Highway Funding: Do Roads Pay for Themselves? No Because of "Theft"

Here is a brief analysis by Jack Mallinckrodt,  PhD in Electrical Engineering, Stanford University who made U.S. transportation planning his retirement hobby and has developed a series of well thought out articles at his website www.urbantransport.org:

"
The current intense search for additional sources of highway user revenue is grossly misdirected.

Based on FHWA “Highway Statistics” data for 2004 (typical), “highway user fees”, defined as all tax payments by highway users paid as a “necessary condition of their use of the highway system”, are already yielding revenues of $245 billion/yr (2004).  That’s enough to easily pay the full current annual costs of right-of-way, planning, building, maintaining,  and operating, and financing  the entire U.S. highway system, with a surplus (in business called  a “profit”) of $98 billion/yr.

 The fact that they don’t do so is due entirely to:

1. An arbitrary (not rational) redefinition of “Highway User Fees” hs that counts only about half of the ACTUAL highway user fees paid, and
2. State and federal politicized congressional misappropriation of those  surplus revenues, (“Diversions) to earmarked political favorites (street cars, bullet trains etc.) that provide little or no congestion reduction capacity at 90 or more times the net the cost per passenger-mile.

As someone might have said: “We don’t have a revenue problem, we have a revenue distribution problem.”. The revenue distribution process is a leaky sieve. The revered “Highway Trust Fund” initiated long ago as a solution to highway funding, with its latter day revisions has become instead, part of the problem.

No conceivable additional revenue collection mechanism, not increased fuel taxes, not tolling, nor mileage charge system, will resolve this funding gap until we fix the real highway fund leakage problem.  Our first priority must be to fix the highway user fee receipt distribution process. Otherwise we will simply be spinning our wheels faster. There is much more to this story, derived and explained in “Highway User Fee Surplus.”
"

CitiBike? No, SillyBike

• "The CitiBike program aimed at putting 10,000 bikes in 600 locations around New York City for commuters to share in the name of environmentalism, health and being hip."
• "CitiBike has put out 6,000 bikes at 325 locations at a cost of $6,833 per bike."
• "For a $95 annual fee bike-share members in Manhattan get all-you-can-use access to the silly looking CitiBike in 45 minute increments."
• For $200 one can find a good used bike from an online list, pay $200... and keep it!
• Worse yet: "In recent months, the program’s operators approached the administrations of Mr. Bloomberg and his successor, Mayor Bill de Blasio, about raising the cost of an annual membership, proposing rates up to $140"

Sample Sources:
Another Liberal Amenity for the Urban Upper Class Courtesy Taxpayers

Citi Bike System Successful, but Wobbly From the Start

Bike Share’s Rough Ride

Hawaii State Task Force Recommends Jones Act Exemption

This is a very informative article written by Michael Hansen, Hawaii Shippers Council.

Debate in The U.S. over the Jones Act is very lively these days. For example, on April 25th, Mark Perry, a University of Michigan-Flint business professor wrote: Want energy independence? Waive the Jones Act.

To which a pro-Jones Act shippers lobby quickly responded: Missing the mark on the Jones Act.

In my opinion, the Jones Act, hurts all U.S. island and non-contiguous regions. At a minimum, non-contiguous U.S. states and territories, and the LNG trade must be exempted from Jones Act immediately!

AIKEA FOR HONOLULU No. 36 – Offshore Nuclear Power Plants Can Be Effective. Well, I Said So Four Years Ago!

The Economist: Researchers find advantages in floating nuclear power stations. You may recall that I proposed this as mayor candidate in 2010: Nuclear Power in Oahu's Future?  I know that my proposal went nowhere, but it feels great to be four years ahead of MIT. Furthermore, my idea is more economical than theirs. There is no need to construct floating platforms.  The Navy has many large decommissioned ships that float just fine and can be refurbished at a lower cost.

Before Honolulu hits the energy wall and desperation sets in, problems with potable water may arise due to drought, sea level rise or other reasons. So another billion dollar project may be needed for Desalination, as I explain in this article based on a large desalination plant currently under construction in San Diego.

The impact of executive priorities is clear if one compares the economic trajectories of a few countries say since 1990: Greece vs. Israel, Russia vs. China, Argentina vs. Brazil, and France vs. Germany to name a few. All of them faced a number of local and regional adversities but each pair has a clear economic winner now. Priorities and selection of wise transportation, infrastructure, energy and investment options made most of the difference.

Here are two examples of infrastructure where Hawaii made major wrong choices and placed itself in the loser column.

Renewables. They are expensive and their intermittency is highly problematic.  They depend on heavy subsidies.  To deal with intermittency HECO plans to invest heavily on … batteries. (Our politicians needed wind mills with giant labels: Batteries Not Included.) See Hawaii Wants 200MW of Energy Storage for Solar, Wind Grid Challenges. This is purely throwing good money after bad.

Rail. Simply put, rail is way too much buck for the bang. For the five billion dollars of Honolulu heavy rail we could have spent:

• One billion dollars on LNG conversion and a modest floating nuclear power plant to reduce Oahu’s dependence on oil from over 75% to 25% or less, instead of blowing tens of millions in the wind.
• Two billion dollars on HOT lanes and other mitigations to truly reduce traffic congestion.
• One billion dollars to redevelop ex-Navy lands and buildings at Kalaeloa to preserve the rich history of the site and relieve Oahu’s pressing homeless and low income housing problems.
• And one billion on desalination to anticipate water shortage problems.

Join me at the 38th Annual SBH Business Conference, Tuesday, May 13, 2014, 8:00 AM to 2:00 PM, Hibiscus Ballroom, Ala Moana Hotel. Luncheon keynote speaker is entrepreneur, author, coach and motivator, Patrick Snow, who will speak on “Proven Principles for Prosperity.”

The business  program features Mike McCartney (Hawaii Tourism Authority), Tom Yamachika (Tax Foundation), Bob Sigall (Author and Educator), Mark Storfer (Hilo Hattie), Naomi Hazelton-Giambrone (Element Media), Dale Evans (Charley's Taxi), and Peter Kay (Your Computer Minute). Contact: Sam Slom (349-5438) or SBH (396-1724). Don’t miss it!

Aloha!

Panos


Panos D. Prevedouros, PhD
Professor of Civil Engineering
Member, SBH Board of Directors

Desalination Works but It's Expensive

A recent large deployment of desalination in San Diego is useful to Hawaii where Oahu and Maui may approach the need for manufactured potable water in the next 20 years or so if population and tourism growth trends continue and appreciable sea water rise continues (e.g., 0.32 cm water rise was noted between 1993 and 2013, which, if remains steady, results in 32 cm or 13 inches mean sea level rise every 100 years.) Recall that as sea water rises it makes larger parts of the aquifer brackish, thus unusable for drinking and irrigation.

The project in San Diego was smartly located right next to a large powerplant which means that a comparable location for Oahu would be next to the Kahe powerplant and Electric Beach.  This is because desalination requires vast amounts of both water and electricity, and pumping requirements can be reduced by taking advantage of the seawater pumped into a pre-existing powerplant.

The deployment in San Diego is currently under construction. It is designed to produce 50 MGD of water, that is 50 million gallons per day. This amount of clean water can supply 112,000 typical single family homes or more than one third of the current s.f. homes on Oahu.  This would be the upper limit of desalination plant that would be needed for Oahu. This plant would require more than 30 MW of electricity which is what the H-Power plant was producing for decades, before its boiler capacity was doubled in mid-2013.

The budgeted price of San Diego's Carlsbad desalination plant?  One billion dollars including a 10-mile distribution pipe, if the project is completed on time and on budget in early 2016.  Come 2020, Oahu may need to start budgeting for such a large project.

Transportation Engineers Would Be More Relevant if They Did Not Peddle Ineffective Transit Systems

As I opined in the Journal of the Institute of Transportation Engineers.

Mr. Schwartz’s call for making the transportation engineer relevant is important. Sharing this realization, I ran twice for Mayor of Honolulu on an infrastructure preservation and traffic congestion relief platform and I garnered almost 20% in both 2008 and 2010.  Mr. Schwartz' advise to transportation engineers is good except for his instruction to “get people out of cars.” New York City may boast that 70% of commutes occur on non-auto modes, but it’s an exception. The next U.S. city with a low auto-mode share barely has 30% of commutes occurring on non-auto modes. Telecommuting is surpassing transit. Car-sharing, and intelligent and autonomous zero emission vehicles will maintain the auto mode’s dominance.

In 30 years or so, my kindergartener son and his cohorts will be commuting in driverless electric cars that can reach 0-60 mph in 5 seconds, follow at a headway of under 0.5 seconds on narrow high capacity lanes (some four lane urban highways will convert to automated guideways with six 8 ft. lanes), be a full office away from home or work, and still be exciting to drive in off-drivereless mode outside the city.  

The future of transportation engineering in the U.S. will be great as long as we do not expend substantial resources on modes of the past millennium such bicycles and ordinary trains, except for limited applications where they may be both practical and cost-effective.

Useful Uses of Light Duty Drones

Small, light duty remotely controlled (RC) drones(1) that fly at a height between 20 and 200 ft. may perform a large number of useful tasks quickly and relatively cheaply. Here's a partial list of the things that can be done by a $5,000 multi-rotor drone that can lift 2 to 4 kg (4 to 10 lb):

Infrastructure Services (2)

• Assess road and bridge surface condition with 3D mapping that is far easier than deploying expensive custom profilometers on specialized vehicles.
• Inventory and condition of road and highway signs, signals, lane markings and barriers.
• Remote assessment of tree growth, land slide slopes and condition, rock outcrops along highways.
• Detailed external inspection of newly delivered projects such as roads, bridges, buildings, etc.
• External inspection of pipelines.
• Inspection of utility lines.
• Harbor patrol and inspections for leaks, etc.
• Area monitoring of air quality: traffic, chemical, other leaks.
• Traffic management at the site of an incident with no or poor CCTV coverage.
• Rapid regional land surveys and photogrammetry (i.e., centimeter accuracy GoogleEarth).

Commercial Services

• Extra live capture of events such as surfing, racing, skiing and other sports where camera placement is challenging. (Example of 2013 RallyX near Honolulu.)
• Real estate, architectural, promotional and educational videos.
• Spraying of crops and fertilizers -- used in Japan for over 20 years; see picture above.
• Wildlife monitoring and rounding of livestock.
• Remote sensing for archaeology, minerals, other resources.

Security and Rescue Services

• Police, security and similar quick-deployment surveillance that deploys from the trunk of a police vehicle, and supplements helicopter surveillance.
• Remote sensing and discovery of lost hikers, avalanche victims, etc.
• Quick emergency supply drop before "big help" can be mobilized, if necessary.

Small, private drone use may need to be regulated appropriately such as this example: Drones banned from Yosemite, other parks.


Notes (1): Some call them Personal UAVs -- (2): See additional discussion: Researchers Have High Hopes for Drone Use in Transportation

AIKEA FOR HONOLULU Newsletter Kudos

About ten times a year I send out my AIKEA FOR HONOLULU Newsletter in which I usually summarize some of my more important blogs.

I received over fifty responses for issue No. 35 which basically replicated the article below, Sopogy's Demise is a Huge Victory for Honest Engineering and the Taxpayer, including a response from past governor Ben Cayetano who wrote:

"Panos, I suggest you submit a condensed version as an Op-Ed to the Star.advertiser.  Mind boggling stuff.
Aloha, Ben"

Past University of Hawaii President and State DOT director Fuj Matsuda said:
"Thanks for the update:  I had heard that Sopogy was in trouble, but had no idea it was that  bad."

Also, the following response came from a well known person in the area of renewable installations in Hawaii. It reads as follows:

"Always appreciate your emails but couldn't keep myself from responding to this one in particular.

The entire sector has from its birth, been driven by pure "emotion".

Your mature, dispassionate, logical point of view on energy, rail, politics, waste and abuse are appreciated and far too rare.

From the 70's "Japan is taking over the world"and "we're out of oil"... To Y2k's "end of the USA as we know it" .. To today's message of "renewable energy AT ANY COST" ...

I've learned that everyone needs a life mission.  Unfortunately, choosing one's life mission is typically an emotional descision.

A couple more HOKU's from now, just on the other side of Hawaii's very own "Big Dig" (rail), people will be looking for a grownup to lead them, and remember Panos.

HANG IN THERE!

we need ya"

============

Thank you all for your support.  That's my "payment" and it's more than enough!

Sopogy's Demise is a Huge Victory for Honest Engineering and the Taxpayer

Along with a trio of highly capable mechanical and systems engineers I spent dozens of hours poring over the specifics of the micro-concentrated solar power touted by Sopogy which shut down several months prior to this April 22, 2014 article.

Sopogy was told by numerous engineers that their Kona projections were absurd and violated the second law of thermodynamics.  Sopogy proceeded anyway with their original plan.

My multi-year effort was particularly painful because this incompetent technology had received the 2009 Blue Planet Foundation Award and my own Dean sat at the board of directors of BPF when this award was made. Keahole Associates, an Oahu venture of Sopogy, was promoted in University of Hawaii, College of Engineering literature.

Here is some of the 2009 hyperbole: "Sopogy is developing the next generation of high efficiency solar panels and energy storage technologies for Hawaii and the World.  Keahole Solar Power developed and constructed a 2 megawatt solar thermal project and is developing an additional 30 megawatts of fossil fuel free power.  Together his companies employ and support hundreds of green collar jobs and kept over $500 million in Hawaii’s local economy through energy savings. In addition his work has off-set over 2 million metric tons of CO2 emissions which is the equivalent of reducing 27,000 tankers of gasoline or eliminating the consumption of 4.6 million barrels of oil."

The most factual evidence suggests that throughout its existence, Sopogy generated 0.1 MW!  This is roughly equal to 50 modest solar installations on residential rooftops.  It took $20 million (yes million) of Hawaii technology tax credits to accomplish so little.

Sopogy is developing the next generation of high efficiency solar panels and energy storage technologies for Hawaii and the World.  Keahole Solar Power developed and constructed a 2 megawatt solar thermal project and is developing an additional 30 megawatts of fossil fuel free power.  Together his companies employ and support hundreds of green collar jobs and kept over $500 million in Hawaii’s local economy through energy savings. In addition his work has off-set over 2 million metric tons of CO2 emissions which is the equivalent of reducing 27,000 tankers of gasoline or eliminating the consumption of 4.6 million barrels of oil. - See more at: http://social.csptoday.com/technology/sopogy-ceo-receives-blue-planet-foundation-award#sthash.1MB5Q8Cs.dpuf

Sopogy is developing the next generation of high efficiency solar panels and energy storage technologies for Hawaii and the World.  Keahole Solar Power developed and constructed a 2 megawatt solar thermal project and is developing an additional 30 megawatts of fossil fuel free power.  Together his companies employ and support hundreds of green collar jobs and kept over $500 million in Hawaii’s local economy through energy savings. In addition his work has off-set over 2 million metric tons of CO2 emissions which is the equivalent of reducing 27,000 tankers of gasoline or eliminating the consumption of 4.6 million barrels of oil. - See more at: http://social.csptoday.com/technology/sopogy-ceo-receives-blue-planet-foundation-award#sthash.1MB5Q8Cs.dpuf

In 2010 is was announced that DHHL was about to enter into a (tragic) agreement with Sopogy. It would have cost taxpayers tens of millions of dollars to develop a 30 MW solar power plant.

Then in 2011, Sopogy won the APEC 2011 Hawaii Business Innovation Showcase award for Honolulu.

Throughout this period Sopogy CEO Darren Kimura was the energy darling of Governor Neil Ambercrombie. The Gov would not grant me an appointment to talk about energy issues for Hawaii despite repeated requests. Of course his energy point man, Bryan Schatz is so pro "renewables" that logic and cost are not an issue.

Despite everything being stacked in favor of Sopogy, I summarized the analysis and warned DHHL that they should be cautious about this type of power plant and investment. The local media ignored my article. Only the Hawaii Reporter printed my opinion.

In January of 2013 the Hawaii Venture Capital Association gave Sopogy the 2012 HVCA Deal of the Year Award for a deal that (thankfully) went nowhere!

All these august bodies failed to do even minimal due diligence. For example they simply could have looked at HEI's Securities and Exchange Commission filings which list the power they purchase from power sources other than their own.  Sopogy's Kona power plant appears nowhere.

Before publishing my analysis in 2011, I met with Darren Kimura at the Pacific Club. I informed him that I can find no power sold to HELCO and he said that he'll furnish me data, although most of the power was used "internally."  Darren never got back to me.  It was clear to me that he was selling duds for millions.

On April 23, 2014 greentech referred to my 2011 article and commented as follows: 

"Kimura and the company always seemed to be on hand to receive an award, bond, or tax credit in Hawaii but rarely could the firm be found making competitive energy, despite the CEO's claims.

"We have about 75 megawatts under contract and in the process of being deployed," claimed the CEO in a 2011 interview. In a much earlier interview he spoke of a 50-megawatt solar farm in Spain and $10 million per year in revenue.

"Even before the price of silicon photovoltaics plunged it was difficult to see how Sopogy could ever be competitive."

This is only one sample of international humiliation for Hawaii.

Several lessons were observed but likely were not learned, as follows:

1.  Good, honest engineering can reveal technical and economic duds.
2.  Once a project (or company) is an engineering or economic dud, it will fail.
3.  The demise of Sopogy is fortunate because duds like it can become a tax supported scheme concocted by greedy rent seekers and enterprising politicians who also create legal supports for the schemes. For example Hawaii's PUC considered preferential pricing for concentrated solar power to make sure that the 30 MW Kalaeloa scheme would make money (while the taxpayer would get fleeced.)
4.  Media, politicians and environmentalists know nothing about engineering stars and duds, but they have bestowed upon themselves arbitrary decision wisdom  that determines winners and losers.
5.  Many people go along to get along, or do the wrong thing for money regardless of what the right, ethical or moral thing to do is.
6.  There was abundant "me too" or follower behavior and scarcity of prudent analysis and caution.
7.  The truth rarely comes out, or comes out after precious funds have been lost. In this case millions of tax dollars were lost at the Kona plant and large acreage in the Ewa plane was bulldozed.
8.  HEI, the parent of HELCO and HECO knew the facts about Kona's Sopogy plant but did not make any apparent public disclosures when DHHL was proposing a mega version of the Kona power plant. Worse yet, HECO ran a Sopogy television commercial repeatedly from 2011 to 2013, touting Sopogy technology and HECO’s commitment to ecology.
9.  Hawaii’s blind promotion of a sub-standard technology sets a bad precedent in an area were Hawaii already is weak.
10.  Nobody will likely be held accountable for the wasted tax credits or apologize for rewarding incompetence. Will there be an AD's inquiry of DHHL and HECO?

Many well-known people such as Governors Lingle and Abercrombie, Chancellor Virginia Hinshaw, Blue Planet Foundation's Henk Rogers, and Hawaii's only billionaire Pierre Omidyar have Sopogy egg on their face. But given that this is Hawaii, the Sopogy scandal will likely die off quietly and the charlatans will have the last laugh.

PS. The counsel of attorney and engineer Eric Beal is greatly appreciated.