DrumBeat: January 25, 2008
Posted by Leanan on January 25, 2008 - 9:51am
Topic: Miscellaneous
Oil prices: OPEC's high wire act
The cartel struggles to keep oil prices high, but not high enough to kill the economy. Long term, are they investing enough to meet worldwide demand?...Over the next two decades, the world will need to ramp up oil production from 85 million barrels a day currently, to about 117 million barrels a day, according to the Energy Information Administration. Nearly two-thirds of that new production is expected to come from OPEC.
There have been well-publicized concerns some oil-rich states are tapping the profits from their nationalized oil companies and using the money not for re-investment in oil production, but to fund social programs like roads, schools and healthcare. The concern isn't that poor people are getting services, it's that the world won't have enough oil.
But experts say that's mostly unfounded.
Peak Oil Passnotes: Stagflation Beckons
This week, in fact this year, has seen the equity markets fall and fall hard. Maybe not plunge back to the range they were in between the years 2002 and 2005, but the volatility and the worries over the economies of the U.S. and UK has taken the edge off current thoughts of growth.In turn you would expect to see the price of oil tanking. Well, it has fallen, as low as $87 per barrel. But then again one year back it was at $49 per barrel, and no one was really talking about recession. So one can hardly call the figure of $87 a slump.
PDVSA debt rise will not affect ratings-Moody's
NEW YORK, Jan 25 (Reuters) - The massive debt increase in Venezuela's state-owned oil company PDVSA will not affect its credit ratings, Moody's Investors Service said on Friday, adding that it expects the company's debt load to keep growing in the future."PDVSA's financial leverage remains relatively modest, with total debt-to-capitalization in the area of 20 percent, the ratings agency said in a statement.
BP trims Alaska oil spending plans on tax overhaul
ANCHORAGE, Alaska (Reuters) - BP has shelved a $1 billion Alaska heavy oil project and trimmed a planned boost in 2008 capital spending due in part to the state's recent tax overhaul, company officials said Friday.
Ameriwest Energy: 4.9 million barrels of oil recoverable with CO2
Ameriwest Energy Corp has announced the results of a reservoir study of the South Glenrock C Unit (SGCU) located in Converse County....According to the study's base case, the estimated remaining OIP in the C Unit is 17.67 million barrels of oil (MMSTB) of which 4.9 MMSTB may be recovered from a continuous CO2 injection program over 25 years, according to detailed simulation predictions.
Valero suffers refinery fire in Caribbean
Valero Energy Corp. officials experienced a fire Friday in the company's Aruba refinery in the Caribbean. As a result, the entire refinery has been shut down.The fire began in a vacuum tower of the refinery at around 9:45 a.m. Central time and firefighters in Aruba extinguished the fire at 11:15 a.m. One Valero employee was treated for heat exhaustion, but no injuries were reported. All non-essential personnel have been sent home. The refinery employs 775 individuals.
Trader says gas debt talks with Ukraine fail
MOSCOW (Reuters) - A gas trader, half-controlled by Russia's gas export monoploy Gazprom, on Friday said it had failed to reach a deal with Ukraine over a $598 million Ukrainian debt for gas supplies from Russia and Central Asia.Analysts and market observers closely follow all pricing and debt disputes between the two countries, as Ukraine accounts for 80 percent of Russia's gas transit to Europe.
Brazil sugarcane industry eyes EU biofuel market
SAO PAULO (AFP) - Brazil, the world leader in making ethanol from sugarcane, is homing in on Europe's biofuel market following a decision by the European Commission to combat climate change by reducing the dependency on petrol.The EU plan calls for biofuels to be used in at least 10 percent of fuels used in transport in the 27-nation bloc by 2020.
For Brazil's sugarcane industry, the news is seen as a golden export opportunity.
Nigeria oil exports to fall sharply in March-trade
LONDON (Reuters) - Nigerian crude oil shipments are expected to tumble sharply in March because of maintenance work at the Bonga field and a force majeure at the Forcados terminal, traders said on Friday.The March loading schedule is estimated at around 1.72 million barrels per day, down 420,000 bpd from the previous month.
Plenty of oil remains, Exxon manager says
As a public affairs manager for ExxonMobil Corp., Sara Tays is frequently asked if the world's oil supply is on the verge of running out.Tays, the featured speaker at the Greater Beaumont Chamber of Commerce's luncheon Thursday, said this concern was first raised in the late 19th century.
Demand has increased exponentially since then but new technology is constantly uncovering new supplies and the end is not yet in sight.
OPEC to monitor US price impact - Venezuela oil min
CARACAS (Reuters) - OPEC will monitor the impact on oil prices of a U.S. economic slowdown at its meeting next month, although it is premature to say if America's problems will hurt crude values, Venezuela's energy minister said on Friday.
Venezuelan crude oil sales to the US bounce back
Similarly to the previous months, Venezuelan crude oil shipments to the United States slightly increased in November compared to the previous year, and particularly to November 2006, but byproducts exports reinforced their downward trend.
Buying local helps the neighbors
Independent merchants are seeing a growth in the desire among their customers to buy local, according to a nationwide survey of more than 1,300 independent retailers. The survey -- commissioned by the Independent Business Forum, a trade association network, and administered by the Institute for Local Self-Reliance -- found that even in during these tough economic times, small businesses are doing OK, especially when they play up “their local ownership and community roots.”
High oil prices prompt a scramble for Africa
Even if prices tumble, interest in West Africa is likely to be sustained by its strategic location between the U.S. and Asian markets, and the low sulphur content of its oil which makes it less corrosive to refine and more environment-friendly.But with talk of "peak oil" -- a plateau in world production -- gaining currency among even seasoned oil executives, any prolonged decline in petroleum prices seems unlikely.
StatoilHydro shuts Oseberg South field due storm
OSLO (Reuters) - Stormy North Sea weather has forced StatoilHydro to shut its 54,000-barrel per-day Oseberg South oilfield, the Norwegian energy group said on Friday, adding that it sought to restart production on Saturday.StatoilHydro also reduced manning at platforms at four other North Sea fields but plans to continue production at Snorre, Huldra, Visund and Kvitebjoern.
Iraq expects to raise oil production
Iraq expects to increase oil production this year to 3.7 million barrels a day and hopes to sign contracts to boost the output from oil fields that aren't producing to capacity, Iraq's oil minister said.Iraq's oil production is at its highest since before Saddam Hussein fell in 2003, Hussein al-Shahristani said in an interview Thursday night on the sidelines of the World Economic Forum's annual meeting.
Russia Novoil refinery halts diesel output
"Diesel production at NovoUfimsk is on halt for a third day and people say it will take about a week to fix the problems," one trader, a regular offtaker of volumes from the refinery, said....Another trading source said the Ufa group was behind the promised schedule of diesel deliveries, both for the domestic and export markets, but the management has pledged to catch up with the schedule, especially on the export front.
New energy deal to make Serbia major hub for Russian gas supplies to Europe
MOSCOW: Russia signed gas and oil deals worth US$2.2 billion (€1.5 billion) with Serbia Friday as part of a long-term effort to lock in its role as a major energy supplier to Europe, a push that worries some Western leaders.The two agreements, which Russian officials said would make Serbia an important hub for the distribution of Russian gas, are just the latest bid by Moscow to build or acquire European pipelines, storage facilities, ports and energy companies.
Price watchdog growls at petrol companies
THE ACCC finally declared war on the oil industry last night, saying price gouging by greedy petrol companies was hurting every Australian.
Sheriff’s office gas fund request refuels debate
Sheriff Gobble asked the Finance Committee Wednesday for $195,000 from the county’s general fund to provide vehicle fuel for his department through the end of the fiscal year (June 30, 2008). Halfway through the budget year, his budget is almost exhausted.The sheriff also asked for an additional $30,000 for his vehicle maintenance line item.
The sheriff was severely criticized by County Mayor D. Gary Davis and Commissioner Jim Smith for taking no conservative action when it was first determined fuel funding was going to be insufficient for the year.
“In six months you’ve doubled your (fuel) budget and you’ve shown no intention to cut consumption,” said Mayor Davis.
UK: Massive wind farm 'turned down'
Plans to build one of Europe's biggest wind farms on the Isle of Lewis are set to be turned down, BBC Scotland understands.The BBC's Gaelic news service, Radio nan Gaidheal, has learned that Scottish Government ministers are "minded to refuse" the 181 turbine scheme.
More than 5,000 letters of objection to the proposals were received by the Scottish Government.
It is believed environmental concerns are behind the decision.
Bill Gates new project: Farming
DAVOS, Switzerland (CNN) -- Microsoft billionaire Bill Gates announced a new direction Friday as he pledged $306 million in grants to develop farming in poor countries, leading the charge for corporate responsibility at a major meeting of business chiefs...."If we are serious about ending extreme hunger and poverty around the world, we must be serious about transforming agriculture for small farmers, most of whom are women," Gates said.
Chinese farmers could earn more money by cutting their country’s coal consumption. Straw residues from agricultural production are becoming an appealing feedstock for cofiring in power plants.
Eating As If the Climate Mattered
Notably, all food at the NCSE conference was vegan, and there were table-top brochures with quotes from the U.N. report on the meat industry, discussed more below. And the IPCC head, Dr. Rajendra Pachauri declared, as the AFP sums it up, "Don't eat meat, ride a bike, and be a frugal shopper."
Warning that rising costs make livestock production untenable
NFU Scotland's livestock committee, comprising sheep and beef farmers, has warned retailers that significant shortages of product are on the horizon unless prices improve. There is concern that farmers are set to sell their breeding stock as rising costs make businesses unsustainable.The warning follows news that the pig industry is to stage a mass rally outside the Houses of Parliament on March 4.
China Halts Coal Exports Amid Shortage
SHANGHAI, China - China's Transport Ministry ordered ports on Friday to temporarily stop loading coal for export as the country struggles to meet domestic needs amid mounting power shortages....The Transport Ministry's emergency notice, posted on its Web site, ordered railways and other transport networks to make hauling coal and food a priority in coming weeks. Ocean shippers should stop loading coal for export and divert shipments, if needed, "for domestic thermal coal requirements," it said.
It warned of "severe" consequences for failing to comply with the order, to stay in effect through the Lunar New Year holiday in February and the annual session of the national legislature in early March.
South Africa Declares Electricity Emergency
CAPE TOWN, South Africa (AP) — South Africa will ration electricity, increase prices and encourage a switch to solar energy, all part of emergency measures now being undertaken amid power outages that have caused chaos and misery nationwide and threatened to choke economic growth.Neighbors like Botswana and Namibia, which rely heavily on South African energy exports, have also been badly hit by the disruptions in the region's economic and political powerhouse. The outages have undermined confidence in South Africa, with more incidents like the stranding of hundreds of people on tourism icon Table Mountain spreading through the media to other countries.
South Africa: Power cuts threaten 22,000 farming jobs
Harvesting is heavily dependent on cooling systems, and unscheduled power cuts have made it difficult to plan ahead. Government wants Eskom to commit to scheduled and unchanged two-hourly power cuts between 4pm and 6pm or 6ams and 8am when it's the coolest.
South Africa: Power cuts cost milk industry R100m a month
Disrupted irrigation schedules, lower milk yield by cows suffering from heat stress and damage to electrical equipment are adding to farmers' woes.They are particularly vulnerable to losses because milking is generally done early in the morning and in the afternoon, in peak power usage periods.
When one looks at the chronology of government policy-making, it appears that when the hard choices needed to be made, the decision was for guns before butter. More specifically, the government chose to spend billions of Rands on arms that we do not need (and in some cases do not have the capacity to use) instead of adequately investing in infrastructure to lay the basis for long term economic growth. This infrastructure includes diverse aspects, such as our road networks, water purification and sewage systems. Electricity generation and distribution is currently the most topical case in point.
Australia: Holiday petrol runs dry
Shell last night warned of looming shortages in the more expensive fuel after production problems at its western Sydney refinery.While the company claimed the shortages were tied to equipment failures yesterday, one Liverpool outlet said it had been dry since last Saturday.
Tajikistan: Citizens Ponder Bleak Future Amid Harsh Winter
The harshest winter in decades is plunging Tajikistan into a socio-economic crisis, as officials find themselves squeezed in a tightening vice of tough choices. The country currently is grappling with an energy emergency, with some areas now left totally without electricity. Efforts to solve the crisis, however, could cause a disastrous spike in inflation in a country where over 50 percent of the population lives below the poverty line.Temperatures in Dushanbe, the Tajik capital, have hovered around minus-20 degrees Celsius over the past few weeks. The minus-22 reading recorded in Dushanbe on January 19 was the lowest recorded temperature in the city since 1982. The country’s antiquated infrastructure has not been able to cope with the cold, prompting drastic cuts in electricity.
Energy Crisis Looms In Maryland
BALTIMORE (WJZ) ― With the average BGE Electric bill set to go up another $100 a year, Maryland is in the midst of an energy crisis.Blame the rising costs on a wholesale market that the state has no control over.
The new increases will mark an 85 percent total increase since deregulation.
During 2007 the Integral Program to Combat the Illegal Market detected 323 clandestine tubes connected to PEMEX installations.Of the 323, 296 hoses were found illegally installed to refining segments and the rest in closed areas, oil pipelines, and gas and basic petrochemistry lines.
Two secret tunnels were also discovered under construction to reach PEMEX segments last year, one in San Pedro de las Colonias, Coahuila and another in Mazatlan, Sinaloa.
India, France Agree to Talks on Nuclear Cooperation
(Bloomberg) -- Indian Prime Minister Manmohan Singh and French President Nicolas Sarkozy agreed to discuss a civilian nuclear-cooperation agreement, which may help India to plug a power shortage using reactors from companies such as Areva SA.
Climate change ‘will lead to warfare over food and water’
Climate change will have a long-term impact on the nation’s security as wars break out over food and water supplies around the world, a report said yesterday.Hundreds of millions of environmental refugees will seek new places to live, with many of them heading for Britain, according to the report for the Oxford Research Group.
...It was “almost certain” that, by 2050, droughts, food shortages and flooding would lead to the mass movement of up to 200 million environmental refugees, the paper, An Uncertain Future: Law Enforcement, National Security and Climate Change, said.
The Peak Oil Crisis: The Future of Cars – Part 1
Since the end of World War II, the private gasoline-powered automobile has become the center of life in America. Our suburbs, commerce, recreation, religion, indeed nearly every imaginable aspect of our lifestyles has been centered around the mobility the ubiquitous, affordable private car has brought us. The lure of the private automobile is not unique to America. There are few other cultures in the world today that are not trying to emulate America as soon as their economic circumstances permit – think China and Russia. There now are about 240 million cars, light trucks, and motorcycles in the U.S. (not to mention another 700 million or so elsewhere in the world). The number is increasing by nearly 4 million each year. Something has got to give.
Shell says shuts Australia gasoline unit for months
SYDNEY/SINGAPORE, Jan 25 (Reuters) - Royal Dutch Shell (RDSa.L: Quote, Profile, Research) said on Friday it will keep a gasoline-making catalytic cracking unit at its 85,000 barrels per day (bpd) Clyde refinery in Australia shut for several months following an unplanned outage.The shutdown at Clyde and the partial closure of Shell's 125,000-bpd Geelong plant, have prompted the refiner to ship in hefty volumes of clean products from Singapore, which traders said could be largely gasoline, raising prices by $2-4 on Friday's Asian close.
Shell Seeks Gasoline in Singapore as Sydney Stations Run Short
(Bloomberg) -- Royal Dutch Shell Plc sought to buy cargoes of premium gasoline in Singapore after a refinery fault in Australia led to fuel shortages in Sydney.
Gold soars above US$920 as power crisis closes mines
SINGAPORE - Gold and platinum hit all-time highs on Friday after a power crisis closed South African mines, with dollar weakness, firm oil and expectations of more interest rate cuts in the United States providing additional support.South Africa's three main gold producers and the world's biggest platinum miner suspended production at all their mines in the country on Friday due to a power crisis, helping send precious metal prices to new highs.
Sasol says power woes to "impact on production"
JOHANNESBURG (Reuters) - Sasol, the world's top maker of motor fuel from coal, said on Friday its output would be affected by a request to cut its electricity demand, but was able to maintain output for the "foreseeable future".South Africa is in the grip of a national power emergency, and the state-owned utility Eskom has asked big power consumers to reduce their demand for electricity.
World's top oil consumers discuss record crude prices
Brussels/Davos - The energy ministers of the world's biggest oil consumers held a conference call on Friday to share their concerns over high world oil prices and urge China and India to help stabilize the situation, officials in Brussels said.
IEA Calls OPEC Group for Gas Producers an 'Own Goal'
(Bloomberg) -- The International Energy Agency said setting up an OPEC-style group to control natural-gas supplies and prices would be a mistake because utilities might increase electricity production from other sources of energy."If such a gas forum is formed it gives the wrong message to consumers and could be an own goal," Fatih Birol, the IEA's head of research, told a press conference today at the World Economic Forum in Davos, Switzerland. Utilities may worry that such an organization would be able to control gas prices and opt for other sources of fuel, he said.
Bulgaria sees South Stream pipeline operational by 2013
SOFIA (Thomson Financial) - A 10 bln eur pipeline carrying Russian gas to Europe via Bulgaria should be up and running by 2013, Bulgarian Economy and Economy Minister Petar Dimitrov told a parliamentary debate on the subject today.
Gazprom strikes new supply deal with Lithuania's Lietuvos Dujas
VILNIUS (Thomson Financial) - Lithuania's Lietuvos Dujos gas distribution company signed a new supply deal with Russian giant OAO Gazprom, a company spokeswoman said today, a move that could hit customers' pockets hard.The spokeswoman confirmed that a deal had been inked but refused to give details of the amount and price of the gas, saying the information was confidential.
However, new gas prices announced by Lietuvos Dujos yesterday evening showed an average increase of 67 pct to 1,250-1,620 litas (531-688 usd) per 1,000 cubic metres, depending on the amount consumed.
Former chairman of China's No. 2 oil company faces corruption charges
BEIJING: The former chairman of China's No. 2 oil company, Sinopec Corp., has been expelled from the Communist Party and referred to prosecutors on charges of corruption and bribe taking, state media reported Friday.Chen Tonghai "abused his position to obtain improper benefits for his mistress and others and led a corrupt life," state broadcaster CCTV reported on its main evening national news broadcast.
20,000 wind turbines - plus a 15% rise in electricity bills
The cost of household electricity bills is expected to rise by up to 15 per cent if Britain is to meet compulsory climate change targets announced yesterday.
Feds Launch Investigation Into Oil Companies
BIDDEFORD, Maine -- The federal government’s Office of the Inspector General is launching an investigation into the business dealings at two of the three oil companies owned by Curro Industries in Biddeford.Curro is accused of taking money from customers then failing to deliver fuel.
Brown calls for a 'green' World Bank
DAVOS (AFP) - Prime Minister Gordon Brown called Friday for the World Bank to assume an environmental role capable of taking on the global challenges posed by climate change.
UN climate envoy expected to become South Korean PM: reports
SEOUL (AFP) - The United Nations special envoy on climate change is expected to be nominated as South Korea's next prime minister, media reports said Friday.The nomination of Han Seung-Soo is likely to be officially announced next week, Yonhap news agency quoted a source close to president-elect Lee Myung-Bak as saying.
EU aims to adopt energy, climate laws by spring 2009: presidency
BRUSSELS (AFP) - The European Union aims to enact sweeping new legislation on energy and climate change by the spring of 2009, the EU's Slovenian presidency said Thursday."We are counting on a constructive approach and support of the member states and the parliament for a final adoption of the package by spring 2009," said Slovenian Environment Minister Janez Podobnik.
Japanese PM pledges initiatives on climate change, development
LONDON (AFP) - Japan's Prime Minister Yasuo Fukuda pledged Tokyo-led initiatives on climate change and economic development in the near future in a comment piece in the Financial Times on Friday.Writing ahead of a speech to the World Economic Forum at Davos, Switzerland, on Saturday, Fukuda wrote that "combating climate change and fostering development, particularly in Africa, are two of the issues that Japan, as chair of the 2008 meeting of the (G8) ... is pushing hard to address."
He wrote that he feared that "recent instability in the world economy might hijack the debate and dominate the agenda."
EU Aims to Choke Carbon Emissions
The work of the European Union is often seen as technical, dull and remote: It's hard to gin up much general interest in, say, another green paper on financial regulation, however incisive it may be. But today's announcement in Brussels was a blockbuster: a sweeping package of measures to combat climate change that sets a global standard and means major changes for how Europe gets its energy.
Scientific Group Releases New Statement on Climate Change
The world’s largest society of Earth and space scientists has released a new statement on climate change that unequivocally names human activity as the cause of global warming."Earth's climate is now clearly out of balance and is warming," according to the first paragraph of the new statement by the American Geophysical Union. The statement cites many components of the Earth system that are changing at unnatural rates, including rising global temperatures, ice melt, sea level rise and the distribution of precipitation around the globe.
"The facts are well-established now that the Earth's climate is warming," said Bette Otto-Bliesner of National Center for Atmospheric Research in Colorado at a press conference today in Washington, D.C., held to release the statement.
Dulles Rail Project All but Dead
Here is the letter that the FTA sent to the Governor.
There are already a lot of recriminations about this. There are a lot of people that are upset at the no-bid contract that was awarded to Bechtel (lead contractor for the Big Dig), and thus there are concerns about substandard construction and cost overruns. And of course are upset at the way Bechtel pushed for aboveground rail in a busy business district, and ignored requests for an underground route.
There were concerns on the part of the FTA that there was no funding plan in place for the 2nd half of the project (that would take the line out to the airport).
There were concerns that the Airports Commission doesn't have experience managing large projects like this, which of course increases the danger of cost overruns.
There is of course talk about how the Feds under the current administration really don't like rail at all in any form, and would rather build either roads or BRT. They changed the scoring system to make it much harder to get any project off the ground. Of course they don't have any problems with shoveling money into Iraq, but that's another matter entirely.
One question I have for Alan is why is it so (*&(*& expensive to build heavy rail. 5 billion for a 23 mile segment seems like a lot, but I don't have anything to compare against, so perhaps it is a reasonable estimate for this type of project.
Truly hilarious that the feds would be complaining about no bid contracts. They never met a no bid, sole source contract they didn't like. But that would be for truly useful projects like Iraq. Not that I support sole source contracts. But this administration has zero credibility in managing its way out of a paper bag.
And, of course they hate rail or anything that would interrupt are rapid descent over that large cliff called peak oil.
THIS IS AN OUTRAGE !!!
A last minute demand without notice for impossible to meet conditions !
Please note that the federal share (in the federal city) was only 18% !
Years of wrangling and effort to raise the monies, and then blindsided by the pro-oil ideologues of the GWB administration. A blatant bias against non-oil transportation. A badly needed project.
THERE IS NO EXCUSE AND ZERO JUSTIFICATION FOR THIS KILL !
Utter and complete BS !
Best Hopes for the next 361 days,
Alan
PS: The Federal process, to Ration by Queue (and the Dulles extension has waited decades in queue) inherently raises costs and complexity. It is NOT designed to lower costs, but to raise them.
A comparable might be the CTRL projects to bring high speed rail into downtown London. 5.2 billion pounds (about $10 billion) for 108 km (67 miles). However, the Dulles extension need not have cost as much, but then it would NEVER get federal funding !
Who did you think was going to pay for Iraq
and the "Stimulus" package?
"Systems collapse not primarily because of rebellion from below
but because of the weaknesses of the dominant classes and the impossibility of
their maintaining their level of gain and privilege. It is only when the existing
system is weakened in terms of its own logic that the push from below can
possibly be effective."
-Immanuel Wallerstein
The federal share of the project was $900 million (about 18%), the balance from state and local sources.
But raising $4+ billion from local and state sources was a difficult challenge that took lots of political and economic deals. Now unwound by a single bureaucratic move.
Best Hopes for 90% Federal Funding for Urban Rail, just like the funding for the Interstate Highway System,
Alan
More and more, depending on the Fed will be futile.
Better is to go the Eisenhower Interstate route:
That this is indispensible to the Pentagon.
Pentagon rail to Dulles?
Yeah, I know - I live in the middle of this area. If this project had gone through, we would have a station walking distance from home. They had actually gone so far as to start some of the utility relocation.
It is far too early to say where things go from here. There is a public meeting next Monday of the task force that the county has set up to work up a new master plan for the area - I would be tempted to go to see what the consensus is.
Our state government isn't in a good shape right now. The House is held by the Republicans who refuse to consider *any* form of tax increase whatsoever. Our state gas tax is among the lowest in the nation, but any increase whatsoever is out of the question. Yet 'transportation' is always one of the things highest on the list of things that people want (primarily more roads, I guess, but things like rail and bike lanes also have trouble).
Last session they went so far as to pass a set of "abuser fees" - essentially fines to people with bad driving records can can amount to thousands of dollars, and the author of the bill was of course an attorney who specializes in traffic cases. No, no conflict of interest there. That was the Republican solution to raising money for transportation projects. The outrage has been so great that they are in the process of undoing that - even the author of the bill has bailed on the concept.
I live in the area as well. The Post article mentions a new 1% car tax on new vehicle sales, and three bills under consideration contain a gas tax increase.
No tax at all up to 2.0 liters, then $500/liter for used and $1,000/liter for new each time they change hands. Utility vehicles might get different treatment, but they have to be utility vehicles, not this minivan/SUV stuff sneaking through.
Last year I had to take a flight to DC. I chose National over Balt or Dulles in spite of the higher cost and scheduling problems. The ease of getting on the subway made all the difference in the world. Still impressed by it.
Don't you mean Reagan National
Yes, Ronald Reagan National Airport over Baltimore-Washington International Airport or John Foster Dulles International Airport. With all the acronyms on this site, I thought an abbreviation might be tolerated.
BTW, wasn't it George Washington National Airport originally? And how does it keep the name National when, I think, international flights leave from there?
I can drive MY VEHICLE on any road in the USA. Railroads, including the right-of-way, rail beds and rail traffic control systems are all privately owned by companies with no desire to support efficient low cost rail systems with any real level of competitioon between companies supplying service on the rail system.
If the government would acquire all the railroad right-of-way, trackage and railroad traffic control systems nation wide and then open access to those rails to any private enterprise, Then I would give strong support to rail. This type of public/private operation works very well for both highways and airways and could work equally well for rails.
Can you imagine if trucking companies owned all the highways and only the one company that owned each segment of the road could operate on that segment and NO public vehicles were permitted on the road? Or if all the airways were owned by the individual airline companies and only each airline that owned that particular part of the airways was allowed to operate in that air space and NO corporate/private avaition was allowed to operate at all?
I can not give support to continued massive financial support for antiquated structures like our current all private rail systems. It simply does not work to the benefit of the public. Even 100 to 150 years ago people used horses and horse & buggies for transportation becasue railroads were not organised to provide the transportation they needed.
In my dreams, each state would have a single RR system. It would be owned by the public, but not by the government. Instead, an elected board of trustees would be responsible for operating the system in the public interest, and be accountable directly to the voting public. If people wanted more/better rail service, all they would need to do is vote in trustees that were dedicated to doing that, and to pay the increased fares that this would require. Those wanting absolutely lowest fares could vote for that ticket, and they would then get what they pay for. Providing the citizenry with a direct political feedback loop in addition to the economic feedback loop of the marketplace would best assure an outcome that is both socially and economically optimal.
This arrangement would cover both passenger and freight, which would all be under the same management. This would eliminate the problem of Amtrak being a 2nd class citizen because it doesn't own the rails it runs on.
Routes that crossed state lines could be operated on a cooperative or joint-venture basis between the two neighboring states. I would not envision any route that ran longer than between two cities; traveling longer distances by rail would require changing trains at each city.
This arrangement would get the federal government out of the railroad business altogether, except possibly to arbitrate any disputes between states. It would also get corporations out of the railroad business.
I think this would work great if we could ever get it set up. Working out the financing for the initial buyout, and getting both the FedGov and the corporations out of the way would be the really difficult part.
Community investment trusts. Doesn't have to be only at state level, but could work fine at muni or regional level too. Requirement that ownership, investment and control remain within a bounded geographic area. That form of ownership is a very good replacement for corporations. Which, of course, is why corporations try to stop them, a classic example being the big telcos attacks on muni wireless and the demise of community cable tv.
Historically, it was this sort of coop that wired and powered the rural areas in US.
cfm in Gray, ME
I can drive MY VEHICLE on any road in the USA.
Nope. A few 'roads' have restrictions. Like number or people, weight, or if you have or have not paid a toll.
If the government would acquire all the railroad right-of-way, trackage and railroad traffic control systems nation wide and then open access to those rails to any private enterprise, Then I would give strong support to rail.
Not necessary - under the natural monopoly concept, the government can say 'yes you own the railway, now you must allow others on it at X regulated price'
Wallerstein is merely paraphrasing Aristotle, The Politics.
It is always easier to retain power than to seize it, thus the old rulers shall always be considered the responsible party for their own demise.
Wallerstein gets credit for paraphrasing the best, you would enjoy reading from the original.
Their mistake was in asking for federal funding at all. I'm beginning to come to the conclusion that the FedGov is only going to be part of the problem and not part of the solution, and should therefore be bypassed, ignored, and defied to every extent possible by those that actually are trying to solve problems. The more local the funding and control of a project is kept, the more likely it will be to actually succeed. This is the new paradigm.
We've gotten so used to the FedGov being a limitless trough from which a limitless number of pigs can be fed. That is quickly coming to an end. Between the consequences of peak oil & other resource scarcity, the damage starting to be done by GCC, the enormous waste of Iraq and other Bush boondoggles, the mountain of debt, the massive trade deficits and hollowing out of the US manufacturing base, etc. -- all of that is adding up to bills starting to come due now. The US is about to enter an era when the FedGov is going to find itself so constrained that it won't really matter all that much who is in charge, they won't be able to come up with the money to even keep existing programs going, let alone fund any new initiatives.
State and local governments are going to be under severe fiscal stress also. Fortunately, when it comes to transport projects, there is a projected cash flow from user fees that one can work with. The trick will be to come up with a way to package the deal so that the debt service can be covered even with relatively conservative and pessimistic assumptions. This won't work everywhere, but as energy prices rise and ever more people find themselves really needing mass transit, more and more projects should become financially viable. This assumes that the muni bond market at least can be kept afloat.
The US is about to enter an era when the FedGov is going to find itself so constrained that it won't really matter all that much who is in charge, they won't be able to come up with the money to even keep existing programs going, let alone fund any new initiatives.
That sounds remarkably like:
... They will be lucky to be able to answer the phones...
by Kunstler.
State and local governments are going to be under severe fiscal stress also
The state and local gov's will be bankrupt. Between their bonds going to zero worth(via Ambac et al insolventency) and lower revenue via lower taxes.
This assumes that the muni bond market at least can be kept afloat.
This is assuming alot I believe.
As the next wave of Loan Resets hit this summer, you are going to see 1929 crash next October.
$2 Trillion (that's 200 million million) of losses exposed between now and then.
Write that one down. 1929 Next October.
Warren Buffett is supposedly riding to the rescue for the muni bond market. I don't know if he can pull it off, but he might be able to. That isn't the sector that is particularly problematic right at the moment.
Some states and municipalities will be in severe fiscal stress and may go under, but I wouldn't be so quick to assume that all will, and certainly not all at once.
'That isnt the sector that is particularly problematic right at the moment.'...I beg to differ...'Traders are pricing in a 71% chance that MBIA will default in the next five years and a 73% chance that AMBAC will default in the same time period.' 'The triple-A credit rating of the bigger bond insurers is crucial because any demotion could lead to downgrades of the $2.4 trillion of municipal and structured bonds they guarantee.' 'If credit insurers turn out to have inadequate reserves, the credit default swap (CDS) market may well seize up the same way the commercial paper market did in August 2007. The $45 trillion of outstanding CDS is about five times the $9 trillion US national debt. The swaps are structured to cancel each other out, but only if every counterparty meets its obligations. Any number of counterparty defaults could start a chain reaction of credit crisis. The Financial Times reported that Jamie Dimon, chief executive of JPMorgan, said when asked about bond insurers: "What [worries me] is if one of these entities doesn't make it ...? The secondary effect ...? I think could be pretty terrible." Even Warren Buffet cant come up with $2.4 trillion to bail out the bond insurers. As I understand the situation Mr Buffet has started a new bond insurance company and has limited his involvement to taking on only solid risk. I have seen no news of Mr Buffet involving himself in existing bond insurance comapanies.
http://www.atimes.com/atimes/Global_Economy/JA26Dj05.html
...snip...'Maintaining an AAA credit rating is of utmost important to bond insurers like MBIA because they need a strong credit rating in order to guarantee debt. Moody's, Standard & Poor's and Fitch are all reviewing the financial strength ratings of bond insurers, which write insurance policies and other contracts protecting lenders from defaults'...snip...
For the insurers to maintain the necessary triple-A rating, their capital reserve would have to be repeatedly increased along with the premium they charge. There will soon come a time when insurance premium will be so high as to deter bond investors. Already, the annual cost of insuring $10 million of debt against Bear Stern defaulting has risen from $40,000 in January 2007 to $234,000 by January of 2008. To buy credit default insurance on $10 million of debt issued by Countrywide, the big subprime mortgage lender, an investor must as of January 11, 2008 pay $3 million up front and $500,000 annually. A month ago, the same protection could be bought at $776,000 annually with no upfront payment'...snip...
Credit-default swaps tied to MBIA's bonds soared 10 percentage points to 26% upfront and 5% a year, according to CMA Datavision in New York. The price implies that traders are pricing in a 71% chance that MBIA will default in the next five years, according to a JPMorgan Chase & Co valuation model. Contracts on Ambac Financial, the second-biggest insurer, rose 12 percentage points to 27% upfront and 5% a year. Ambac's implied chance of default is 73%'...snip...
Interesting article by Peter Schiff- "To line their own pockets, Wall Street willingly exposed shareholders to risks they never would have assumed with their own capital". That is how the game is played. http://www.europac.net/externalframeset.asp?from=home&id=11574
I'm not sure how this is all going to pan out, but just a couple of things to keep in mind:
1) Municipalities themselves are not defaulting on their debt to any significant extent right now. There is always the odd one or two, here or there, now and then. I'm not aware of any sudden upsurge beyond the normal background noise, though. There is some speculation about growing foreclosure rates plus a general economic downturn putting municipalities into such fiscal stress that they will be at high risk of default. This might happen in some places, although it is a little early to know for sure. There is no reason to single out municipalities, though. If things get that bad, plenty of corporations are likely to default as well. This is why I said that I didn't see munis as being a particularly troubling sector right now.
2) It soounds like the Buffett initiative will provide a pathway for municipalities when it comes time to issue new debt. If the fallout from AMBAC and MBIA hits municipalities too hard, they might just issue new debt through Buffett in order to refund the old.
River
Take a look at this site sometime.
Pension Watch
http://www.pensiontsunami.com/
http://www.pensionriskmatters.com/
Thanks, I will check them out.
The muni market isn't the problem. it's the mortgage backed bonded insuring part of the equation that's the problem. some say that muni bond insurance is basically just marketing. they don't really need it. some states I believe have just not gotten insurance when issuing bonds.
The municipal bonds here are paid with property taxes, which most certainly ties directly to the mortgage muddle, and we'll all recall Orange County's messy bankruptcy in 1994 as a foreshadowing of what can happen. Their bonds were insured, no?
the mortgage insurer problems have nothing to do with munis. I don't think any muni bonds will go to zero SOLELY because of an insolvency at a bond insurer.
Nope, they'll just get a free (NOT!) haircut with every bond issue and they'll be inspected like a first round private placement every time they want to go to the funding well. That'll put a crimp in development, yes indeed.