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The Highwaymen – privatization of the roads

Daniel Schulman with James Ridgeway, Mother Jones
Why you could soon be paying Wall Street investors, Australian bankers, and Spanish builders for the privilege of driving on American roads.
…The deal to privatize the [157-mile Indiana Toll Road] had been almost a year in the making. Proponents celebrated it as a no-pain, all-gain way to off-load maintenance expenses and mobilize new highway-building funds without raising taxes. Opponents lambasted it as a major turn toward handing the nation’s common property over to private firms, and at fire-sale prices to boot.

The one thing everyone agreed on was that the Indiana deal was just a prelude to a host of such efforts to come. Across the nation, there is now talk of privatizing everything from the New York Thruway to the Ohio, Pennsylvania, and New Jersey turnpikes, as well as of inviting the private sector to build and operate highways and bridges from Alabama to Alaska. More than 20 states have enacted legislation allowing public-private partnerships, or P3s, to run highways.

…The financial stakes are potentially huge. “You’re buying the infrastructure of the economy, and it’s enormously valuable,” says John Schmidt, who served as associate attorney general in the Clinton administration and as counsel to the city of Chicago on the $1.8 billion privatization of the Chicago Skyway, the 7.8-mile freeway that connects the Dan Ryan Expressway in the west to the Indiana Toll Road in the east. “[Private road operators] haven’t been able to get in here previously. There’s been a demand, and it’s been bottled up because we just haven’t had privatized infrastructure in this country, so they’ve been buying toll roads in Chile and in France. Now, they suddenly have the opportunity to come into this country.”

…Emerging markets rarely emerge solely on their own, and would-be road operators have spent years working to convince state and local officials that privatization is a no-lose proposition. It has created something of an echo-chamber effect, says John Foote, a senior fellow at Harvard’s Kennedy School of Government who specializes in transportation issues. “If you’ve got enough people whispering in the ears of governors and mayors and so forth saying that this is the greatest thing since sliced bread and don’t miss the boat, pretty soon people start believing it.”

…since its emergence as a major political issue in the Reagan era, privatization has become a default option for politicians of both parties aiming to off-load everything from prisons and welfare offices to Social Security. …But the brass ring has long been seen to be the nation’s enormous, and aging, infrastructure.

Roads, in particular, are ripe for the picking. Congestion is increasing, and the Federal Highway Administration estimates that it will cost $50 billion a year above current levels of federal, state, and local highway funding to rehab existing bridges and roads over the next 16 years. Where to get that money, without raising taxes? Privatization promises a quick fix-and a way to outsource difficult decisions, like raising tolls, to entities that don’t have to worry about getting reelected.

More often than not, those entities are foreign-primarily because, unlike U.S. firms, foreign companies have years of experience operating private toll roads in South America, Europe, and Australia.

…Higher tolls and a proliferation of private roads are certainly in the nation’s future unless the federal government delivers some other solution to a looming funding crisis. The federal highway trust fund, which is financed by the proceeds of the federal gas tax, is running out of money-in part because lawmakers have not dared to raise the tax, currently 18.4 cents per gallon, since the mid-’90s. At this rate, the fund, which is the primary source of money for federal highways, will be spending more than it takes in by 2009.
(Jan/Feb 2007 issue)
What are the implications of the privatization of infrastructure as oil becomes more expensive? Several implications come to mind.

First, the potential for overt and subtle corruption explodes – for example, through tax breaks, subsidies and influence peddling (the original article has more details on the financiers and consultants who will profit).

Secondly, toll roads would seem to further the chasm between the rich and the rest of society – tolls will be insignificant to the rich, but a burden to the rest of us.

Thirdly, the U.S. will be following the trend in Third World countries to turn over their infrastructures to foreign capital.

None of these trends bode well for a future with expensive energy. Interestingly, there are objections coming from both liberals (Ralph Nader) and conservatives (Phyllis Schlafy). -BA

U.S. Interstate system: A golden opportunity missed

Michael Abraham, Roanoke Times
The golden anniversary of one of the most far-reaching public works projects in history has passed unceremoniously — one that has impacted virtually every American. Why no celebrations?

In November 1956, eight miles of the Dwight D. Eisenhower System of Interstate and Defense Highways, the “interstates” opened in Topeka, Kansas. To say traveling has never been the same greatly understates the profound economic and cultural shift wrought by this marvel of engineering.

The previous system of primary and secondary roads was a mélange of pavement, more often than not dangerous, with steep grades and tight, shoulderless curves and inadequate bridges. Standards varied from state to state. Main corridors traveled through downtowns where the going was slow and laborious.

The interstates changed all that. These marvels featured wide lanes, gentle curves, long sight distances, and an absence of traffic lights and other obstructions. Travel was safe, fast and carefree.

…As interstates spread across the land, they predictably brought sweeping changes. For better or worse, a pervasive consistency arose in the motel, fast food and convenience/gasoline chains that flourished at the exits. Communities decentralized. Downtowns atrophied. Public transportation systems were eliminated. Commuters moved further from work and school.

Transportation systems always dictate development patterns. Highways are development de-magnetizers, fostering sprawl and dispersion. Ironically, interstates were designed to emphasize uninterrupted, high-speed travel but were often overwhelmed by the overuse they fostered. Rare are the days now when traffic flows through major cities at the speeds for which interstates were designed.

And interstate car-ma didn’t stop at the exit ramp. The zeitgeist of “mobility first” permeated all transportation planning. Pedestrian, bicycling, transit and rail considerations were marginalized. Trucks became rolling warehouses for just-in-time inventory, supplanting traditional rail-based warehouses. Statistics on automobile ownership and miles driven outpaced population, because cars became necessary for virtually every trip.

The nacent interstate system was buoyed by cheap, abundant fuel. America was the Saudi Arabia of the day — the world’s largest producer of petroleum. There was no reason not to engineer a system that consumed it lustily.
(10 Dec 2006)

Misguided assault on autos won’t solve energy crisis

Editorial, Detroit News
Another “blue-ribbon” panel of experts has met to try and find solutions to America’s reliance on foreign oil, and, as usual, the auto industry is both the problem and the answer.

Blaming the auto industry for all things related to global climate change is the thing to do these days, but it’s misguided, especially when it targets the failed Corporate Average Fuel Economy (CAFE) guidelines. And it ignores other industries, which do their share of dirtying up the atmosphere.
(19 Dec 2006)
A response to the Energy Security Leadership Council, which disagrees with their emphasis on vehicle efficiency but supports their call for more offshore drilling (a very temporary solution at best). -AF

Ford starts production on new Super Duty trucks

Bruce Schreiner,
Ford Motor Co. workers at a Kentucky plant cheered the start of production Monday for the new F-Series Super Duty pickup truck, which company executives predicted will secure the automaker’s position in the increasingly competitive truck market.

The redesigned truck, built at the Kentucky Truck Plant, features a new 6.4-liter diesel engine, new exterior and interior design, additional towing capacity and a tailgate step that allows easy access to the pickup bed.

“It’s the biggest, boldest … truck to ever hit the marketplace,” plant manager Todd Bryant said.
(18 Dec 2006)

The Auto Efficiency Wedge

Stuart Staniford, The Oil Drum
In this piece, I wanted to take up a more precise consideration of how much auto efficiency improvements might contribute to solving what I called the terrible trio of energy dependence on unstable regimes, global warming, and the peaking or plateauing of liquid fuel supply. My examples are all US, but I think the lessons mostly carry over (if a little less urgently) to other developed countries.

I’ll be reasoning mainly by looking at what we did in the 1970s, which was the last time we faced severe energy constraints that bled through into requiring a demand side response.

To begin with, let’s refresh our memories about the history of oil prices, which tells the story of the oil shocks quite well.
(20 Dec 2006)
Stuart comes up with some very promising figures on the potential of vehicle efficiency to radically diminish U.S. gasoline use. As some of the commenters noted he doesn’t consider the law of dimishing returns or the embodied energy in vehicle manufacture, and his results are far more promising than Rober Hirsch’s. But that said, this is an impressive post well worth checking out to get a sense of scale of what might be achievable. -AF

Another of The Oil Drum’s fine analyses. This is one in a series by Staniford on transportation. Earlier articles include: Why We Drive and A few more transit stats. Why isn’t the mainstream media printing articles like this?

One suggestion for The Oil Drum – please end your pieces with a set of take-away conclusions. We need some guidance in understanding complex sets of data. Anything you can do to make the information comprehsible to a large audience would be welcome.

As usual at TOD, the original article is followed by many (200+) comments.