pay routine expenses, 54 percent are using the money to pay off debt or grow their savings accounts.

Fifty-four percent of the money consumers are no longer spending on gasoline is vanishing from the markets, along with manufacturing and oil industry jobs. These troubling conditions raise troubling questions: How can we encourage people to invest their gas savings back in the market? What can companies do to adapt to these continuing, low oil prices? How long can these low oil prices keep up, particularly if the Obama administration lifts oil-related sanctions against Iran?

Apr 08, 2015 | Leave a Comment | by

Simplify USDOT Regulations for Transportation Planning

Today, I want to offer the sixth of my recommendations to reform U.S. surface transportation policy. My colleague David Hartgen and I suggest simplifying Department of Transportation (DOT) regulations regarding transportation planning.

Since 1964, federal laws and amendments (23 USC 134 and 49 USC 5303) have required that states and urbanized areas exceeding 50,000 population carry out a short-term and long-range “continuing, cooperative and comprehensive multimodal transportation planning process” as a condition for federal aid. Sensible at first, the “3C” process now mandates a wide range of required assessments, including air quality, environmental justice, congestion management, safety, maintenance, efficiency, freight, pedestrian-bike, economic growth, fuel consumption, and other requirements. Although some requirements have been eased for smaller regions, recent regulations call for expanded time horizons and new “planning factors.” More rules for climate change, international trade, active transportation and sustainability are likely. These requirements and frequent updates have a negative impact on smaller regions with fewer staff.

For regions with fewer than 200,000 people, eliminate all long-range transportation planning mandates and require 10-year TIP (Transportation Incentive Program) updates. For regions greater than 200,000 population, eliminate or reduce regulations for air quality monitoring and conformity, environmental justice, congestion management, economic impact, safety, fuel consumption, and 40-year planning horizons. For the TIP, remove the option that projects come from a long-range transportation plan. Review other requirements for possible reduction or elimination.

Recent reviews of metropolitan transportation plans find that many are dense documents full of feel-good unachievable goals only marginally related to transportation. Frequent update cycles mean “planning never stops.” Worse, they generally ignore rising congestion and infrastructure maintenance, and depend heavily on federal/state resources for implementation. But the federal role is declining as local, state and private roles increase. After completion, most plans are ignored and shelved until the next update. The cost of this wasted and inefficient planning is substantial — about $500M annually. In short, transportation planning has become a convenient catch-all for pushing other local goals, and a hurdle for self-certification and funding continuation, not a sensible effort to establish future transportation visions.

These changes would bring federal requirements into line with the declining federal role in local transportation issues. Most projects are local in impact, not national. The cost of current planning, about $1B annually, could probably be halved, leaving more resources for implementation, which would speed project development and create jobs. Localities would have more control over essentially local transportation decisions.

Apr 06, 2015 | Leave a Comment | by

U.S. Energy Infrastructure Still Lacking

Energy booms, whether from oil or gas, will continue as both technology develops and more resources are discovered. However, each energy boom puts a strain on our existing energy infrastructure. For instance, oil can be transported by truck, ship, rail and pipeline. Pipeline is the safest and most reliable way to transport oil. Even with 185,000 miles of liquid petroleum pipeline across the United States, there is just not enough to transport the huge volume in the current boom. The lack of pipeline has increased transportation by rail and rail accidents during this time.oil_by_rail

  • The recent increase in transportation of oil by rail has increased the number of rail accidents.
  • In 2014, 70 percent of petroleum products and crude oil were shipped by pipeline, while 3 percent was shipped by rail.
  • A recent study by Fraser affirms their safety by reporting transporting oil by pipeline is 30 times less harmful than by train.

More and more oil is extracted every day and our storage capacity is overflowing. Two things need to happen that will greatly alleviate this situation. First, more pipelines are needed to transport all of this new oil. Second, all of this oil needs a place to go. Building more storage capacity only temporarily alleviates the problem. The crude oil export ban needs to be lifted so that the oil can get out of the over capacity storage units and enter the energy market.

Apr 06, 2015 | 1 comment | by

Eliminate Air Quality Standards for Regions that Meet Standard

Today, I want to offer the fifth of my recommendations to reform U.S. surface transportation policy. My colleague David Hartgen and I recommend that the Clean Air Act of 1990 be amended in two ways. First, eliminate the conformity requirement for regions meeting clean air standards. Second, review regions not in conformity every 10 years, after new census data has been released.

The Clean Air Act of 1990 (CAA) requires each region currently in non-attainment with air quality standards to submit plans demonstrating that it will be in compliance in the future. For transportation, each region must show that its’ Transportation Improvement Plan (TIP) “conforms” to the State Implementation Plan for air quality improvement. In the DOT Rules (40 CFR 93), this means that the region’s TIP projects will, as a whole, not increase future emissions above the no-build level or above budgeted emissions.

The present rule requires even very small regions to conduct extensive forecasting of air pollution if they were ever in non-attainment of air quality standards. But virtually all of the future reduction in regional air pollution will be caused by cleaner vehicles, not by local transportation actions. Recent reviews of the air quality plans of 48 regions found that every region predicted a 30-50% reduction in vehicle emissions over 20 years even as travel increased, and that the TIP would reduce emissions by only 0.25-0.5% — way too small to be significant. Further, the conformity rule requires reduction of emissions (measured in tons of pollutant) but the CAA standards are for concentrations (measured in parts per billion in air). Therefore, there is no direct connection between the rule’s emissions analysis and the CAA’s concentration requirements.

Very few regions have been cited for non-conforming plans from among the literally hundreds submitted. A 2003 GAO analysis found that only five regions out of 200+ revised their plans based on conformity, and that frequent updating was administratively burdensome. No region has actually lost federal funds as a result of non-conformity. For major projects environmental impact statement analysis already requires additional air quality analysis, so requiring regions to do it twice is duplicative and burdensome. In this way the rule has become an administrative hurdle that duplicates later needed work, does not improve local air quality, and requires huge administrative effort to ensure certification for federal funds.

Regions — particularly the 400+ smaller ones — will have significant relief of administrative burden. Assuming that the conformity analysis costs $20,000 per certification, administrative time, and administration costs, this change would save nearly $8M that could be better spent on effective transportation planning. Air quality would not degrade as a result of this change.

Apr 01, 2015 | Leave a Comment | by

Eliminate Federal Gas Tax Funding for Non-Highway Uses

Today, I want to offer the fourth of my recommendations to reform U.S. surface transportation policy. I advise eliminating federal-aid gas tax funding for all non-highway uses.

The federal highway transportation program is structured as a users-pay/users-benefit system with fuel taxes funding construction and maintenance of the Interstate and national highway system. Over the last 30 years, the program has diverted an increasing percentage of its funds to transit, bicycling, walking, smart growth, transportation museums, weed removal and other non-federal transportation purposes. While these programs have value, they also reduce the funding available for federal aid to highways; this has jeopardized interstate commerce. Eliminating federal aid funding for all non-highway uses will return the federal highway program to a users-pay/users-benefit program that spends limited resources on the most critical infrastructure.

U.S. government policy is based on the principle of federalism where the federal and state government share legislative responsibilities. In transportation, the federal government funds interstate passenger and goods movement using federal aid highways, aviation, inland waterways, and ports. Traditionally, other transportation modes have been funded by state and local governments. While transit and active transportation are important in certain states and regions, such systems are not federal in nature and should not be funded by the federal government. Most local governments and some states provide substantial funding for transit. Federal government funding makes up less than 30% of the revenue for the most important transit agencies such as the New York Metropolitan Transportation Authority. The funding of these modes from federal aid amounts to a cross-subsidy from highway users to other modes.

Federal transportation funding is limited. With little bipartisan interest in increasing the gas tax or embracing an alternate funding mechanism coupled with increasing vehicle fuel efficiency, federal gas tax receipts must be targeted as effectively as possible. Fuel tax diversions significantly reduce funding for highways.

While transit is important in many communities, it should be funded by farebox revenue and with supplementary local funding that does not come from federal roadway funding. U.S. transportation policy is predicated on a users-pay/users-benefit system. Potential funding sources for transit include local general tax revenue and value capture. (Value capture uses increases in land values resulting from highway and transit projects to finance infrastructure improvements.)

This change could devote more revenue to highways. Assuming all non-roadway funds are dedicated back to roadways, under Moving Ahead for Progress in the 21st Century (MAP-21) transit receives approximately $11 billion per year. Additionally, there is approximately $5 billion per year in highway funding that is flexed to transit, bicycling, walking or non-transportation purposes. This totals $16 billion in additional highway funding per year, or about 1/3 of federal gasoline taxes.

Mar 30, 2015 | 1 comment | by

Privately Built High Speed Rail in Texas

Ever since Japan built the first high-speed rail line in the world linking Tokyo to Osaka in 1964, U.S. train advocates have been lobbying for true high-speed rail in the U.S. While France, Germany, Spain and recently China have built high-speed rail systems, the U.S. has resisted for many reasons. High-speed rail works most effectively transporting customers between dense city centers with robust transit systems and low rates of car ownership. A popular existing passenger rail system and higher costs of car ownership are important factors as well.

The U.S. has never fared particularly well in these categories for a number of reasons. First of all, car ownership in U.S. cities was far higher in the 1970’s than in Europe or Japan due to a more robust roadway network. In addition, U.S. cities are generally less dense than European cities. And U.S. city transit networks are much more skeletal making them less effective. Also U.S. taxes on gasoline are much lower making car travel cheaper than in Europe and Japan. Furthermore, U.S. rail tracks are dedicated to freight, creating the most efficient freight rail network in the world but limiting options for passenger rail.

Despite these challenges, in 2009, President Obama promised a national high-speed rail network. However, six years later that promise is nothing but a dream. The Obama administration strategy was flawed from the start. Instead of focusing on the most fiscally realistic place to build HSR, such as the northeast corridor, President Obama disbursed money to 38 states to build new rail but also to upgrade existing rail. The only high-speed rail project to begin construction is the California line from Los Angeles to San Francisco by way of the Central Valley. However, this project has a more than $50 billion funding hole, takes a circuitous route through the Central Valley making it physically impossible for the train to meet its travel time obligations, and is causing politicians to bend environmental review and ballot question intent laws. The project has no Republican support and is rapidly losing support from Democrats including the Lieutenant Governor. Most expect the project to be cancelled as soon as its major supporter, Jerry Brown, leaves office. High-speed rail’s track record in the U.S. has been one of almost complete failure.

All of these factors make potential high-speed rail success in the U.S. look doubtful at best.

However, there are several potential bright spots. The higher-speed Acela train operated by Amtrak on the northeast corridor has been a modest success. Train farebox revenue covers the full operating costs of the line. Many experts have speculated that a true 200-mile per hour high speed rail line would be even more successful financially. If this train could be operated by the private sector with competent management, which Amtrak has seldom provided, and be free of government restrictions such as Buy America, it might work. And if the private operator sought advice from successful rail operators in Japan instead of from the bungling bureaucrats advising the California and national rail lines, significant profits could be possible.

Two such lines are on the drawing boards. One is proposed for Florida linking Miami with Orlando International Airport. The other is proposed for Texas linking Dallas and Houston.

Let’s examine the Texas route from Dallas to Houston in a little more detail. The Texas line shares several characteristics with successful European and Japanese lines. Dallas to Houston is a popular air route, flown by three of the four largest airlines. Instead of trying to position the line in the middle of the highway or use existing tracks, the company is planning to build the line along a utility corridor. In addition to providing a dedicated right of way, such an alignment limits the number of folks living in the train’s path as people do not live in utility right of ways. The 250-mile flat distance between the two cities is perfect for high-speed rail. Finally, the metro areas each having more than 6 million folks are plenty big enough to serve as the endpoints.

However, there are several obstacles to the route as well. Neither metro area has an extensive transit system, nor the density to create such a system, so the train stations would have to feature many parking spaces. This is different from European or Japanese HSR. And whether folks living in the expansive suburbs especially near an airport would drive to the center city to take the train, versus drive to the airport is an open question. In both metro areas there are folks living in the train’s path. Living next to an Interstate highway is unpleasant; living next to a train would be unfeasible. The full cost of relocation would have to be offered to many homeowners, increasing the cost and opposition.

The biggest challenge is whether or not the system would need government funding. Texas Central Railway insists it does not. Regardless, since competitor modes, namely aviation and intercity bus are not subsidized, we should not be subsidizing HSR either.

The Texas high-speed rail proposal is intriguing. Proposed as a private operation with funding and guidance from Central Japan Railway Company the proposal is already far more promising than any of the Obama Administration’s previous lines. Nobody knows if such a private line can succeed, but Texas Central Railway certainly deserves a chance to try.

 

 

Mar 23, 2015 | 1 comment | by

The Case for Lifting the Crude Oil Export Ban

The United States is running out of room in its crude oil storage facilities and the question is ― where does the crude go now? As domestic crude oil production continues to rise, it has no place to go due to an obsolete ban on the exportation of crude oil in the U.S.

The International Energy Agency said in its monthly oil market report that U.S. supply shows no signs of slowing down, an assessment that pushed the price of crude below $57 a barrel and lowered gas prices at the pump. Low gas prices led to record amounts of driving in 2014, culminating in a record-breaking December, new federal data shows.

With the U.S. now producing more oil and natural gas than Russian and Saudi Arabia, over 11 million barrels a day (55 percent increase from five years ago), lifting the U.S. oil export ban would:

  • Add over $1 trillion in government revenues by 2030.
  • Create 300,000 more jobs a year.
  • Increase current U.S. production from 8.2 million B/D currently to 11.2 million B/D.
  • Cut the U.S. oil import bill by an average of $67 billion per year.
  • Lower gasoline prices by an annual average of 8 cents per gallon.
  • Save U.S. motorists $265 billion for during the 2016-2030 period.

Despite the fact that oil imports are at the lowest level since 1985, the U.S. still imports 33 percent of its oil from foreign sources. A broad view by the public is that U.S. oil should stay at home will test export proponents. A majority of voters, 53 percent, opposed exporting oil. At present, the current policy is discouraging additional crude oil supplies from being brought to market, which actually makes gasoline prices higher than they otherwise would be. The increased economic activity resulting from the rise in crude production would support an average of 394,000 additional U.S. jobs over the 2016-2030 period, with a peak of 964,000 jobs in 2018.

Doing away with exports restrictions would also generate added benefits to U.S. household income, gross domestic product (GDP) and government revenues. The average disposable income per household would increase by an additional $391 in 2018 as benefits from increased investment.

The current hydraulic fracturing and American energy boom is reducing oil imports by 22 percent next year. Lifting the crude oil export ban would increase the energy boom. This boom could also reduce the oil imports of European countries. The United States could replace Russia title as “Europe’s gas station” and provide all of Europe’s energy needs.

Mar 18, 2015 | 3 comments | by

Metro Transportation Plans Lack Transparency

Today, I want to offer the third of my recommendations to reform U.S. surface transportation policy. I request that Metropolitan Planning Organizations (MPOs) analyze their long-range transportation plans’ ability to reduce congestion.

Under federal law, MPOs are required to create Long Range Transportation Plans every four years (if deemed in non-attainment) or every five years otherwise, outlining their planned transportation investments and their reasons for making those investments. Some plans forecast that horizon-year congestion will be less if the plan is implemented compared with the no-build case, but in nearly all cases, future congestion (with the plan) will be greater — often significantly greater — than in the baseline year (today). Yet that fact is seldom made clear to citizens and taxpayers.

Requiring Long Range Transportation Plans to directly compare congestion levels in the horizon year with congestion levels in the baseline year, will allow citizens and taxpayers to judge whether or not the plan focuses enough effort on congestion reduction to ameliorate the situation.

According to the latest Urban Mobility Report from the Texas A&M Transportation Institute, traffic congestion in America’s 101 urbanized areas costs motorists $121 billion per year in wasted time and fuel. Most MPOs’ Long Range Plans give lip service to reducing congestion, but very few actually target their investments in such a way as to credibly project that 20 years of investment will yield less congestion than in the initial (baseline) year of the plan. If they make any comparison at all, most plans compare congestion after the plan’s implementation with what it would be under the no-build alternative. The models used to produce these plans do generate the information needed to compare horizon-year congestion with baseline-year congestion, but this comparison is almost never included. Citizens and taxpayers are led to believe that because congestion with the plan is marginally better than congestion under the no-build alternative, the plan is the best that can be accomplished. Yet most plans could do far more to reduce congestion if they focused their resources on the problem. The Urban Mobility Report shows that urbanized areas that have this focus can actually achieve significant reductions.

This requirement could provide substantial mobility improvements at a very small cost. To the extent that this motivates MPOs to focus more resources on actual congestion reduction, there will be traffic flow improvements, time-savings, reduced fuel use and reduced emissions. The cost of making this change in the planning process will be very low, since most MPOs already generate the needed information as part of their transportation modeling.

Mar 11, 2015 | Leave a Comment | by

Eliminate Transportation (TIGER) Grants

Approximately every six years, Congress reauthorizes U.S. surface transportation policy. One of these reauthorizations is overdue, providing an opportunity to make U.S. transportation policy more free-market oriented. I have chosen six programs or policies that badly need to be changed. Over the next two weeks, I will summarize each of these programs.

My first recommendation is to eliminate the Transportation Investments Generating Economic Recovery (TIGER) grants. The TIGER program is an executive agency discretionary funding program that supports road, rail, transit and port projects. Started in 2009, as part of the American Recovery and Reinvestment Act (ARRA) also known as the Stimulus, TIGER is supposed to award funding based on merit. Unlike most federal programs, which appropriate money based on a formula set by Congress, the TIGER program is administered and audited by the executive branch.

Unfortunately, the executive branch’s administration of the TIGER program has failed to follow the rules and expectations of the program.

The program is supposed to achieve critical national objectives, yet more than 60 percent of the grants have supported local transit, pedestrian or bicycling projects. While such projects have a role, they are not national projects and should not be funded by a national-oriented program. Several of the road, rail and port projects are also locally oriented.

Projects are supposed to be selected based on “rigorous” criteria, but DOT uses vague metrics. For “livability,” the department’s definition is “Significantly enhance the creation of more convenient transportation options for the traveler,” which could mean almost anything project sponsors want it to mean.

Lower ranked projects are frequently funded while higher ranked projects are not. In the first round of TIGER grants, the agency funded almost as many “recommended” projects as “highly recommended” projects. In the fifth round of TIGER grants, DOT changed the ratings of some projects from “not recommended” and “recommended” to “highly recommended” in order to justify funding them.

The program provides limited information to applicants and the public. Despite three requests from the Government Accountability Office to provide better documentation of the review process and to release more information to applicants who fail to win grants and to taxpayers, USDOT has failed to provide more information as requested about the program.

Democratic districts have received a disproportionate share of the grants. In the third round of grants Democratic districts received 61% of the grants and 69% of the funding, despite comprising 49% of the total congressional districts. Democratic districts were overrepresented as award winners in all six rounds of TIGER Grants.

Since funds would be allocated by Congress we don’t expect eliminating the program will cost taxpayers anything. In fact, staff reductions could follow permitting executive branch employees to engage in other activities.

 

Mar 09, 2015 | Leave a Comment | by

Add Taxpayer Protections to Railroad (RRIF) Program

Over the next few weeks, I will be highlighting six national transportation policies that need to be changed. 2015 provides a great opportunity to seek these changes because the federal bill that governs surface transportation policy is up for renewal. Republican majorities in the House and the Senate should create a more free-market oriented transportation policy.

Today’s recommendation is to add taxpayer safeguards to the Railroad Rehabilitation and Improvement Financing (RRIF) program. RRIF was created by 1998’s TEA-21 legislation. Under its provisions, the Federal Railroad Administration (FRA) can devote up to $35 billion to loans and loan guarantees for freight and passenger railroad infrastructure. Unlike DOT’s Transportation Infrastructure Finance and Innovation Act (TIFIA) loan program, there are few taxpayer safeguards in RRIF, other than a requirement for recipients to pay a credit risk premium. Loans may be extended for 100% of a project’s estimated cost with no explicit requirement for a dedicated revenue repayment stream.

We recommend adding four taxpayer safeguards similar to those in TIFIA. First, restrict RRIF loans to 33% of the project’s budget. Second, require that senior debt of the project carry an investment-grade rating. Third, require that the loan recipient document the existence of a revenue stream dedicated to retiring the RRIF and other loans. And fourth, require that in the event of project bankruptcy, the RRIF loan moves to equal status with the primary debt (called the “springing lien” provision in TIFIA).

Why are these safeguards needed? The current RRIF program in effect invites applicants to apply for loans for risky, speculative projects. RRIF should be reconceived as providing supplemental, gap-closure financing, like TIFIA, rather than being the primary or sole source of a project’s financing. The speculative XpressWest high-speed rail project was ultimately rejected by the FRA, but only after strong objections were raised by Members of Congress. That project had requested a RRIF loan of $5.5 billion, which was between 80 and 100% of the estimated project budget. Limiting RRIF loans to a maximum of 33% (as in the original TIFIA legislation) would make it clear that projects must demonstrate their economic and financial feasibility by being able to attract primary financing (investment-grade senior debt) from the capital markets, with RRIF providing supplemental, gap-closure financing. Together with the requirement for the applicant to document the existence of a dedicated revenue stream, these reforms would provide significant protections for federal taxpayers, akin to those of the successful TIFIA program.

This change could save taxpayers billions. The taxpayer protection provisions would reduce the number of risky, speculative loan applications, thereby saving FRA time and money in processing them, resulting in modest FRA budgetary savings. More broadly, the provisions would protect taxpayers from future defaults that could result in billions of dollars in unpaid RRIF loans.

 

Mar 02, 2015 | Leave a Comment | by
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