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.