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66 comments on Are Politicians Ready for This Line of Argument?

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memmel on December 3, 2006 - 3:59pm Permalink | Subthread | Comments top

As far as the California bond issue goes. I think California just signed the death warrant for spreading burbs.

Again I implore people interested in peak oil to investigate the cost of road building as oil prices increase and as technology leads to less of the lower grade products like asphalt. What this mean is that if you plot costs vs miles of roads the current bond issue will not produce anywhere near the roads that people think it will and thus it will not allow the sprawl to continue. Next even concrete is not immune but its tied to the price of coal and gas as these go up concrete goes up same for steel.

See.

http://money.cnn.com/2005/10/27/news/construction_costs_soar/index.htm

I suspect the cost of road construction will double about every two years as we pass peak oil combined with the other
economic effects this bond issue has basically bankrupted California and will never result in any growth.

Whats going to happen in CA. First the current economic recession will greatly reduce the amount of tax money available for paying on the bonds. Peak oil will ensue it extends basically forever or until the economy changes dramatically. So CA will default. Raising taxes won't work in a declining economy since it will simply drive more business and people out of the state.

I'm not sure what to do now since the state and voters have shot themselves in the head.

The only solution I can think of is if its possible to legally vote on the bond issue again and redirect the monies to electric rail and urban building. This may be possible and it would allow CA to save itself. I have my doubts.

I posted before that in order to expand suburbia again and keep the party rolling you needed a huge investment in infrastructure to support ever distant suburbs it looks like CA has chosen this route.

This in my opinion along with the current economic climate California the first place that suburbia will fail in a big way outside of Detroit. Detroit is of course failing but the underlying failing of the auto industry clouds the issue.

I hope that future historians correctly understand this event.

For the lack of a shoe ( Asphalt ... )

Kuntsler you should do a detailed review of whats going to happen to California. Your right about the death of suburbia but I think you miss that the cause is the price of Asphalt and to a lesser extent concrete.

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Hothgor on December 3, 2006 - 7:23pm Permalink | Subthread | Parent | Comments top
The only way for Asphalt prices to double every 2 years is if the US motorist refuse to adapt to the Peak Oil crisis and keep driving themselves over the cliff.  Fortunately, the US can dramatically cut its oil use by using EVs, PEHVs and Light Rail.  And Asphalt production isn't exactly the creme of the crop so to speak of oil use.  A lot of it is recycled when the roads are repaved.  I for one don't see the price of Asphalt doubling every 2 years because of peak oil.
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Engineer-Poet on December 3, 2006 - 11:23pm Permalink | Subthread | Parent | Comments top
From what I've found in my digging, it looks feasible to make an asphalt-like substance by medium-temperature decomposition of biomass (heavy bio-oil).

There is going to be some price at which it pays to turn garbage, green waste, etc. into asphalt for paving and roofing.  Biomass to asphalt?  Of course; how do you think it was done the first time?

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memmel on December 3, 2006 - 11:54pm Permalink | Subthread | Parent | Comments top

The problem is at what cost ?

And this would have to compete agianst ugrading the heavy oil using methane as a hydrogen source. Underlying the loss of asphalt is the fact its now cost effective to upgrade heavy organics and soon coal using hydrogen.

So it looks like sooner than later rural roads will degrade. The population along the road cannot afford to maintain it.
Property values along this now gravel road will plumment and so people will move closer in.

This movement of people into incorporated areas with a larger tax based will cut the throat of the county tax structure since you have in a sense a reverse tragedy of the commons taking place lets call it abandoning the commons. This leads to lower tax assesments in the county areas and somewhat higher tax base in the cities.

Sure at some point the density is high enough to cover the costs of roads but suburbia is dying in the process. And understand this inward migration is of people that have basically lost everything as their property devalued so they are not going to cause major increases in the tax base.

Finally I don't disagree that there are expensive choices, I just am pointing out that I think that suburbia is now toast. Local governments are the bottom feeders of the tax pyramid and they are the first that will be unable to handle the squeeze of higher road costs and collapsing economy.

Or course for the US the real problem is a lot of our wealth is tide up in these far flung rural mini farms and suburbs.

I think the recent  rise in the price of oil coupled with the housing bubble precipitated events its not just peak oil but the two together make suburbia no longer tenable.

And back to California and its bonds and road spending. California will eventually default and file bankruptcy. The state just made a huge mistake.

I thus think I understand how America will crumble.
Continued economic recession and rising road building costs will together cause crisis after crisis as increasingly larger government entities default on bonds and go bankrupt.

How many places can afford asphalt that's 5-10 times more expensive than today ?

Expensive asphalt won't save the day here. And no government has the balls to stop supporting the road structure and flip over to electric rail they will simply bleed to death.

This gives another indicator to watch thats a lot easier to follow than trying to follow individual bond issues and road construction. We just need to look for a rise in bond defaults by local goverments since eventually that is in my opinion the big initial effect of peak oil.

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Engineer-Poet on December 4, 2006 - 8:11am Permalink | Subthread | Parent | Comments top
What you're missing is that this is bio-oil.  It's made by a relatively simple thermal process from biomass... which is a local product.  If the rural areas don't feel like going back to dirt roads (and many might), they can make their own asphalt.
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Hothgor on December 4, 2006 - 10:31am Permalink | Subthread | Parent | Comments top
Could you go into some more detail on this process?  I'm very curious to hear about yet another reason why we aren't doomed :P
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Engineer-Poet on December 4, 2006 - 5:30pm Permalink | Subthread | Parent | Comments top
http://www.unh.edu/p2/biooil/bounhif.pdf
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memmel on December 3, 2006 - 11:25pm Permalink | Subthread | Parent | Comments top

The recyling when roads are repaved is a bit of a myth.
This only happens when they do a major reconstruction and remove the top several layers. So sure its reused to some extent when they rebuild the roadbed. But to maintain the roadbed every few years they need to add a fresh layer of asphalt if they don't the road bed degrades forcing the major reconstruction. The time scales vary with climate and I've post before what they are. As far as prices doubling they have in the last few years. Assuming they double agian is simply using a business as usual scenario.

http://www.dot.ca.gov/hq/esc/oe/asphalt_index/ACCHART1.gif

On the other side I'm using what I call a reverse Export Land Model for California. The recent rise in property values have resulted in a massive increase in assessed property taxes. The problem is no one is paying these taxes.
This mean that more and more properties have tax liens on them that have to be cleared before they can be sold. And these are not small liens. 5,000 dollar plus. And this is on top of foreclosuers etc comming.

In short California cannot maintian the current road beds with todays tax dollars. The revenue will drop dramatically as the tax base erodes over the next few years. And the cost will probably double over the next few years.

They end story is that state and local goverments will begin to default on bonds soon. This seems to be the real first casuality of the combination of peak oil and recent economic games.

One thing a lot of people looking at peak oil have overlooked is that the combination of skyrocketing road construction costs goverments defaulting on bonds and dropping tax base results in the growth machine of suburbia grinding quickly to a halt as oil prices increase.

Bond defaults are whats going to cause a big unwinding of the suburban ponzi scheme. And coupled with this is far less road for the dollar going forward.

The bond defaulting is the key ingrediant for the death of suburbia and its underlying cause is two fold massive increase in road/infrastucture costs the overlapping housing bubble bursting. Tied in of course will be massive losses from investments.

This old story will be just a small one soon.

http://www.gsm.uci.edu/~jorion/oc/case.html

The key to the collapse of suburbia and then our economy is local then state goverments defaulting on bonds.

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fleam on December 4, 2006 - 12:51am Permalink | Subthread | Parent | Comments top
Another excellent memmel post.

The upcoming housing crash is going to really hurt tax revenues, the avg. CA house tax is something like $1000 a month! 10 grand a year, it's up there. I think a lot of home-0wned would love to have taxes of only $5k a year....

So, as this all crumples like the zones on a Volvo, tax revenues in CA are going to plummet.

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memmel on December 4, 2006 - 1:35am Permalink | Subthread | Parent | Comments top

And who is going to take out a zero down 125% arm on a property with a huge tax lien ?

All of the stuff going into forclosure next year is going to have major tax liens agianst it and a lot of home for sell will as well. As you said the real cost in a lot of places is about a thousand a month figure two years of liens and your looking at 20k out of pocket just the get the liens off the place. Much less all the other costs.

Of course this means the sale price of the homes with liens is at least 20k less than comparable homes if not more.
I know if I walked into a situation where I had to pay 20k cash to remove the property liens I assure you I'd ask for a lot more off the house, more like 50-100k ( I'm a bastard ) The fact that the price was lower because of liens is not reflected in the selling price so it will force a major downward push on all home prices.

Actually of course I'd not touch any property in California till I knew the tax base and assessments were stable.
And remember that all these people selling at a loss still have to pay taxes to the feds on there loss.
I came close to bankruptcy in the dot com crash and it was a rude awakening to find out I had to pay taxes on money that was written off. I'm not sure how much you personally end up owing in a foreclosure loss but my experience is its not pleasant.

Now its intresting to conjecture on how this finicial meltdown will effect oil usage in the US. At the individual level your talking about someone losing their home and moving into and apartment I assume they will get one closer to work or more likely in the mess leave the state and agian rent closer to work. But the monkey wrench is in this situation your probably talking about employment for two married people so the total commute may not change that much.
If they flee california your looking at several thousand miles of fuel use for the move which will limit any savings the first year. I suspect that the unwinding of suburbia will not actually result in fuel savings in America for several years if at all.

Certianly the move back to renting in America will make it a lot easier for enlightened cities that adopt electric rail and trolleys to draw in population at some point. So the fact that it looks like suburbia may die and early death is not a bad thing.

Whats funny is I think a lot of people are just now realizing the extent of the problem.

I'd not lose sleep over this bypass worry about paving the main street and what your going to do when the State of California files bankruptcy in three years.

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