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Roemer Report – August 2009

OUR TRANSPORTATION NON-POLICY: Ken Zino of The Detroit Bureau.com delivered a razor-sharp assessment of a budget-busting $500,000,000,000 transportation bill that Minnesota Democrat James Oberstar recently introduced to the House of Representatives that calls for sweeping changes in U.S. transportation policy and the way it will assess taxes and fees to keep the soon-to-be bankrupt Highway Trust Fund solvent. Among other things Oberstar wants to increase funding for mass transit by establishing higher fees on highway users. The “Surface Transportation Authorization Act Of 2009″ claims to be a “blueprint for investment and reform,” writes Zeno, and directly challenges the Obama Administration; a fight that Oberstar likely will not win. Secretary of Transportation Ray LaHood wants to defer the larger discussion of transportation policy prompted by the impending bankruptcy of the Highway Trust Fund and the current transportation bill which expires this October 1. LaHood proposes maintaining the status quo for 18 months by injecting up to $20 billion into the existing system to keep the money flowing to the states, which then can divert up to 50% of the money for other purposes. Oberstar wants accountability and coherence to the unsupervised spending. Zino notes the our transportation system is deteriorating, with almost 37%) of all lane miles on the National Highway System in poor or fair condition; more than 152,000 bridges — one of every four bridges in the U.S. — are structurally deficient or functionally obsolete. Hold onto your wallets; Zino posits the half Trillion dollar program cannot possibly be paid for unless fuel taxes are doubled to counter, among other things, President Obama’s national fuel efficiency policy.

CRUDE OIL SLIPS, DIESEL SLIDES: Although on July 9 Bloomberg.com reported Crude Oil rose to just above $60 one could hardly call it a rally and since then it has slipped under that mark and is hovering around $59. According to the Wall Street Journal Oil hit a seven-week low the day before and cited a variety of pressures that are likely to keep the lid on crude oil prices in spite new signs of economic recovery. There are similar tea-leaves being read that reveal diesel prices may follow suit. On July 9 the Energy Information Administration’s website’s Weekly On-Highway Diesel Prices graph showed a discernable, steady decline to $2.59 a gallon, down about a penny from the week prior and more than $2 lower than last year. Government data showed diesel inventories soared to their highest levels since 1985, more than 30% higher than last year.

FREIGHT TONNAGE RISES: Revealing a 3.2% rise, the American Trucking Associations’ Truck Tonnage Index from May, may indicate the recession has bottomed and that the worst is behind the industry. According to a report in the July 6 Transport Topics, the month’s freight increase, the first since March, brought the advanced, seasonally adjusted index to 102.3, up from 99.2, the lowest since November 2001, when the economy slid in the wake of the September 11 terrorist attacks. On the editorial page, Transport Topics editors viewed this news as one more of a series of signs that “we are seeing hints that things are improving.”

TRUCKERS TO BENEFIT FROM STIMULUS: The U.S. EPA recently awarded the Tennessee Dept. of Transportation a $2 million American Reinvestment and Recovery Act (ARRA) discretionary grant to being equipping truck stops across the state with truck stop electrification systems. Known as TEEs or TSPs, the auxiliary power systems provide cooling and electricity to sleeper cabs and will save trucking companies as much as $3,240 annually in avoided fuel costs. According to the Memphis Business Journal June 28th, the systems are not only great for truckers but will significantly reduce emissions from idling trucks and reduce diesel emissions.

ETHANOL’S FLAME FLICKERING: With President Obama looking to mandate to increase the amount of ethanol from 10 percent to 15 percent in each gallon of gasoline, two new studies may change his mind. The Congressional Budget Office (CBO) reported in May that aside from subsidizing the ethanol industry to the tune of $3 billion a year, Americans are also paying another surcharge for the fuel supplement in the form of higher food prices. From April 2007 to April 2008 CBO estimated that “the increased use of ethanol accounted for accounted for about 10 percent to 15 percent of the rise in food prices.” Here’s why: because millions of acres of farmland and billions of bushels of corn were diverted to ethanol from food production. That means the ethanol subsidy cost Americans, who spend more than a $1 trillion annually on food, between $5.5 billion and $8.8 billion in higher grocery prices. So, on top of the U.S. government (read taxpayer) providing a 45-cent per gallon subsidy for every gallon of ethanol processed, Americans got to pay extra for their Twinkies. But wait, there’s more. According to the EPA report “Lifecycle Analysis of Greenhouse Gas Emissions from Renewable Fuels,” burning ethanol won’t likely reduce overall green house gas (GHG) emissions and may likely increase them. EPA analysts are quick to point out that displacement of petroleum by biofuels over subsequent years can “pay back” earlier land-conversion impacts, but that is less hard fact and more theory at this point. In fact, in one scenario, ethanol produced by the industry standard natural gas-fired dry mill process will, over a 30-year horizon, produce a 5 percent increase in GHG emissions.

DURABLE GOODS ORDERS CLIMB FOR MAY: New orders for manufactured goods increased $2.8 billion in May according to the Commerce Department’s report June 24th. It was the third increase in the last four months for this solid economic indicator. The jump, said IndustryWeek.com followed a 1.8% increase in April, and was supported by Machinery, also up three of the last four months with the largest increase, $1.6 billion or 7.7% to $22.5 billion. "The May durable goods report adds a persuasive component to a growing body of evidence that U.S. economic activity is beginning to stabilize after a deep contraction," said Cliff Waldman, Economist for the Manufacturers Alliance/MAPI. "Stripping out either transportation or defense, two volatile categories of demand, new orders were up over 1%.  And 'manufacturing with unfilled orders' had a sharp increase for the second consecutive month, indicating that demand is beginning to make a positive contribution to future production. 

SAFEWAY GETS GAS:  In an effort to reduce road calls from tire failures, Safeway plans to inflate the tires of its fleet of 320 trailers and 80 tractors with nitrogen. According to Theautochannel.com, at the end of June, Phoenix-based NitrogenMan completed an installation of its nitrogen inflation system at Safeway’s Tempe-based truck fleet operations center. NitrogenMan says tests have proven that tires inflated with nitrogen deliver up to a 40% longer tread life because they run cooler and maintain a more consistent tire pressure in spite of fluctuations in outside temperature. A recent study conducted by Dependable Highway Express, the trucking division of Dependable Logistics Services and one of the largest LTL carriers in California, showed zero tire pressure loss with nitrogen inflated tires, while tires inflated with compressed air experienced up to a 5% reduction in pressure over 90 days. Nitrogen-inflated tires experienced more consistent wear and maintained 1/32 deeper tread depth then those with compressed air after as little as 18,000 miles.

CLEAN, GREEN TRANSPORTATION MACHINES: A new study confirms that diesel engines are much cleaner than expected and beat federally mandates regulations by a significant margin. According to the Coordinating Research Council’s 2009 ACES (Advanced Collaborative Emissions) Phase 1 final report issued in June, “the engines achieved 89% reductions in NMHC, CO and particulate matter emissions compared to 2007 standards.” “These findings underscore just how clean this new generation of fuels, engines and emissions control technology really is,” said Allen Schaeffer, Executive Director of the Diesel Technology Forum. “Today’s diesel trucks and buses are so clean it would take 60 of today’s models to have the same soot emissions as one 1988 model,” said Schaeffer. 

LAUGHTER IN THE WORKPLACE IS SERIOUS: There’s likely little shortage of stress in the workplace lately, but Judy Young, a self-help lecturer knows the cure: laughter. But she doesn’t use jokes to make people laugh in her sessions. In the story “Kansans' research shows a good laugh each day can boost on-the-job morale,” appearing in the Wichita Eagle, she gets people to pretend to laugh until they laugh for real. In her seminars she leads people through a series of breathing and stretching exercises and tells them to fake some ho-hos, ha-has, and hee-hees and prompts them to walk faster, slap their knees. Funny thing is, pretty soon people are laughing for real. The results are nothing to laugh at. A study she did with researchers Nate Regier and Heidi Beckman— the first study to look at self-induced laughter in the workplace—showed increases in optimism, positive emotions and social identification. The peer-reviewed study was published in the Journal of Primary Prevention in 2007. Recently, Young received a letter from the American Heart Association praising her efforts to help prevent heart disease.

Even if you are right on track, you’ll get run over if you just sit there. Will Rogers