Could Repeal of the Jones Act Actually Happen?

Transportation analyst and presidential advisor Bob Poole of the Reason Foundation raises this question, which is critical to Hawaii.  Here is his analysis:. All highlights were added by me.

"I’m not sure how many readers are aware of the Merchant Marine Act of 1920, generally known as the Jones Act.  For 90 years, this piece of protectionist legislation has been a politically sacred cow. It requires that all water-borne shipping from one U.S. port to another—whether along inland waterways, along coastwise routes, or between the mainland and Alaska, Hawaii, Guam, and Puerto Rico—be provided only via U.S.-made vessels, owned by U.S. companies, and operated by U.S. crews. The original rationale for this was national defense—but post-World War II, the military has made voluntary deals with major U.S. airlines to make certain planes available in times of military need, and the same could be done for ocean vessels. Today, the Jones Act is supported mostly by the seafarers unions and the dwindling number of companies that own and operate Jones Act ships.

The consequences of this legislation are many, and nearly all negative. My MIT classmate William Hockberger (naval architecture) described the impact on the U.S. marine industry to me this way:

“Our coastal and seagoing fleet is pathetic*, along with the marine industry that is supposed to provide and sustain it, as a result of the ‘protection’ that has prevailed for most of our country’s existence. If ship operating companies could buy ships on the open market, if shippers could use ship services provided by any company in the world (subject to some basic rules regarding human and environmental safety), if the money to buy the ships could come from anywhere, and crews didn’t have to be mainly U.S. citizens, we could have a marine industry much larger than it is and the economics would be very different. The cost of using a ship [versus some other mode] would be much lower, and in many cases a ship would be the preferred alternative.”

The very high costs resulting from the Jones Act have basically killed nearly all proposals for so-called “marine highway” shipping. Recent reports from the Maritime Administration, the Congressional Research Service, and the Center for Commercial Deployment of Transportation Technology have all blamed the high costs imposed by the Act for the lack of progress in coastwise shipping.

Other victims of the Jones Act are the people and industries of Alaska, Guam, Hawaii, and Puerto Rico, who pay what amount to monopoly prices for transportation of the food, consumer products, and energy that must be shipped in from the mainland. 

And then there are U.S. ports and waterways. The Jones Act also applies to all dredging vessels, ballooning the cost of maintenance dredging of inland waterways and deepening of major harbors.

Although the Jones Act has long been a sacred cow, there are several straws in the wind suggesting that change might be possible. Last November Honolulu attorney John Carroll filed a class action lawsuit against the federal government, arguing that the Act violates the Commerce Clause of the Constitution and subjects Hawaiians to a shared monopoly on shipments of imported goods. It seeks damages and a halt to enforcement of the Act.

Last month Americans for Tax Reform took up the cause, arguing that the Jones Act should be repealed because, among other things, it is driving up the cost (and reducing the extent) of shipping gasoline by water from the Gulf Coast to the Northeast.

And then there is the proposed free-trade agreement between the United States and the European Union. Among the items on the agenda for this proposed deal, according to The Economist, is to eliminate the protectionist restrictions on shipping imposed by the Jones Act.

As I noted in last month’s issue, Congress is planning to enact a new Water Resources & Development Act this year, dealing with both harbors and inland (as well as coastwise) waterways. This would be a good opportunity to tackle the reform or repeal of the Jones Act, a precondition for new investment in America’s maritime industry."

If you ever wondered why Senator Inouye and his followers are so successful in becoming "entrenched politicians" then the two words, Jones Act provide a big part of the answer. (All you have to do is check the campaign contributions for Hanabusa, Hirono, etc.)

(*) One of the main links of Hawaii to mainland US is Horizon Lines.The average age of Horizon’s fleet is 35 years as compared to 28 years for all Jones Act noncontiguous trade container ships, and 12 years in the international fleet. This is the picture of where US marine shipping is going with the Jones Act:

 

Improving Hawaii's Energy and Transportation Structures

Late February 2013 interviews with Hawaii Reporter's Malia Zimmerman:

• Dr. Panos Prevedouros: Improving Hawaii's Energy and Transportation Structures

• Former Hawaii Ben Cayetano talks about politics and economy 

Zig Ziglar's 10 Quotes That Can Change Your Life, And I

Zig Ziglar, the well known motivational speaker and author of many books on Sales and Personal Development died late last year. Forbes published these 10 Quotes That Can Change Your Life. I like them and have a mostly humorous response to them…

10) “Remember that failure is an event, not a person.”
True but if you do it often it can become am unwelcome cousin...

9) “You will get all you want in life, if you help enough other people get what they want.”
Quite possible, although God has a penchant for calling such saintly souls home early...

8 ) “People often say motivation doesn’t last. Neither does bathing—that’s why we recommend it daily.”
Indeed, Marine cadets get their motivation hourly. Too old for that. Off to the shower then...

7) “There has never been a statue erected to honor a critic.”
Probably true. But critical thinking and critique allows one to reside at a 76th floor apartment with steady supply of water and power. Or fly almost anywhere on the globe safely, or talk to anyone on the globe with a cell phone. Engineering is critical thinking and critique of proposed plans and solutions. I guess Zig was no engineer so he’s fully excused.

6) “People don’t buy for logical reasons. They buy for emotional reasons.”
Including men? I never get emotional buying pants. Or yoghurt. I guess he’s talking about luxuries…

5) “Expect the best. Prepare for the worst. Capitalize on what comes.”
Spot on. Cures mild depression on contact.

4) “If you go looking for a friend, you’re going to find they’re scarce. If you go out to be a friend, you’ll find them everywhere.”
Sweet, but becomes increasingly difficult past the third grade...

3) “A goal properly set is halfway reached.”
Sorry, here I much prefer Murphy's more precisely estimated position: The first 90% of reaching a tough goal takes 90% of your time. The last 10% of reaching a tough goal takes another 90% of your time.

2) “Your attitude, not your aptitude, will determine your altitude.”
Yes but this assumes that there is some aptitude to work along with a nice attitude.
All the smiles in the world cannot lift someone with a minimal skillset.
Actually Zig’s three components of success are Will, Skill, Refill. Spot on!

1) “If you can dream it, you can achieve it.”
This is typically quoted only by people who have actually achieved it!
Of course if I dream about BBQ chicken for dinner, chances are that I'll achieve having it.

Honolulu’s Poor Economic Growth and What to Do about It

The Brookings Institution, rated No. 1 think tank in the world, published the Global Metro Monitor update which “provides economic growth data.” Where does Honolulu rank among 300 cities? It ranks 284th for the 1993 to 2007 period, and 217th for the 2007 to 2011 period. Honolulu ranks 54th in terms of population in the U.S.

While Honolulu ranks 284th, for the same period Portland ranks 93rd, Tucson ranks 100th, Tampa ranks 106th, Salt Lake City ranks 130th and depressed Cincinnati ranks 206th. Honolulu is much closer to 297th ranked New Orleans than any of its peer cities.

Why is Honolulu ranking so low? In large part because of the excessive waste of funds on unproductive endeavors. Unfortunately, this is a lesson that has not been learned. Here is a list of 10 large mistakes:

1. We invested in the 2nd city and more housing. As a result we get worse congestion and continuously escalating housing prices because of land controls. Creating a 100,000 population city on prime agricultural land is a mistake that Honolulu county will be paying for, for centuries.

2. We invested in buses: 200 more buses, express buses, and HandiVan in the last 30 years. Yet we got flat ridership. In 1980 Honolulu had 760,000 residents and TheBus carried 71.6 million trips, or 7.5 trips per resident per month. In 2010 Honolulu had 960,000 residents and TheBus carried 73 million trips, or 6.4 trips per resident per month, a 15% drop in per capita productivity. Transit is a declining business.

3. The last thing we need is a multi‐billion dollar investment in transit. But that’s a local priority!

4. We invested in high-occupancy and zipper lanes but we don’t do anything to manage the flow on them.  As a result drive alone and carpool share was 81% in 1990 and 81% in 2012. More people drive alone now than 20 years ago, despite the tripling of fuel prices. Carpooling has lost share because the freeway HOV lanes provide a low travel time benefit.

5. We invest in government. As a result we get over-regulation and slow innovation. Many government operations in Hawaii still use carbon copying and physical walking of papers from place to place, then pay extra workers to enter the information on a computer.

6. A private consortium launched the Superferry. The supermajority of people loved it.  Corporatist politicians and special interests killed it.

7. We invest in junk renewables like concentrated solar. Taxpayers paid millions in tax credits to a company on the Big Island that installed 1,008 panels on four acres of land to produce 0.1 MW which is mostly used internally and no power is sold to HELCO!

8. We do not invest much in tourism, infrastructure upkeep, congestion relief and park cleanliness. Despite the brouhaha about our banner 2012 year for tourism, the fact is that growth in tourism has not kept up with Honolulu’s modest growth in population: In 1990 we had about 8 visitors per local resident. In 2010 we had 7.25 visitors per local resident. Taxes generated from tourists do not keep up with local needs for services on a per capita basis.

9. Now we want to invest in "one iPad for each public school student" as if Apple can stuff knowledge in pupils’ brains.

10. We also want to invest in one super-casino so we can collect voluntary money losses from gamblers. We seem to know how to get from 284th to 300th.

What if we wanted to improve our ranking (and our quality of life)?

First we need to place our trust on data and not on “visionaries.” Given Hawaii’s great loss in Congressional seniority, an economic decline followed by bumpy stability will be the trend as I explained previously. Honolulu’s basic 0.5% annual growth will be flattened by local, national and international pressures.

Then proceed with this sample half dozen of economically productive actions:

1. Plans focused on growth for Oahu must be abandoned.
2. Top Priority: Maintain, Rehabilitate, Replace, Modernize.
3 Scrap rail. Use $3 billion to fix roads and add express lanes and urban underpasses.
4. Scrap wind. Focus on natural gas, waste‐to‐energy and geothermal.
5. Scrap the EPA agreement for secondary sewage treatment. (Many cities are taking EPA to task for its unreasonable consent decrees.) Focus on accelerated replacement of water and sewer lines.
6. Manage current and future budgets to sustain item 2.

[Also published in Hawaii Reporter.]

China Develops the Ultimate Definition for Fake

Very few things blow the wind out of me these days, but last night's 60 Minutes story on China's real estate was an astounding surprise.

Whole cities, countless of highrises with thousands of mid- and upper-luxury apartments, thousands of parking stalls, hundreds of miles of landscaped and illuminated city streets, and multistory shopping centers.  All brand new and ALL EMPTY.  Totally vacant. Never occupied.  AND NEARLY 100% SOLD!

Welcome to the fake world of development of resources that few need and much much fewer can afford. The article China's Ghost Cities provides a summary but you need to watch the 60 Minutes story.

There could be well over 100,000 people in this town. There is nobody there. Such an unabashed waste of effort and resources!

Poop Powers Zoom Zoom!

Furthering the efforts of recycling, re-use and sustainability, Bristol, UK water and sewer company has developed infrastructure to produce methane-based biogas from sewage waste, clean it from its high content of CO2 and fuel cars with it.

 Remarkably, they claim that... poop from 70 homes can power this Bug for 10,000 miles!

Compressed Natural Gas is not new as a fuel for vehicles. Just to name a few, Athens, Rome, Seattle-Tacoma and Seoul use GNG in all or most of their public transit bus fleets.  Australia has tens of thousands of private cars powered by CNG or LPG, which is liquefied petroleum gas.

The main sources are, as their name implies, Natural Gas and Petroleum Gas. A third source of methane is organic matter decomposition (which actually created natural gas in the strata of the earth over the millennia.)

Renewable sources of organic matter include biomass, food waste and ... poop. Sludge, the accumulation of solids at waste treatment plants, is often problematic even for cities like Honolulu which has two Waste-to-Energy facilities, so it typically up in the landfill. (Honolulu had a contract to develop fertilized pellets from it, but the venture was not successful.)

The dumping of thousands of tons of sludge is, of course, a lose-lose situation because of the loss of land and the loss of an energy source at the same time. Bristol's Wessex Water has developed and biogas and demonstrated the Bio-Bug, which other than a simple modification to the fuel supply and storage system remains a conventional Bug with the original engine (and in most similar applications the car is switchable on-the-fly between gasoline and methane/propane/butane.)

Where is Hawaii Transportation Headed?

Remarks to the Hawaii Venture Capital Association and ThinkTech Transportation Panel, Plaza Club, February 28, 2013.

Aloha and thank you for the opportunity to present you my take on the future of transportation in Hawaii.

• Honolulu has among the nation's worst quality roads.
• Honolulu has among the worst traffic congestion particularly among peer cities.
• Hawaii has among the highest rates for drunken driving.

To solve all these highway related problems, Honolulu ordered a 5 billion dollar train.

The unquestionable and predictable result is that all these problems will get far worse by the time the train is installed. And by that time Honolulu will be short on transportation funds.

With less funding, there is no doubt that the congestion, maintenance and safety problems will get even worse.

In December 2007 Hawaii got the private Superferry. This was a means to get bulky items, equipment and vehicles between islands in 3 to 6 hours instead of 3 to 6 days. However, Hawaii did its best to preserve its way of moving bulky items, equipment and vehicles between the islands in 3 to 6 days.  A key supporter of the Superferry's execution is now Hawaii’s Representative in Congress.

Hawaii is probably the most oil dependent place on earth. Sure many Greek and other small islands depend on diesel generators to make power but their winter population is usually 1,000 to 10,000 people. Here we have 1.5 million people in the middle of the Pacific and we are about 80% dependent on oil and its volatile pricing.

Instead of investing in solid alternatives like coal, natural gas, trash and geothermal, we are now approaching the waste of one half billion dollars on flaky wind and solar.

Worse yet, we are extremely fuel dependent for land, air and sea transportation. Smart government should have found means to develop gobbles of cheap electricity so that we can extract fuels from algae and biomass to fuel vehicles, boats and airplanes.

But our flaky government is concerned with plastic bags and shortcuts to development, like the PLDC. And we are losing the Tesoro refinery.

The Tesoro plant used to make asphalt, but county and state government wouldn’t commit to a schedule of road repairs. So about 10 years ago Tesoro stopped making cheap asphalt. So now we need to bring it in and store it.

Hawaii government promotes EVs by making expensive, anti-business mandatory parking and charging regulations. At the same time Hawaii offers EV buyers the highest electricity rates in the nation, to punish EVs as much as possible.

The cost of power in Hawaii is three times the US average. So the 90 MPGe Nissan Leaf is 30 MPGe in Hawaii. Do you know how many conventional cars you can buy that deliver 30 mpg or more, and have a much lower price, and require no subsidy like the five grand we dole out for each EV?

And answer me this. Why are we even promoting EVs when 90% of our electricity comes from oil and coal? Each EV that clocks about 50 miles per day consumes as much electricity as a modest house with 4 people. Isn't this a fake and indeed disastrous oil independence policy?

Again thanks to our silly renewable mandates the KWh rates will only go up, so we will get less power, less reliability, and higher rates.

What's the future of transportation in Hawaii you ask?  In the past quarter century, transportation (except for TheBus,) public education and energy performance in Hawaii have ranked in the bottom half in the US or very near the bottom. I expect that this level of poor performance will get worse.

Although there are great alternatives, Hawaii is actively burying its potential for a bright future. Cost-effective decision making, long term sustainability planning, and accountability with stiff penalties are all absent. And so is our chance for improvement.

Mahalo!

Transportation and Economy

This is a 22 minute lecture on the very many facets of Transportation and its effect in the regional, national and world Economy.

It's in the format of a movie for my public access TV show Panos 2050: Sustainable Solutions for Hawaii on Transportation and Economy.

Click the link and wait a few seconds for the movie to load.

Energy from Trash Should Be a Priority for Hawaii

Read the full article in Honolulu Civil Beat. Selected highlights:

The long term economy of Waste to Energy (WtE) plants is very good. There is plenty fuel (trash, waste and biomass). Municipalities pay the WtE plant to take their trash. The utility pays the WtE plant for the mega-watts of electricity it produces. Trash volume reduces 6 to 10 times so landfill demand is minimized.

• Sweden imports waste from other Europe to fuel its WtE program. Maui should install a WtE plant and bring in trash from Big Island, Lanai and Molokai. Oahu should plan for another 100 MW of WtE (about half of it tuned to burn biomass, sludge and manure) and bring in trash from Kauai. Barges return to Honolulu from Kauai practically empty.
• Both Oahu and Maui should consider ordering a sophisticated MRF, or Materials Recovery Facility, to better sort materials such as glass (by color), stones and similar inert materials, and all types of metals out of the trash. This would result in a cleaner burn at the WtE plant and revenue from recyclables, e.g., mixed glass is nearly worthless but glass sorted by color has value. So do sorted metals.
• To make Oahu more sustainable we should revise what we currently trash and what we recycle at home in the BLACK, GREEN and BLUE bins, as detailed in the post below.

Last but not least, The Economist notes that "Energy from waste plants that use trash as a fuel to generate electricity and heat continue to have an image problem. That is unfair, because the technology has advanced considerably and has cleaned up its act." As depicted in the image blow, very large part of modern WtE plants is devoted to pollution control.

Oahu Household Recycling

• Honolulu has the most expensive electricity rates among U.S. metro areas, by far.
• Oahu makes about 8% of its electricity from trash. It should plan to make 20% by 2020.
• Oahu generates thousands of tons of paper, plastic, and cardboard trash. This is free fuel for the production of electricity. Instead of making power with it, we waste energy to bale it and ship it out. That’s nuts!
• The next four slides explain what to recycle and what to throw in the trash.

 

Americans With No Abilities Act

I could not resist posting this hilarious chain email. Of course it does not apply to 50% of the Americans, but it does portray quite a few...
.................................

The Americans With No Abilities Act is being hailed as a major legislative goal by advocates of the millions of Americans who lack any real skills or ambition.

"Roughly 50% of Americans do not possess the competence and drive necessary to carve out a meaningful role for themselves in society," said California Sen. Barbara Boxer. "We can no longer stand by and allow People of Inability (POI) to be ridiculed and passed over. With this legislation, employers will no longer be able to grant special favors to a small group of workers, simply because they have some idea of what they are doing."

In a Capitol Hill press conference, House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid pointed to the success of the U.S. Postal Service, which has a long-standing policy of providing opportunity without regard to performance. At the state government level, the Department of Motor Vehicles also has an excellent record of hiring Persons with No Ability (63%).

Under the Americans With No Abilities Act, more than 25 million mid-level positions will be created, with important-sounding titles but little real responsibility, thus providing an illusory sense of purpose and performance.

Mandatory non-performance-based raises and promotions will be given to guarantee upward mobility for even the most unremarkable employees. The legislation provides substantial tax breaks to corporations that promote a significant number of Persons of Inability (POI) into middle-management positions, and give a tax credit to small and medium-sized businesses that agree to hire one clueless worker for every two talented hires.

Finally, the Americans With No Abilities Act contains tough new measures to make it more difficult to discriminate against the non-able, banning, for example, discriminatory interview questions such as, "Do you have any skills or experience that relate to this job?"

"As a non-able person, I can't be expected to keep up with people who have something going for them," said Mary Lou Gertz, who lost her position as a lug-nut twister at the GM plant in Flint, Mich., due to her inability to remember righty tighty, lefty loosey. "This new law should be real good for people like me. l finally have job security." With the passage of this bill, Gertz and millions of other untalented citizens will finally see a light at the end of the tunnel.

Said Sen. Dick Durbin: "As a senator with no abilities, I believe the same privileges that elected officials enjoy ought to be extended to every American with no abilities. It is our duty as lawmakers to provide each and every American citizen, regardless of his or her inadequacy, with some sort of space to take up in this great nation and a good salary for doing so."

We have kick-started this program by having a POI in the White House.

Honolulu at the Bottom of Top 300 Cities

Shortly after publishing the post on Honolulu's and Hawaii's "no change" situation of the last three decades, I saw the Global Metro Monitor update of the Brookings Institution (a think tank.) Yet another non-flattering economic statistical outcome for socialist-heavy (Democrat) Honolulu.

Blue cities (Democrat majority) are actually mostly red (weak economy).

Hawaii Over The Past 20 Years: Minimal Change, Minimal Growth. What Should Hawaii Plan For?

Annual U.S. Bureau of the Census data strongly suggest that Hawaii, and Oahu in particular, are stable communities with very mild growth and change particularly after the turn of the millennium.

The data suggests that mega-projects such as rail and "big wind", and mega-developments such as Ho'opili and Koa Ridge are ill conceived and unnecessary.

This slideshow provides both data evidence and brief discussion.

Politicians have engaged in biased or data-free decision making for decades. The mounting debts are sufficient proof that ignoring the trends and serially engaging in unproductive activities simply digs a deeper hole. Both Hawaii and the US are approaching the danger of the hole walls caving in and burying them, much like the PIIGS* and other countries.

What should Hawaii do in the next two decades?  The last slide provides the answer. In three sentences:

• Decline followed by stability will be the trend.
• Send “visions” and mega-projects to the cemetery.
• Maintain, Replace, Modernize should be Priority 1.

(*) Portugal, Ireland, Italy, Greece, Spain

Transportation and Energy Infrastructure Projects: Forecasting is Unnecessary

I enjoyed Dr. Martin Wachs' brief article Planning for High Speed Rail (HSR) in California. It centers around planning and forecasting: "The current debate is divisive precisely because improved data and models cannot provide a better glimpse into the future" Wachs says.

After nearly three decades in planning and policy, and six years involvement in local politics I have come to believe that forecasting is unnecessary as a primary decision making tool. Why?

Because transportation infrastructure deployment lags demand by decades. Why do we need to forecast 20+ years into the future? The need is present (or not.) Current data are the best quality data we have. So instead of making numerous uncertain assumptions about a future we do not control, let's assume that the project is built overnight and assess its benefits at the present time.

In the case of Hawaii, when I first relocated here in 1990, traffic congestion was the No. 1 issue and has remained in the top 10 ever since. Twenty three years later, roadway capacity addition has been marginal and most major bottlenecks have not been addressed. So why does the city's planned rail project have a 2030 horizon?

I think the answer is this: The proposed rail does not generate enough ridership with the current population so artificial demand balloons for population and jobs in 2030 are "forecast" to justify the system.

Similarly California has a population of 38 million with huge concentrations in Los Angeles and San Francisco metro areas. If HSR does not work for 38 million, then it won't work. Why is a 20 to 50 year projection needed?

Worse yet, the typical  planning models lack credibility because they are never tested with back-casting.  If Parsons Brinkerhoff's model is trusted to predict transit ridership (bus and rail) in Honolulu with year 2006 as baseline and 2030 as the horizon, does it also predict transit ridership for 1982?  In other words, we should check the model's ability to project forward by using the 24-year period from 1982 to 2006; for which we have perfect information. How does the model do?

I think the answer is this: It does very poorly and for this reason back-casting is never applied.(1)

Obviously, since the inception of a project, several years go by for environmental studies, design,  engineering, funding, bidding and construction. So a 10 years-out plan and forecast is needed. But multi-billion dollar energy and transportation infrastructure projects should be justified by their "now" value and not by future demand balloons.

If the projects are beneficial "now" then long range forecasts can be performed for selecting the proper size for them. For example a reversible highway sized at two lanes for sufficient congestion relief may need to be built with three lanes to accommodate future demand. Similarly a 1,000 MW power plant may be engineered with a 1,200 MW capacity for the future.

Projects funded with private capital, fully or partly as in Public-Private Partnerships, sophisticated risk analyses that protect investment from foreseeable risks are conducted. These meticulous and carefully inspected forecasts of project costs and revenues have little in common with the manipulated forecasts for taxpayer funded and subsidized systems, primarily transit systems.

For taxpayer funded projects forecasting is unnecessary and indeed misleading for decision making. It is commonly used a tool for deception, particularly for rail projects.(2)


Endnotes

(1) My students and I investigated the accuracy of traffic volume forecasts primarily in the agriculture-to-residential mega developments in Ewa between 1976 and 2002. We found this:

The study compared forecast traffic levels from Traffic Impact Analysis Reports prepared between 1976 and 2002 to actual traffic volumes recorded by the Hawaii State DOT in the city and county of Honolulu. The information extracted uniformly from 11 reports included year of report, consultant, type of project, location, movement, forecast horizon, forecast traffic volumes and forecasting method.

This study focused on road and residential developments and examined the accuracy of traffic demand forecasting, the conservative or optimistic tendency in traffic forecasts and the potential factors affecting accuracy. The results revealed that traffic forecasts are on average overestimated by 35% and there is a clear tendency to overestimate future traffic volume. Errors ranged from -40% to +200%.

SOURCE: Caroee, Maja, Panos D. Prevedouros and Alyx Yu, Volume Forecasts for Environmental Impact Statements and Traffic Impact Analysis Reports: Accuracy of Road and Residential Developments in Honolulu, Paper 13-1398, 92^nd Annual Meeting of Transportation Research Board, Washington, D.C., 2013.

(2) Flybjerg, Bent, et al., Delusion and Deception in Large Infrastructure Projects (2009)

U.S. Titanic

Cox, a former chairman of the House Republican Policy Committee and the Securities and Exchange Commission, is president of Bingham Consulting LLC, and Archer, a former chairman of the House Ways & Means Committee, is a senior policy adviser at PricewaterhouseCoopers LLP.

On November 26, 2012 the Wall Street Journal published their opinion... Why $16 Trillion Only Hints at the True U.S. Debt: Hiding the government's liabilities from the public makes it seem that we can tax our way out of mounting deficits. We can't.

It explains quite well that the cartoon below is quite real.

JONES ACT Hurts Hawaii (Alaska, Guam and Puerto Rico too)

Bloomberg indicates that U.S. islands such as Puerto Rico, Guam and Hawaii, along with the state of Alaska, feel the effects of the Jones Act more than most localities. Some of Hawaii’s political and business leaders have long complained that the restrictions mean all goods shipped from the U.S. mainland must go via the two carriers serving the state. By some estimates, Jones Act makes goods in Hawaii 33% more expensive than they could be.

For island territories the Jones Act is counterproductive and indeed hazardous. "Russian Icebreaker to Make History in Alaska" is an example of how the Jones Act endangered a community in Alaska. Even in a critical situation like this, the Russian ice breaker could not load oil from an Alaska port and take it to Nome, Alaska, but it had to backtrack to Korea to get the oil and back to Nome, Alaska.

Both Presidents George W. Bush and Barack Obama resorted to temporary Jones Act waivers so Foreign-Flag crude tankers could transport the government’s crude oil from the Strategic Petroleum Reserve (SPR) to the refineries because no Jones Act tankers were available.  The Bush waiver occurred in September 2005 following Hurricane Katrina and Obama’s from July through September 2010 in response to the loss of Libyan oil on the world market. (The Jones Act is a Critical Energy Issue)

Prophetically in the same March 2012 article Michael Hansen predicted this: "The Jones Act may now result in the closure of Tesoro’s Hawaii refinery."  It happened less than a year later: "Tesoro Corp.’s Hawaii refinery in Kapolei, the largest of the two oil refineries in the state with a capacity of 94,000 barrels a day, is closing its refining operations in April." (PBN, Jan. 8, 2013)

With this introduction in mind, here is a sample of articles asking to ban or modify Jones Act for Alaska, Guam, Hawaii, Puerto Rico and other U.S. Territories:

• The influential maritime publication Lloyd’s List endorsed an exemption from the U.S. build requirement for Hawaii, Alaska and Puerto Rico. The editorial published on Friday January 4, 2013, was written by Tom Leander, Editor-in-Chief, Asia, Lloyd’s List, based in Hong Kong. Leander writes that "many critics of the Jones Act, including Lloyd’s List, hope that the GAO will provide evidence that can be used to persuade Congress to scuttle the US-built requirement of the Jones Act as it applies to Puerto Rico — and further to Hawaii and Alaska – under a so-called sunset waiver."

• The Secretary of the U.S. Department Homeland Security, Janet Napolitano, issued a Jones Act waiver this morning to allow foreign-flag clean products tankers carry refined petroleum products from domestic coastwise ports to the North East which is suffering from shortages of motor gasoline and diesel fuel due to Hurricane Sandy.  The waiver expires on November 13.

• Hawaii Shippers Council Outlines Jones Act Reform Proposals: The Council's press release observes that "90 years of Jones Act protection has resulted in the near complete collapse of the U.S. deep draft merchant shipbuilding industry, and continuing that protection for the noncontiguous trades will not save it. The Act has generally failed to achieve its intended goal to nurture the U.S. maritime industry, and commercial deep draft commercial shipbuilding in the United States is all but ended."

• Honolulu Star-Advertiser's Guard asea on aged craft reveals Coast Guard issues with aging cutters it cannot afford to replace: “The Coast Guard in Hono­lulu faces a dilemma with its two biggest ships, the aging 378-foot cutters Jarvis and Rush, which the service wants to retire but can't because it has no replacements.” 

• Senator-candiate (at the time) Mazie Hirono provided a container load of untruths to justify her baseless support for the Jones Act: "In Hawaii especially, the maritime industry is an essential economic mover, generating more than $4.7 billion annually into Hawaii’s economy and providing more than $1.1 billion in wages and benefits for our people."

• Sen. Hirono's position is diametrically opposed to Eddie Baza Calvo's, Governor of Guam. He is "Seeking an exemption from the Jones Act to make the price of nearly everything on the island cheaper."

• Sen. Hirono position is diametrically opposed to Representative Pedro Pierluisi's, Puerto Rico member of the U.S. House of Representatives. “I am pleased that the GAO is actively working on my request to determine, once and for all, the economic impact that the cabotage laws have on Puerto Rico. This study should put an end to all of the speculation that surrounds this subject and, if the study concludes that the Jones Act is having a negative impact on our economy, could provide the basis for potential legislative action in Congress,” said Pierluisi. The U.S. Government Accountability Office (GAO) is preparing a report “to provide policymakers with a comprehensive, descriptive summary of information on the Puerto Rican and Caribbean Basin trade markets, and how the Jones Act potentially affects these markets.” 

• Adding to Hawaii's oild dependency woes, Natural gas is cheap, but Jones Act rules it out for Hawaii, says Michael Hansen, President,Hawaii Shippers Council.

• An expanded version of the article above is titled: Jones Act Requirements Could Block Natural Gas Transport to Hawaii

Endnote: These U.S. territories are exempt from the Jones Act: American Samoa, The U.S. Virgin Islands (USVI) and The Commonwealth of the Northern Mariana Islands (CNMI) due to the international treaties associated with their annexation by the U.S.

Oahu Is Rising

Literally!

This is not about economic growth, intellectual enlightenment, or attaining some other form of excellence. 

This is a matter of fact statement about the geography of Oahu: It is rising. Every century the Koolaus will grow taller.

Contrary to global warming theories that for decades have suggested that Oahu’s shores will be inundated and beaches will be lost, new scientific analysis shows that even with possible sea lever rise, and even with the constant erosion of the island by wind and rain, Oahu will grow taller thanks to strong volcanic forces that lift it up from the bottom of the ocean.

The effects of climate, soil thickness, and water contact times on Oahu, Hawaii is the title of the article by Stephen T. Nelson, David G. Tingey, and Brian Selck from the Department of Geological Sciences, at Brigham Young University, in Provo, Utah.

Here is their remarkable conclusion: “Recent work indicates that Oahu is tectonically emerging at 0.060 m/ka. As long as this uplift continues, the net size of the island will slowly increase and the Koolau Range should persist as an orographic trap to precipitation, maintaining relative aridity in the Waianae Range.”

That’s 6 cm every 1,000 years. Not sure if that's enough to protect from any sea level rise due to polar ice melting.

New 3-Cylinder Ford Engine Delivers 47 mpg!

Alan Mulally is the venerable engineer and project manager of the Boeing 777 and for several years now CEO of Ford Motor Company. Why is he kissing this new engine?

Because this super-efficient, well-balanced and light weight engine can deliver 47 mpg in a Ford Focus compact car without the complexity and price penalty of hybrid technology. Many manufacturers are now turning to 3-cylinder engines for their smaller cars but also prepare editions that match the output of common V6 engines for larger vehicles.

These smaller engines would have huge benefits for the world market, and China in particular, where Volkswagen announced plans to build its 7th plant, just a few days after Ford had said it would build its 5th.

This is good news for mobility and the planet. Smart policies* and smart engineers get the job done: Mini engines with normal performance and mini consumption and air pollution. And fewer resources used to make those engines enhances long term sustainability.

Note (*): America's new emission standards require car manufacturers to achieve a fleet average of 34.1 mpg by 2016 and 54.6 mpg by 2025.

Hawaii's Sudden Economic Tsunami

With the sudden death of US Senator Inouye and the retirement of US Senator Akaka, both in December of 2012, Hawaii instantly finds itself at the center of an unprecedented fiscal tsunami due to the total loss of Congressional seniority. The table below indicates that Hawaii's Congressional Seniority changed overnight from stellar to abysmal.

Although well over half of federal funds are appropriated by formula, a large share of local programs are funded by special appropriations and earmarks which would be very hard to obtain in the coming years.

Recent preliminary research by a group of students at UH placed the annual impact of Senator Inouye to Hawaii between $200 Million and $450 Million per year. The students surmised that the sudden loss of Senator Inouye would be similar to the sudden and complete loss of Hawaiian Airlines.

An expanded discussion by Malia Zimmerman "Hawaii, Like Alaska, Could See Huge Fiscal Impact From Loss of Congressional Seniority" combines multiple sources to provide additional information about the financial impact to Hawaii.

-------- January 11, 2013 Update -------- 

 Within about two years, I guestimate that Sen. Inouye's death combined with Sen. Akaka's retirement and the absence of no reps from Hawaii in an Appropriations Committee to cost:

•     ~ 200 high paying military contract jobs (civilian)
•     ~ 800 normal paying military contract jobs (civilian)
•     ~ 300 high paying UH research jobs
•     And a few dozen other millions in gravy
•     For a total of at least $200 Million per year of taxable income and related economic activity.

After a couple of years, the East-West Center, UH's Kakaako Medical Research Center, Mauna Kea astronomy investments, many small subsidized programs and the Armed Forces may be in jeopardy for major cuts.

Green Energy and Rail Get an F

Election politics are behind us so it is a good time to post the economic report card for President Obama's first term issued by The Economist on September 1, 2012.

I am pleased to see that for the two areas of "green energy" and "rail passenger transportation" The Economist gives the President an F. These are indeed the two areas that I completely disagree with both the President, Hawaii's Governor, most of Hawaii's current political establishment, and with the environmentalists of Sierra Club.

Indeed, biased taxpayer black holes deserve this.

It is my hope that this F along with today's sad news of the death of US Senator Inouye along with the retirement of US Senator Akaka (this is a 1-2 knockout punch for Hawaii to the very bottom of US Senate seniority combined with Hawaii's rock bottom seniority in the US House) will infuse sanity and restraint into the brains of local decision makers.

Cuts are painful, but cutting wasteful projects* is productive and necessary to avoid a nosedive.

(*) The rail, transit oriented development, wind farms, limitless solar subsidies, inter-island cable, government solar farms, cookie-cutter housing on prime agricultural land, North Shore mega-developments along a single, jammed 2-lane country road, ...

The World in 2030: World Preeminence for China, Energy Independence for USA

The Verge: The US National Intelligence Council, representing the 17 intelligence agencies of the US government, says that "we are at a critical juncture in human history" in its fifth Global Trends report. The report details the challenges facing the species in the coming decades; the council says that many positive developments in health, education, and governance will propel human civilization, but that the threat of conflict could emerge as supplies of food and water become more scarce.

The Diplomatic News: The American Century is drawing to a close, and the US Defense Department will have to be more flexible in dealing with a faster-paced multipolar world, according to the Global Trends 2030 report

NY Times: A new intelligence assessment of global trends projects that China will outstrip the United States as the leading economic power before 2030, but that America will remain an indispensable world leader, bolstered in part by an era of energy independence.

London Financial Times:

• Pax Americana ‘winding down’
• China will be the world’s largest economy by 2030 but the US will still remain “first among equals” in the international system
• Europe, Japan and Russia will continue to experience relative decline
• Asia will come to dwarf the rest of the world in terms of its economic and military power
• The wave of Islamist terrorism is likely to have ended by 2030
• The US will be energy independent and could be a significant exporter of energy
• Advances in manufacturing technologies could reduce the need for outsourcing

Here is what the report says about renewable energy. It makes Hawaii look like a fool by wasting millions of taxpayer dollars to produce Kilo-Watts instead of Mega-Watts (1 MW = 1,000 KW):

"With shale gas, the US will have sufficient natural gas to meet domestic needs and generate potential global exports for decades to come. Increased oil production from difficult-to-access oil deposits would result in a substantial reduction in the US net trade balance and faster economic expansion. Global spare capacity may exceed over 8 million barrels, at which point OPEC would lose price control and crude oil prices would collapse, causing a major negative impact on oil-export economies."

"The IEA’s baseline scenario shows the share of renewables rising just 4 percent during the 2007-2050 period. Hydropower accounts for the overwhelming majority of renewables in this scenario, with wind and solar energy providing 5 and 2 percent contributions in 2050 respectively. Their contributions in 2030 would be even less."The 170 page report can be downloaded here: National Intelligence Council, Global Trends 2030

London, Paris, New York, Tokyo ... Honolulu?

Little Honolulu of 953,000 people, one third of which live on the other side of the island, wants to be like the 8 to 15 million people cities with rail systems.

If Honolulu truly wanted rail transit that resembles anything like the busy systems in London, Paris, New York, Tokyo, etc. then it would design a system of short lines as those shown in red, green and blue colors in the picture below. It would also have planned extensions (dashed lines) like the one passing through Salt Lake and terminating at Aloha Stadium.

Instead Honolulu plans the yellow rail line whose only purpose (which it is too obvious to see by looking at this picture) is to pave over the prime agriculture of the Ewa Plains with housing, a mega mall, a casino, and anything that will make our rulers richer.

In Honolulu, special interest monies (to the tune of over $10 million in the 2008, 2010 and 2012 elections) and octogenarian politicians convinced the populous to look to the 19th century for solutions to clogged freeways.

How to Solve Traffic Congestion, Make Revenue and Be Happy Paying a Toll

With road pricing, Stockholm, Sweden has reduced traffic congestion dramatically, and generates revenue for public works. Most remarkable outcomes also include that motorists do not feel that they had to change their driving and habits, and that 70% of residents approve of the road pricing.

Watch this 8-minute TED talk by Jonas Eliasson, Director of the Center for Transport Studies at Sweden’s Royal Institute of Technology. It is a 10-year before-after real-life, real-city experiment documenting success.

Honolulu is a prime candidate for road pricing because of its limited lane capacity and ineffective traffic congestion plans such as TheRail.

I would not be surprised if road pricing is adopted in Honolulu after 2025 or so to sore up TheRail financially, nudge more people to it, and reduce peak traffic demand, as in Stockholm.

EPA and Caldwell Are Costing Honolulu $4.5 Billion for Sewers

October 2012 was the 40th anniversary of the landmark Clean Water Act (CWA). On this anniversary, the U.S. Conference of Mayors voiced concerns with what is seen as an increasingly unequal partnership with the federal government. The nation’s towns and cities face a “fiscal crossroads with affordability” as a result of the costs associated with the CWA.

  

Jim Suttle, the mayor of Omaha, Nebraska and former director of its public works department states that the EPA’s reliance on consent decrees is a factor that has impeded the search for innovative solutions to sewer overflows and other problems pertaining to clean water. He argues that the federal government must stop pursuing consent decrees and instead rely on the permitting process to manage water quality problems.

The U.S. Conference of Mayors brings up as an example Lima, Ohio, a town of 39,000 residents. To comply with the Clean Water Act, Lima devised a $60-million long-term control plan, but in 2005 the EPA rejected the plan, and has sought to impose a consent decree that would entail $104 million in capital costs. As a result, Lima’s population will face sewer rates amounting to 4% to 7% of their household income. The CWA compliance costs come to about $2,700 per Lima resident.

Honolulu is in a similar predicament with the overreaching consent decree that Mayor Hannemann signed with the EPA for secondary sewage treatment which is expected to cost no less than $2 billion (The $1.2 billion figure in this article is old and partial.) The same consent decree mandates a number of other replacements and upgrades that will cost about $2.5 billion for an approximate total cost of about $4.5 billion. The CWA compliance costs come to about $4,600 per Oahu resident, almost twice those for Lima residents.

These figures indicate that EPA has gone wild with its requirements for small and large cities. Michael Bissonnette, the mayor of Chicopee, Massachusetts has requested revisiting the consent decrees that are already in place. The U.S. Conference of Mayors is calling on Congress to amend the CWA to make it less burdensome to local governments. The group wants a cap placed on costs to ratepayer associated with unfunded water mandates.

In Honolulu, KITV has already reported that local residents are calling the Board of Water Supply because they can’t afford to pay the rapidly escalating water and sewer rates. (View KITV story.) Therefore, high on the agenda of the new mayor of Honolulu should be the revisiting of the exorbitantly expensive EPA consent decree. This however, would be highly unlikely with mayor-elect Caldwell because he considers this outrageously expensive agreement as an accomplishment.

Dr. Panos Prevedouros Honored by Honolulu City Council

Dr. Panos Prevedouros is being honored here today because of his expertise, his service to the community and its elected officials, and his willingness to act on the simple fact, that when traffic moves, the economy does so with it.

Certificate text by Councilman Tom Berg:

 In 1990, Dr. Panos Prevedouros received his doctorate in Civil Engineering from Northwestern University and in that same year, became an Assistant Professor at the Department of Civil Engineering at the University of Hawaii at Manoa. Dr. Prevedouros became a Professor in 2005 and continues to this day to teach both undergraduate and graduate courses in the discipline of Traffic and Transportation Engineering.

Dr. Prevedouros may be best known locally for his advocacy for cost effective traffic solutions such as synchronizing traffic signals, utilizing grade separation at congested intersections, the implementation of managed lanes and other bottleneck relief solutions. In the community of Ewa Beach alone, Dr. Prevedouros has held over four town hall meetings at the calling of area officials.

In addition to countless invited speeches in Hawaii, Dr. Prevedouros has lectured at several US Universities as well as Universities in Austria, Australia, Canada, China, France, Germany, Greece, Japan, Nepal, Singapore and S. Korea. He was instrumental in establishing a cooperative agreement between the Engineering Colleges of University of Hawaii and University of Saitama, Japan. In June 2009, Dr. Prevedouros organized and chaired a Transportation Research Board and Federal Highway Administration sponsored scientific conference in Honolulu. The 2nd International Symposium on Freeway and Tollway Operations was attended by over 300 experts.

Dr. Prevedouros is a court-qualified Traffic and Transportation Engineering expert in the State of Hawaii, has chaired the transportation committee of the local Chapter for the American Society of Civil Engineers, and was a founding member of the Hawaii Chapter of the Institute of Transportation Engineers. He developed and advised the UH chapter of the Institute of Transportation engineers and he developed and managed UH’s Traffic and Transportation Laboratory. He’s subcommittee chair on traffic simulation at the National Research Council since 2006.

Dr. Prevedouros has received a number of international awards including Transportation Research Board awards in 1995 and 2009 (TRB is a unit of the National Academy of Engineering), Outstanding UH Faculty award in 1996, Van Wagoner Award for Urban Underpasses by the Institute of Transportation Engineers in 2005, and Best Paper on Transportation Sustainability Award from World Road Association (2011.) He co-authored the 2nd and 3rd editions of internationally adopted textbook Transportation Engineering and Planning (Prentice Hall, 1993 and 2001.)

Today the central part of the H-1 Freeway runs at least 10% better than it did 12 years ago. Every improvement to the H-1 freeway done between 2000 and 2012 has been analyzed and justified by Dr. Prevedouros, including the upcoming PM Zipper lane and the lane addition at the Middle Street merge. He has testified at several hearings, helped modify bills and served at Oahu Metropolitan Planning Organization’s TAC.

Dr. Prevedouros was appointed to the City Council Transit Advisory Task Force in 2006 and was the only member out of seven that did not approve elevated rail as the LPA. He was appointed by Council Chair Barbara Marshall to the Transit Technology Expert Panel in 2008 and was the only member out of five that did not approve the steel wheels on steel rail technology for Honolulu. He ran for Honolulu mayor in 2008 and 2010, and assisted mayoral candidate and past Governor Benjamin Cayetano in 2012 based on his expert opinion that elevated rail for Honolulu is a boondoggle.

Obama Re-elected. Market Drops 2%. So What?

I am sure that my Obama loving friends celebrated well last night. I'm glad they did because it's pretty much downhill from here.  This market reaction is only a tiny harbinger of what's to come.

Nothing personal with the President, but as Margaret Thatcher put it, Socialism lasts only as long as other people's money last. The math is both simple and brutal.

I hope you don’t think that only the top 1% of income earners lost a bit of wealth overnight.  Government and private company retirement funds, individual 401Ks, university endowments and most other savings and investments of the remaining 99% are in the stock market. (And in US bonds and T-bills that pay less than inflation so people's savings diminish with time while pension under-funding is growing.)

Of course Californians voted for added taxation to themselves. The outcome of this will be none other than ... Ross Perot's "giant sucking sound..."

These days the world is running at the speed of the Internet. Trends develop and bubbles burst quickly. So all of us under 75 stand a good chance in finding what Greece is all about where, among other things, unemployment for people under 25 yo is at about 50%.

Celebration will quickly turn into sequestration. The Treasury has quietly informed the President that the debt limit will be reached before the year is out.

--------

On November 7, the day after the election the DOW dropped from 13,300 to 13,000. Some said that this was a temporary knee-jerk reaction. By November 15 the DOW had slid further to 12,500.