I compare TxDOT to a drunk who has run up a big bar tab and, knowing that he can’t pay, orders another round and prays for a miracle.
“…income from traditional transportation funding sources (taxes and fees) is no longer sufficient to keep pace with current and projected demand for highway construction and maintenance.” — TxDOT Director, Lt. Gen. Joe F. Weber USMC, describing the TxDOT finance situation before resigning in 2015 after serving 18 months as director
- A quick review of the TxDOT financial mess
- A closer look at the numbers; TxDOT revenue, maintenance, expenses, and debt
- Maintenance costs keep rising
- Toll roads are no road finance miracle.
- Hard times could hit TxDOT especially hard
- The most predictable threat to TxDOT is arguably the next fuel price spike.
- Why TxDOT has to keep the trucks running
- Can TxDOT do without its cars?
♦ A quick review of the TxDOT financial mess
AUSTIN — If ever there were a branch of Texas state government that deserves a prize for the stubborn denial of reality, I would nominate TxDOT, the Texas Department of Transportation. A canary in a coal mine would be too innocent a comparison. I compare TxDOT more to a drunk who has run up a big bar tab, and who knowing that he can’t pay, orders another round, praying for a miracle as it gets near to closing time.
Lets look at how TxDOT got to this point, and also what we might anticipate given the current trends. To question whether TxDOT as a state road building agency has a viable future might seem pretty farfetched. This is because of the importance of roads and driving in the lives of almost everyone who lives in Texas, and also because of the 99-year history of TxDOT as a state agency; it is hard to imagine life without TxDOT. I have written about TxDOT and its steadily increasing debt before.
Since then, things have only gotten worse.
Since then, things have only gotten worse. I described a lot of how Texas transportation politics works in this discussion of IH-35.
TxDOT is a government agency that has gradually become vital to the Texas economy as we know it, on the basis of the following three primary factors. None of these factors now looks very dependable compared to TxDOT’s golden era, a period that extended roughly from 1950-1990. These are the three factors that TxDOT needs to have going its way to keep out of trouble.
- Easily affordable cars.
- Easily affordable motor fuel.
- A reliable revenue stream centered on state and federal gas taxes. Failing that, TxDOT needs cheap easy finance credit to keep building publicly funded roads.
If there was a fateful turn in the wrong direction that led TxDOT to its current problems, it was probably its inability to raise its 20-cents-a-gallon state gasoline tax since 1991. This tax was always TxDOT’s primary source of revenue, but this amount has not been raised for nearly a quarter century ago, when it generated about $2 billion a year. This fuel tax that used to pay for nearly everything is unadjusted for inflation, which means that TxDOT ‘s road building capability using this source has taken a nosedive.
It is pretty easy for most people to understand how bad habits can start out small, and then keep getting worse through denial and delay, and so it was with TxDOT. Since fuel prices are very apparent at the pump, and since most folks drive, raising fuel taxes has always been a noticeable and unpopular political move. The federal government didn’t raise its own fuel taxes for nearly as long, since 1993.
Texas politicians take pride in never
raising fuel taxes.
Since Texas politicians like to be seen as the most fervent conservatives anywhere, and since conservatives are supposed to abhor taxes, Texas politicians take pride in never raising fuel taxes. At least not until the notorious spendthrifts in Washington, D.C., do it first. This is like showing that you are healthy by going to the doctor less often than your friends do.
As successful politicians everywhere know, the big advantage of using debt instead of taxes to fund things the public wants, is that the true cost of debt is much less immediately apparent to the taxpayer, even though the long term cost, with interest payments on the debt, is then a lot more. For this reason debt is politically seductive, like an addiction.
The Texas Department of Transportation just issued its audited financial statements for 2014. They’ve rung up a debt balance of $19 billion. It was only $4 billion back in 2006. That’s when Rick Perry went on his debt binge. Of the $7.3 billion tax revenues TxDOT will take from Texans in 2016-2017, more than $2.4 billion will go to making debt payments. It gets worse. Transportation experts are telling us we need to find billions more just to keep up. Our roads are becoming crowded and Texas fell from 17th to 23rd out of 50 states in lane-miles per person since 2006. Our roads are becoming more dangerous too: Texas fell from 26th to 33rd out of 50 states since 2006 in terms of highway deaths per 100k residents.
Year after year, starting in 2000, TxDOT filled the budget gap left by the relatively shrinking fuel taxes by adding long-range debt, continuing to do so until it reached its current level of about $23 billion.
Prior to 2000 Texas was pay as you go with its state highways. Starting in 2001, Texas started borrowing money for new road construction, pushing that cost onto future taxpayers. By 2011 the debt had grown from zero to $11.9 billion. Currently, Texas is $23 billion in debt and will spend $31 billion over the next 20 years to retire that debt.
Short of a miracle, TxDOT seems hopelessly trapped in its debt.
The deep financial hole that TxDOT has now dug itself into is causing serious current road finance problems. TxDOT is now burdened by well over a billion a year in interest payments, with no relief in sight. Short of a miracle, TxDOT seems hopelessly trapped in its debt. Yet it struggles on, counting on a Republican Texas legislature to find new funds to keep building and maintaining state roads as usual, in preparation for the exponential expansion of road capacity that TxDOT sees as its basic mission.
Texas led the nation in job creation between 2010 and 2015, and projections by the Texas State Data Center indicate the state’s population may increase to more than 45 million by 2040. By then, according to the Texas Department of Transportation (TxDOT), Texas’ annual truck freight tonnage is expected to more than double from its 2014 level.
There are now powerful political interests tied to road contracting and land development that seek to keep road construction going as usual. In Texas roads have become a politically lucrative, publicly-funded subsidy used to generate private real estate development profits. A form of public welfare for private land developers, and popular among politicians for that reason.
TxDOT is managed top down by politicians, like the governor who appoints the TxDOT Commissioners who regard roads like a form of public entitlement. At the same time maintaining business as usual policy has gotten harder and more costly for TxDOT. The Texas legislature has helped by passing a few new TxDOT revenue sources that aren’t obvious taxes and seemed relatively painless. Prop. 1 added a sizable shale oil fee worth a few billions, and also increased the vehicle sales tax. But these are a drop in the bucket compared to TxDOT’s backlog in accumulated debt.
Few Texas politicians have been willing to challenge TxDOT.
Few Texas politicians have been willing to challenge TxDOT and to call for a basic policy change, because that risks losing money to other parts of the state that are equally starved for state road money.
Dallas would like to tear down its central city freeway, I-345. TxDOT agrees, but says no until 2037. As perhaps the most notable example of a declaration of road policy independence from TxDOT, Houston Mayor Sylvester Turner recently called for Houston to stop widening its roads, as TxDOT would very much like it to do.
♦ A closer look at the numbers:
TxDOT revenue, maintenance, expenses, and debt
The current TxDOT budget stands at about $11 billion. The latest year reported, FY 2015, relapsed and added about $3 billion in new debt, after a few years of reported budget surpluses during the shale oil boom. This makes it clear that TxDOT’s deficit finance problem has never gone away.
During the period 2006-2011 the TxDOT numbers were reported in a form that is fairly easy to interpret. During this period about $2-4 billion in new TxDOT debt was added each year.
The more recent years, 2012-2015, are harder to interpret. During this later period, Gov. Rick Perry installed a policy manager from his own office, Phil Wilson, to try to get a handle on TxDOTs rapidly increasing debt. Wilson was a smart manager from outside TxDOT’s stodgy engineering culture. Until Wilson, TxDOT had a long tradition of choosing its directors from within its own engineering ranks.
Maintenance is no longer listed as a
separate budget category.
Maintenance is no longer listed as a separate budget category. In the last decade, TxDOT has encouraged the development of Regional Mobility Authorities with their directors appointed by the governor. These RMAs have coordinated closely with TxDOT, but they are encouraged to issue their own toll road debt and build roads, which keeps them off the TxDOT account. Wilson, now managing water supply at the LCRA, worked to secure as much outside funding as possible, like federal TIFIA loans, and State Infrastructure Bank loans. He also brought in new revenue streams, like the Prop. 1 shale oil fees, and new vehicle fees.
This document gives an easy to understand economic snapshot of some recent TxDOT budget numbers for fiscal year 2014. These are some categories of TxDOT expenses for that year in millions of dollars. Planning, $1,325; Construction, $3,258; Maintenance, $4,280; TxDOT management, $242; Interest payments on existing debt, $1,367; Toll road costs, $417; Total TxDOT budget = $11,092.
As we already see in 2014, the maintenance costs that year exceeded the new construction costs. Perhaps a better term than what TxDOT calls its “assets” might be TxDOT’s accumulation of perpetually underfunded maintenance mandates.
This is a review of TxDOT’s financial situation in May 2106.
Together these roads carry nearly half-a-billion vehicle miles of travel per day.
TxDOT’s assets are mainly its 73,000 centerline (how long it looks on the map) miles of roads. Together these roads carry nearly half-a-billion vehicle miles of travel per day. TxDOT estimates its total asset replacement costs at about $90 billion. This also includes 53,000 bridges, more than any other state, of which 80% are said to be in good shape.
♦ Maintenance costs keep rising
TxDOT has a backlog of aging roads that need to be maintained by reconstruction about every 20 years. A lot of them were built in the last 20 years and are coming due for a lot of costly maintenance spending. The cost of maintaining roads rises with oil price, due partly to the diesel fuel used by the road construction equipment, and also because asphalt is a petroleum product, cheaper but less durable than concrete pavement. The maintenance trends are disturbing.
If nothing changes in the next two years, growing maintenance costs will soon leave no room in TxDOT’s budget for construction or expansion projects. “That’s just math,” Wilson said. Lawmakers have already proposed several ideas to boost transportation funding, even as a larger budget battle looms. The top ideas appear to be rededicating sales tax revenue on vehicle purchases to TxDOT or adding $50 to the annual vehicle registration fee. Other proposals include ending diversions from the gas tax revenue and taking $1 billion from the state “rainy day fund” to create a highway infrastructure bank.
♦ Toll roads are no road finance miracle
There is apparently no realistic path forward which can continue the easy road finance policies that TxDOT adopted after Rick Perry became governor and TxDOT started building lots of roads, especially toll roads, on credit. Toll road debt tends to be speculative and thus high yield debt that thrives on easy credit. So long as the major Texas cities and their suburbs keep growing, toll revenues are assumed to keep growing in step, and for decades to come.
At first, TxDOT built its toll roads by means of a new and closely allied state agency, the Texas Turnpike Authority, managed by ex-Austin Chamber of Commerce Pete Winstead.
In 1997, Pete was appointed by Governor Bush to be the first chair of the Texas Turnpike Authority (TTA). During his tenure at TTA, he led efforts in getting Records of Decision on the four element toll road (SH 130, SH 45, Loop 1 and US 183A) project known as the Central Texas Turnpike Project. Pete also led efforts on a $800 million TIFIA loan, as well as negotiated over $600 million in local contributions for the right-of-way and utility relocations. He was one of the founders and first Chair of the Capital Area Transportation Commission (CATC) to involve the private sector in effective advocacy for toll roads and other highway infrastructure. Additionally, Pete chaired the Citizens for Mobility effort to secure approval of the Phase 2 toll road plan at CAMPO, as proposed by the CTRMA and TxDOT.
It seemed like toll roads were a great way to build roads without increasing the Texas fuel tax.
Initially it had seemed like toll roads were a great way to keep building roads without increasing the Texas fuel tax. Eventually it became apparent that toll roads can be money losers too.
Tolls and other revenue have fallen more than $100 million short of covering debt and operating costs of the state’s three-road Central Texas Turnpike System since the highways opened about four years ago. Texas Department of Transportation subsidies almost 70 percent more than originally predicted have made up the difference.
Those subsidies, covered primarily by state gasoline taxes that otherwise would be available for other road spending, should average about $38 million a year over the next decade and total about $750 million by 2042 , according to TxDOT documents. The system’s first profitable year is not estimated to occur until 2030 , with some years in the red even after that because of major road rehabilitation expenses.
After Perry installed a close ex-Legislative associate, Ric Williamson, as TxDOT chair, TxDOT encouraged the creation of toll road helper agencies, the Regional Mobility Authorities, or RMAs. The RMAs were able to wheel and deal and issue risky high yield debt for toll roads, debt which wouldn’t be a direct TxDOT liability if something went wrong.
After the Great Recession in 2009, and with the advent of quantitative easing by the Fed, TxDOT had better access to easy credit from the Fed to keep building its roads and toll roads as usual. By 2011, TxDOT’s road debt was already about $12 billion. Now, TxDOT has accumulated its $23 billion in debt, and it keeps growing. About 11% of TxDOT’s yearly budget now goes to pay interest on its debt; about $1.4 billion dollars a year.
Nobody can say when TxDOT will hit
the wall financially.
Nobody can say when TxDOT will hit the wall financially, but the current trends are not only unsustainable on the state level, but fickle federal policy plays an important role too. This is because the federal fuel tax money comes back to Texas, but with strings attached which can change over time.
Highway funding showdown is latest budget scramble at TxDOT
As Congress barrels toward a Friday deadline to fund the nation’s highway system, transportation experts across the country are responding to ever-tighter budgets with simple but significant cost-saving changes. In Texas, federal funding makes up about a third of the Texas Department of Transportation’s $23 billion two-year budget. While TxDOT has shouldered criticism for recent spending decisions, the agency touts a few examples of successful moves to pinch pennies.
In fact the TxDOT toll road debt burden is now so serious that Texas House Transportation Committee chair Joe Pickett has been talking about paying off all the relatively costly long-term debt on TxDOT toll roads, and replacing this with even more new debt, borrowed at the current abnormally low interest rate, a move estimated to add an additional $30-38 billion.
This debt swap would raise the total TxDOT debt to more than $50 billion.
This debt swap would raise the total TxDOT debt to more than $50 billion. This is more than three thousand dollars in TxDOT debt for every driver in Texas. This approach also has some limits because the savings are not immediate.
Of course such a debt swap would mean that TxDOT has to find a lender willing to approve more doubling of TxDOT’s debt, lending it at a historically low interest rate, and depending on the future population that drives on these toll roads to keep driving as much as they do now, and for decades to come. Sugar daddy loans like that can be hard to find, and the Fed has its own role to play.
♦ Hard times could hit TxDOT especially hard
TxDOT is required to be blind to economic forecasting because that isn’t its constitutional responsibility. TxDOT is supposed to stick to its business of building and maintaining Texas roads and bridges, and to leave economic forecasting to the responsible parties. The responsible parties are the politicians, who almost always prefer to see a bright future; the outlook most conducive to their reelection.
TxDOT ignores the warnings of climate scientists that we need to cut back on fossil fuel production.
TxDOT ignores the warnings of climate scientists that we need to cut back on fossil fuel production and consumption as soon as possible.
If the global economy has had a prevailing mood or disposition over the last decade, we would have to say that it has been moving toward pessimism, toward low growth and low profit. This global situation is favorable to neither investment nor profit. Nor to new construction, nor to gas tax revenue increases, nor to TxDOT debt repayment ability.
If top Federal Reserve banker Janet Yellen’s path to American prosperity is blocked, as this account indicates — “Five threats to American prosperity tie the hands of its banker-in-chief” — then this sort of stagnation might affect TxDOT’s finances.
We have now gone most of a decade since the last U.S. recession, and those in charge of managing the U.S. economy, the Fed, have very little effective stimulus ability left. Many economic investment managers like bond guru Bill Gross believe the USA is ripe for another recession in the context of its very high debt and low growth. Here is my own recent attempt at economic crystal ball gazing.
With the end of the Texas shale oil boom, which began when global oil prices collapsed in mid-2014, the Texas oil and oil services economy took a nosedive. Now TxDOT finds itself providing roads for a struggling oil economy state, inside a depressed U.S. economy that is trying to function inside a troubled world economy. Like it or not, Texas is operating inside a depressed global economy which appears to be headed toward deflation and contraction like the USA experienced during the Great Depression.
If the global economy sneezes, then TxDOT
could catch pneumonia.
♦ The most predictable threat to TxDOT is arguably the next fuel price spike.
The advent of shale oil fracturing was supposed to keep the USA driving for decades without having to depend on imported oil, right? It is not working out that way, which likely means trouble ahead. Are we expecting the Fed to keep printing up enough cheap credit to prop up a failing U.S. shale fracking industry with its mysteriously elusive reserves.
Because the global oil market is a very inflexible market in an economic sense, a few million barrels of production above or below the normal global market demand tends to be magnified, and to cause the sort of dramatic global oil price swings that we saw in mid-2008, and again in mid-2014. For the time being, there is a big global oil glut with the indebted and unprofitable shale oil producers going broke. U.S. shale oil production is falling dramatically. If we are not producing profitable shale oil, then what does that imply for our future driving ability? These numbers tell the tale.
Since Peak Fracking in June 2015, US oil depletions hit about 1 mb/d.
The depletion rate of about one 1973 Oil Embargo per year.
Production increases are frozen, 86% of sector operating profits are used to cover interest payments.
Shortages of 2.4 to 3.6 mb/d by the end of 2017 from U.S. production.
Gasoline prices will continue to rise faster and higher than EIA forecasts.
Art Berman is a geologist and top petroleum economist, in my opinion about the best in his chosen area of oil and gas economics and market analysis. He posts his findings openly and in the public interest. Here are Berman’s main points concerning an approaching oil price spike, the logical result of the recent collapse of oil prices and the sharp decline in not just U.S. oil and gas shale fracking, but including all global drilling activity.
If there were a sustainable market price of oil that could keep its world full of users operating and driving, what would that price be in current dollars? What is an oil price that is low enough for the world’s billions of oil customers to afford, but at the same time high enough to keep enough oil coming to keep supporting the global economy? Berman calculates this globally tolerable price to be about $70-80 dollars per barrel. That the current global oil price is only about $50 per barrel means that many high-price oil producers are going broke, much as the Saudis had hoped.
New oil production will nearly cease until oil becomes scarce and profitable again.
Drilling and new oil production will now nearly cease until oil becomes scarce and profitable again. Here is a good analysis that supports the conclusion that the next global oil price spike will hit by about early 2018.
How long it will take to for the global oil market to tighten up again is an important but complex question. But what happens if the global economy is too weak to restore profitable oil production until production falls below what it takes to keep the world economy operating properly? If the private market, the Exxons and BPs and Shells, can’t do the job, we will need direct government subsidies to restore global oil production. However, the truth is that the fossil fuel industry has enjoyed huge subsidies already, both public and private.
The mid-2014 collapse of oil prices is bankrupting most U.S. shale oil producers, who are heavily leveraged producers but rarely profitable. The U.S. shale drilling boom from 2010 to 2014 was really in large part due due to Wall Street subsidies for shale oil production that never showed a real profit, even at $100 per barrel. Zero interest credit has a natural tendency to give rise to speculative “asset bubbles” that rely on easy low-interest loans from Wall Street to finance junk bonds to finance drilling profit from $100 a barrel oil that never quite materialized.
As is the case with shale oil, there in not much future in Canadian tar sands “oil” until the price rises a lot, all assuming that this complex heavy mining industry and its workers can hang on until then.
No matter how much Canadian oil sands producers cut costs, John Stephenson argues it can never be enough. While the CEO of Stephenson & Co. noted some players in the sector will be able to squeeze out tiny profits in a US$50 per barrel oil price environment – Husky Energy and Suncor Energy, for example, can operate with at least some margin for profitably with prices above the US$30 level – he stressed the oil sands’ economic heyday is over. ‘I’m sure the last buggy-whip manufacturer had razor-thin margins and it would have done an excellent job of cutting costs,’ Stephenson told BNN on Tuesday, ‘but it doesn’t really matter if there’s a systemic shift.’
♦ Why TxDOT has to keep the trucks running
There is little doubt that TxDOT’s spending on roads will have to continue in some form, and at some level, no matter what. Of TxDOT’s many social and commercial functions, which of its transportation functions are most vital to the current Texas economy? What would suffer most if the TxDOT road network were to shrink because of a lack of maintenance funds?
TxDOT’s most vital function is to provide mobility for the Texas trucking industry.
The most vital function that TxDOT performs is probably to provide mobility for the Texas trucking industry. If there is any economic threat concerning TxDOT’s roads that most people would would tend to underestimate, it is probably our near-universal dependence on trucks. If the trucks don’t run as usual, perhaps due to changing road, vehicle, labor, or fuel economics, then life as usual would break down in a few weeks, in many places. Trucks take lots of high-energy, high-quality diesel fuel, which will probably become scarcer than gasoline during the next fuel price spike. Gasoline is primarily a consumer fuel.
Trucks play a vital role by linking freight shipped by rail to its final retail sales outlets. Alice Friedemann, an industry expert, has written a quite readable book, When Trucks Stop Running: Energy and the Future of Transportation. This book has lots of the the numbers and details needed to properly understand the energy and economics of trucks and other types of transportation.
We could potentially survive without driving our cars very much, aside from getting fired. Railroads are quite vital to our economy, but they are pretty secure because they are highly energy efficient and are privately owned and maintained. That means that they would probably stay in business, even in a depressed economy.
Trucks are more economically vulnerable. They need cheap fuel, affordable labor, as well as decent roads to keep the population fed. Trucks tend to deliver the goods and food taken from rail to the stores where we buy things. This pattern is changing fairly rapidly as Amazon and home delivery trucks gradually displace big box retail, while taking less total energy per dollar of higher value goods delivered.
Heavy shale drilling support trucks have already caused $4 billion worth of damage.
TxDOT has already resorted to triage of its roads in the shale drilling areas where its roads have been heavily damaged by trucks and heavy equipment. Paved roads are designed with weight limits in mind, and nothing destroys roads so efficiently as overweight trucks. Heavy shale drilling support trucks have already caused $4 billion worth of damage to TxDOT roads.
Between 2009 and 2013, the number of accidents involving commercial vehicles in and around the Permian Basin increased by 86 percent. During that same time, the number of commercial vehicle accidents in and around Eagle Ford Shale grew by 105 percent. Clearly, something has gone terribly wrong in Texas. Texas roads — particularly those in the western half of the state where the oil industry thrives — have taken a beating since the oil boom of 2009 kicked in. Corroded asphalt, expanding potholes, and “alligator cracks” are the norm in fracking areas, and according to the Texas Department of Transportation (TxDOT), it would take $4 billion per year to fix these pummeled highways and byways.
Turning TxDOT’s paved roads back into gravel has been one suggested solution to deal with TxDOT’s rising road maintenance cost. Road triage may have to be used to preserve TxDOT’s most vital roads, and not just in the oil fields.
♦ Can TxDOT do without its cars?
The short answer is that TxDOT probably needs the gas tax from our cars too much to survive without very many cars. Probably that is the reason that all TxDOT future travel projections show a big increase in driving for decades to come. What else is TxDOT going to tell their toll road bond investors? TxDOT is structurally addicted to its cars because they provide TxDOT with the 40 cents a gallon in state and federal fuel taxes that has kept the agency going until now. Much of TxDOT’s debt over the last decade is probably largely due to an unanticipated reduction in car travel due to higher fuel prices.
Is there any way out of our Texas mobility dilemma, complicated by gentrification, suburban sprawl, and the long commutes to and from the core city where a lot of the good jobs are? Transit is one obvious approach, but the strong economic and political pressures needed to bring real reform may not yet exist.
Austin has a legacy of decades of low density, car-dependent development ringing the city.
Austin has a legacy of decades of low density, car-dependent development ringing the city and benefiting these residents with lower taxes. This residential sprawl development is intrinsically hard to serve with either buses or rail transit. On the other hand, commuters are generally unwilling to drive more than about an hour to work.
What about bikes? One of the more plausible ways to preserve existing urban and suburban mobility despite a depressed Texas economy may be the bicycle, and particularly the electric bicycle. Texas urban areas might be able to evolve to embrace the ubiquitous and widespread adoption of electric bikes for commuting for which purpose they are now being widely used in China.
Beijing’s Electric Bikes, the Wheels of E-Commerce, Face Traffic Backlash
‘Over the past few years, they’ve become the main driver of urbanization in China,’ said Ni Jie, the chairman of Luyuan Electric Vehicles, an electric bike manufacturer in eastern China, and a vocal defender of the industry. ‘It’s become a major mode of transport for the newly employed in China and workers from the countryside.’
To make the major transition toward the large scale use of bikes and electric bikes that we see in China, TxDOT would probably need to start providing bike lanes that are safely and securely separated from fast and dangerous car traffic on its major roads.
In Dallas and Houston we can see the potential for light rail to restore mobility if it it is compatible with the land use. Dallas has 90 miles of light rail, more light rail than any other city in the USA, although LA is catching up fast. Fast light rail on its own exclusive right of way is a natural match for the dense kind of corridor development that we see in some urban areas , like along Austin’s Lamar-Guadalupe Corridor. For light rail to fully realize its mobility contribution, it needs to be integrated with buses that reach into surrounding areas.
Urban light rail faces a strong well-organized right-wing political lobby.
One problem with promoting urban light rail is that it faces a strong well-organized right-wing political lobby like the one that killed the rail start in San Antonio.
If we can ignore TxDOT’s $23 billion in debt, the cost of light rail and passenger rail seems to make no sense at all. Reform is always more expensive than business as usual. Business as usual thinking and debt-blind cost comparisons don’t tend to make light rail look very attractive to many drivers until things start going wrong. However younger people are rejecting car ownership, and sunbelt cities are becoming more friendly toward rail.
L.A.’s Costly Bet on Curbing Car Culture
Los Angeles and other auto-centric Sunbelt cities are building out rail systems costing\billions of dollars
One response by the public to the trends I describe will be the hope that electric cars can keep us driving, assuming the economy ever recovers enough so average folks can afford them. An economic recovery that could permit a consumer shift towards a new and more sustainable driving technology is not going to happen in the several years that Berman sees before the next oil painful price spike in a few years. It is hard to convince folks to concern themselves with water until their well runs dry.
Some might hope that the new ride-sharing technology like Uber and Lyft could keep us mobile by selling autonomous electric mobility one ride at a time, despite any oil shortage.
The reality is that many current U.S. drivers are already struggling to afford to keep driving their existing petrol fueled cars, which they now keep running for more than a decade, and younger people are no longer so enchanted with cars as their parents and grandparents were. Because of the bad U..S economy, there is now a glut of unsold cars in search of a market. Finance experts are getting concerned about an auto loan debt bubble.
The Comptroller of the Currency Thomas Curry recently noted, ‘what’s happening in the auto loan market reminds me of what happened in mortgage-backed securities in the run-up to the crisis.’
Can’t the car companies like Ford and GM
see what is coming?
Can’t the car companies like Ford and GM see what is coming? Of course they can, but as part of a giant industry dedicated to selling cars, what can they do? The car makers and even the TNCs are starting to see themselves as part of a mobility industry that sells rides, rather than cars. Uber is now partly a car leasing company, one that sees itself as being positioned to transition to electrically-powered, autonomous vehicles as conventional driving becomes less affordable. Google and Apple are thinking the same way, sending signals that they support autonomous driving. Is this why auto manufacturers are teaming up with ridesharing companies?
Cars are still vital for average citizen travel, especially for commuting in our structurally car dependent state of Texas, but they are now facing a lot of economic headwinds, including the culture shift among young people. The ride-sharing companies like Uber and Lyft are in part a response to non-drivers who need to buy trips now and then and are willing to pay for speed. The TNCs are not a whole lot cheaper than cabs but if they were autonomously driven they probably could be. Due to the efficiency of their software systems in combination with smart phones and a big driver and passenger base, they are faster. And they know how to buy politicians
Now we leave the interesting topic of the impossible finance challenge that TxDOT faces. The world is at the end of its century of cheap oil, and the declining affordability and fading attractiveness of car ownership is causing a major shift away from privately owned and driven cars that will affect TxDOT a lot in the next few years. The Texas road lobby still has the upper hand, but probably not for too much longer.
Read more articles by Roger Baker on The Rag Blog.
[Roger Baker is a long time transportation-oriented environmental activist, an amateur energy-oriented economist, an amateur scientist and science writer, and a founding member of and an advisor to the Association for the Study of Peak Oil-USA. He is active in the Green Party and the ACLU, and is a director of the Save Our Springs Alliance and the Save Barton Creek Association in Austin. Mostly he enjoys being an irreverent policy wonk and writing irreverent wonkish articles for The Rag Blog. ]