The Future of Oil

Bloomberg argues that “supply alone is [not] behind the plunge in crude prices to $50 a barrel.” Instead, demand for motor fuel has slacked off due to lack of growth in driving combined with more fuel-efficient cars and more competitive electric cars.

The electric cars argument is specious, as too few of them have been sold to have much of an impact. The lack of growth in driving has already begun to turn around. Bloomberg itself demolishes the argument that supply isn’t the major factor with its very next story, which reports that Saudi Arabia greatly stepped up oil production in March, partly to meet the country’s “growing domestic requirements” and partly, no doubt, to hurt American or possibly Russian producers.

There is no doubt that cars are becoming more fuel efficient, but that is offset by the huge increase in cars sold in China, where auto sales have exceeded those in the United States since 2009. Besides, gasoline only accounts for about 19 gallons of product from a 42-gallon barrel of oil. Some of the rest goes to Diesel fuel, but most goes into other products for which demand is not likely to decline.

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Oregon’s Next Bad Idea

Oregon’s House of Representatives passed a bill to legalize inclusionary zoning. In memory of Bart Simpson, this should be called the “I Didn’t Do It Act,” as the reason for Oregon’s low housing affordability compared with most other states is the legislature’s continuing support for land-use regulation and urban-growth boundaries.

Inclusionary zoning requires home builders to dedicate a fixed share–usually around 15 to 20 percent–of the housing units they build to low- and moderate-income buyers or renters. Research by economists from San Jose State University has conclusively proven that inclusionary zoning laws actually make housing less affordable. This is because builders respond by building fewer homes and by charging more for the non-subsidized units to pay for the ones that they are required to subsidize.

Inclusionary zoning is legal in California, where housing is far less affordable than in Oregon. But inclusionary zoning is not really about making housing affordable; it is more about assuaging liberal consciences for adopting policies that make housing less affordable. If they can force greedy homebuilders to supply a handful of homes for less than market value to needy people, then they don’t have to feel so bad about everything they did that mucked up the housing market.

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Back in the Air Again

The Antiplanner is flying to Dallas today to participate in a Cato event tomorrow. My topic will be “Maintaining the Texas Miracle,” a subject I previously covered in Austin (clicking on the link downloads an 8-mb PowerPoint show).

On Friday, I’ll give essentially the same presentation in Houston. In both cities, I seem to be a warm-up act for other speakers, including the Danish journalist, Flemming Rose.

If you are in either Dallas or Houston, I hope to see you there. Naturally, in my off-hours I’ll be exploring both cities in search of Neapolitan pizza. I expect to find some in Dallas tonight and some in Houston Friday night, but my air travel between the two cities Thursday will force a late-night pizza that day. If you have any suggested pizzerias, don’t hesitate to let me know.

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“Little Boxes” Was About Skinny Houses

In 1962, folksinger and Quaker activist Malvina Reynolds wrote Little Boxes, the theme song of the anti-sprawl movement. Popularized by Pete Seeger in 1963, the song is popularly supposed to be a protest against suburban homes and is often associated with Levittown.


Aerial view of homes in Westlake.

In fact, the Levittowns in New York and Pennsylvania were planned and built years before Reynolds wrote her song, and it is quite likely that Reynolds, a Californian, never saw them. Instead, according to her’ daughter, “My mother and father were driving south from San Francisco through Daly City when my mom got the idea for the song. She asked my dad to take the wheel, and she wrote it on the way to the gathering in La Honda where she was going to sing for the Friends Committee.” Pressed to define exactly where she was when she was inspired, Reynolds said it was in the Westlake District.

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Doomed to Repeat It

Hampton Roads Transit, which serves Norfolk, Virginia Beach, and Newport News, is having a difficult time. Ridership for the first seven months of fiscal 2015 (which began in July) is down 9 percent from 2013, and 2013 ridership wasn’t so hot in the first place. Financial records show that the revenue per rider, at 98 cents per trip, is 8 cents more than the agency’s target, but the cost per rider, at $5.41 per trip, is 73 cents less than targeted, so fares are only covering 18 percent of operating costs.


Click on the image to go to the page where you can download the draft environmental impact statement–comments due May 5.

What to do in this situation? For any transit agency, the solution is obvious: build more light rail. The region’s one light-rail line opened 16 months late and cost 60 percent more than projected. It was supposed to carry 10,400 riders per weekday in its opening year; it actually carried less than 4,400. While it was up to 5,500 in 2013, the 23 percent drop in light-rail ridership so far in 2015 suggests that the average this year will be even less than in the opening year.

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Turning Portland into San Francisco

Portland is “going to look like San Francisco in 10 years,” predicts real estate broker Douglas MacLeod. That’s because people like him are buying homes, demolishing them, and replacing them with two, three, or four skinny houses–houses as narrow as 15 feet in width but (unlike row houses) with around ten feet of space between them.

This continuing process has enough Portlanders upset that the city council recently voted to require developers to notify nearby homeowners at least 35 days before they begin demolition of a home, not that the homeowners will be able to do much about it. It has also led the Oregonian to commission these interactive graphics showing where homes have been replaced and how fast they are being demolished.

Of course, few are willing to discuss the real answer, which is to abolish or at least greatly enlarge Portland’s urban-growth boundary. The 2010 census found that Oregon is 98.8 percent rural, and more than 80 percent of its residents are confined to the remaining 1.2 percent that is urbanized.

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Wedding Cakes and Prisoner’s Dilemmas

Liberals and libertarians both support gay marriage, but tend to divide on the question of whether a baker in Indiana should be required to make a cake for a gay wedding. “A homophobic baker shouldn’t stop a same-sex couple from getting married,” argues John Stossel. “Likewise, a gay couple shouldn’t force a baker to make them a wedding cake.”

Stossel reasons that, “Lots of other bakers would love the business,” while “the free market will punish” businesses that are racist or anti-gay. Of course, “there are a few exceptions,” he admits. “In the South, people banned from a lunch counter had few other choices. The Civil Rights Act’s intrusion into private behavior was probably necessary to counter the damage done by Jim Crow laws.”

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TODs and Subsidies

Transit-oriented developments (TODs) are supposed to promote economic growth because the demand for it is so high. But if so many people want to live in dense, mixed-use developments, why do they so often need subsidies?

The latest proposal to subsidize TODs comes from Senator Cory Booker (D-NJ). He wants to expand use of the Railroad Rehabilitation and Improvement Financing (RRIF) program to allow the funds to be used for TODs. RRIF was created mainly to provide low-interest loans to smaller freight railroads improve their facilities and restructure debt so shippers along those rail lines would not be stranded (or have to resort to trucks) if the rail lines failed.

However, some of the money has been used for passenger rail, including $663 million for Amtrak and $72.5 million for the Virginia Railway Express commuter trains. Considering that these are perpetual loss-making enterprises that have no hope of repaying the loans except out of other tax dollars, expanding this fund for money-losing TODs may seem a natural next step to Booker. But Booker’s fundamental assumption, like that of many Democrats, is that the federal government has an infinite capacity to give away funds, which is what these “loans” are if they can’t be repaid.

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The Downward Spiral Continues

The Washington Metropolitan Area Transit Authority (WMATA) is increasingly dysfunctional. DC’s subway system is designed to run eight-car trains but due to lack of equipment two-thirds of the trains operating during rush hour have only six cars even though they are packed full of people. WMATA has asked Virginia, Maryland, and DC for nearly $1.5 billion so it can purchase new equipment and upgrade its system to allow a return to eight-car trains.

The Maryland secretary of transportation, Pete Rahn, says the state is reluctant to give hundreds of millions of dollars to an agency as poorly run as WMATA. As an example of poor management, Rahn pointed to a dispute among the agency’s board over what kind of person should replace the agency’s general manager, Richard Sarles, who retired from his $366,000 a year job in January.

Some on the board wanted to hire a “turnaround expert” who could restore the agency’s fortunes. Others wanted to hire someone with more experience in the transit industry. The dispute became so serious that the mayor of Washington proposed to dismiss board member (and last year’s board chair) Tom Downs, who favored hiring someone with more transit expertise, because he disagreed with the mayor’s desire for a turnaround expert. In response, three candidates who were being considered for the job withdrew their applications.

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Self-Driving Cars Coming Sooner Than You Think

Auto manufacturers revealed plans for cars with self-driving capabilities at the New York Auto Show last week. These include cars that will be on the market within a year or two.

Volvo, for example, plans to introduce a car this Spring that can “take over both the steering and throttle to follow the car in front of it at speeds up to about 35 miles per hour.” Audi plans to offer cars with a similar feature (up to 40 mph) as soon as January, 2016. The manufacturers use some variation of the term “traffic jam assist” to describe this feature. While the drive won’t actually be steering the car, for liability reasons the cars will require that the drivers keep their hands on the steering wheel or at least put them there every 10 seconds or so.

Late next year Cadillac will offer its top-of-the-line CT6 model with a “super cruise” feature that will combine self-steering and adaptive cruise control at highways speeds: “hands-off-the-wheel, feet-off-the-pedals highway driving.” Cadillac publicity has at least implied that drivers will be able to take their hands off the steering wheel for extended periods without having to touch the wheel every 15 seconds or so like other brands. GM had announced this feature last year, but gave more particulars at the New York show.

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