Monday, December 19, 2005

TxDOT empire based on cheap oil addiction

TxDOT's $6 billion a year road-building empire is based on cheap imported oil. This is clearly a necessary assumption to do long range planning for roads basic to a road-centered, oil addictive Texas economy.

A big problem is that the operation of this body has become intertwined with special interest politics; largely those tied to road contracting and real estate. These special interests naturally try to defend the status quo in terms of transportation infrastructure funded with public taxes and debt.

In other words, public officials are committing the public to a huge level of long-range debt to subsidize roads that serve expansive patterns of growth favored by the special interests. The credit ratings of counties in the CAMPO area are in effect being pledged as collateral on tax-free muninicipal revenue bonds for roads to serve projected sprawl growth.

The one factor that the Texas transportation bureaucracy has so far been unwilling to factor into their planning the debt risk involved in their travel demand policies extending decades into the future. What will happen to the local municipal bond debt if high gasoline prices restrain driving and cause the bonds to default?

The precariousness of any long range transportation planning that assumes that fuel will always be cheap is exemplified by stories like the following. -- Roger

How soon will world's oil supplies peak?

The question provokes hot debate among experts, as concerns rise that
America isn't prepared for a dropoff.

By John Dillin | Correspondent of The Christian Science Monitor
from the November 09, 2005 edition; CSM

WASHINGTON - If world crude-oil production hits its peak and then
falls within the next five to 10 years, would America be ready? The
answer is, almost certainly not.

A debate unlike anything seen since the oil embargoes of the 1970s
has erupted over the future of world petroleum supplies. A chorus of
experts claims that the peak in production may be approaching, and
that the impact of a peak and subsequent dropoff would be devastating
to the world's economies. Others insist that moment is still distant.

Some nations, including China, already appear to be taking steps to
lock in future oil supplies from the Middle East, Africa, Central
Asia, Canada, and South America.

The risks of future oil shortages are huge. As if to illustrate that
point, the temporary ripple in supplies after hurricane Katrina sent
gasoline prices in the US to record levels...


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