BIKE: Toll roads as national policy?

[Roger Baker]

On Apr 29, 2005, at 10:50 AM, alan_drake wrote:

>
> I see a flaw in Mr. Baker's skepticism.  He assume massive behavior 
> change sin the face of $5/gallon gas.  I see more modest ones and look 
> to the EU & Japan.
>
> Tolls roads exist there with $4 & $5/gallon gas.  Smaller, more fuel 
> efficient cars and public demand has created good urban rail in many 
> (but NOT all EU nations) as an alternative.
>
> I have heard that 27% of US disposable incoem goes to care & feeding 
> of our autos & SUVs.  Gasoline is a smaller % of the total cost.  
> Depreciation, Insurance, added housing for it at home, extra costs 
> when oen buys it, taxes, etc. will not change dramatically with still 
> higher gas prices (insurance may even go down).
>
> Now the "safety factor" in toll road bond financing will surely be 
> tested.  Prior experience is that often toll roads with a surplus will 
> subsidize their weaker brethren.  I would feel few qualms in buying a 
> Loop 1 Houston bond for example.
>
> That said, in the face of the collapse of the US $ (perhaps €50 barrel 
> oil will translate into $100/barrel) I can see a stop in new toll raod 
> construction after some point in time.  Capital markest will be in 
> turmoil with much higher 30 year yields.
>
> Increasing long term interest rates by 3% will do more to stop new 
> toll roads that adding $3 to the price of gas IMHO (the #s don't add 
> up any more).  Combined they will be a death knell.

I've been passing out leaflets at CAMPO meetings warning of toll road 
bond default for a long time now; years. They're deaf for political 
reasons.

There are no rules of good planning that the road lobby does not seek 
to violate for its short range self-interest. The road lobby has a 2-1 
majority on CAMPO board setting policy for the Austin area nowadays.

The flaw in your thinking that $5 gas may not change behavior is that a 
high oil price raises the cost of about everything else in lockstep. 
This is called cost-push inflation. Faced with widespread inflation, 
the fed will then increase the interest rate to maintain a positive 
return on borrowed money. This slows the economy. This combination of 
factors is what gave us stagflation in the 1970s.
Expect more of the same now.

So in essence one result of higher oil prices is to force the feds to 
raise interest rates, which in turn helps kill toll road economics from 
that angle too. In economics, everything is tied to everything else. 
The whole world economy is built on an economic foundation of cheap oil 
addiction and the world is full of junkies in denial.

Over the next five years, worldwide transportation policy will have to 
shift; nothing can now balance oil supply and demand except demand 
elimination through price increases. Our imported oil habit also risks 
an unpredictable sudden collapse of the dollar due to our $2 billion a 
day balance of payments deficit.

Happy trails, Roger



>
> This risk, higher long term interest rates, needs to be added to the 
> CAMPO public comments.
>
> Alan
>