• VINDICATED! VCU Comes Clean

    Yesterday, at a meeting of 100 members of the Virginia Commonwealth University community, Dr. Francis Macrina admitted that his school was wrong for the secrecy agreements it has entered into with Philip Morris USA.

    Other speakers among the 100 or so attending the meeting of a task force tasked with exploring corporate research addressed a variety of concerns related to the propriety of the tobacco contracts and whether VCU should be doing tobacco-funded research at all.

    Since I have been writing against the contracts for Bacons Rebellion and have researched the issue extensively on Richmond.com, all I can say is “Bravo!”

    The meeting is restoring my faith in VCU although I am disappointed they still believe they need to take baby steps in dealing with issues that plenty of other schools would have absolutely no problem in addressing. VCU administrators, for example, refused to allow news cameras to film any of the meeting. A small step backwards.

    A few other points. This meeting and Macrina’s honesty shoots down some folks on this blog. One is a Virginia State Chamber of Commerce lobbyist who saw absolutely no problem with the tobacco contracts. Well, fella, VCU sees a problem with those contracts so maybe you ought to enter the 21st Century.

    And, our beloved Blogmeister, Jim Bacon, needs to wake up and smell the coffee, too. After all this, he doesn’t need to step back, all-knowing, and complain that he can’t find enough to “condemn” VCU about. Well, Jimbo, mark Macrina’s words. Next time, no knee jerk defense of the “Richmond” you so proclaim to love. Think it over, first. Okay?

    The danger, however, is that this issue may die ove the summer. VCU President Eugene Trani seems to be recovering part of his and his school’s reputation by holding these public meetings and encouraging debate. Funny that there’s still an element of fear.

    Unfortunately, Trani, 68, has been ill with heart troubles and has undergone a bypass. This and his age raise the question about his succession. One wonders if VCU has started looking.

    Peter Galuszka


  • Virginia Leaders in the “Green” Revolution

    Virginia, like the rest of the world, is in the early stages of a “green” revolution that will result in the massive reordering of economic, institutional and governmental priorities to accommodate the reality of higher cost energy. While public policy sets the parameters — upholding environmental standards, designing transportation systems and influencing human settlement patterns — let there be no doubt it is the innovation and creativity flowing from the private sector that will actually make change happen.

    In the future, Bacon’s Rebellion will pay more attention to the activities of private-sector players either based in Virginia or active here. There are two particular players that are worthy of attention, for they have gotten a jump on everyone else in building a track record and establishing credibility in developing renewable energy. They are AES Corp. and Intrinergy Inc.

    AES, based in Arlington, provides electric generating capacity in North America and around the world, racking up more than $4 billion in revenues in the 1Q of 2008 alone. While much of this generating capacity burns fossil fuels, the company is rapidly building its holdings of renewable energy capacity. The company owns or operates 32 hydropower stations in nine countries, which collectively generate nearly 7,454 megawatts of electric power. The company owns/operates wind farms in California, Texas, the Midwest and Pennsylvania (the latter of which, in a recently announced deal will supply green energy to the Old Dominion Electrical Cooperative). The company is actively involved in developing 49.5-megawatt wind energy project in China as well.

    In a new line of business, the creation, qualification and sale of Carbon Emission Reductions, AES’s Greenhouse Gas Services division works on projects to reduce greenhouse gases like carbon dioxide and methane. One current example is a project with Malaysian oil mill owners to capture and destroy the methane emissions that are a byproduct of palm oil production. The market for carbon emissions reductions is estimated at $10โ€“15 billion annually.

    Meanwhile, the company is laying the groundwork for solar energy generation as well.

    Intrinergy, based in Richmond, isn’t nearly as large as AES, but it is growing fast. Formed in 2005, the company has developed an expertise in producing clean-burning gas from biomass: anything from wood chips, forest residue and yard clippings. The technology is particularly suited to industrial clients who can use the gas for cogeneration: generating electricity and using the waste steam for industrial processes.

    Intrinergy doesn’t just design and build cogeneration plants. It also lines up supplies of waste byproducts to feed the cogeneration units. Currently, the company buys about 7,000 tons of waste byproducts a month for its European and domestic operations, reports Garry Kranz for Virginia Business magazine. The company also provides the financing for the projects, funding the full cost of constructing the energy generation facilities. That way, the client can share in energy savings without putting up any of its own capital.

    The company has built plants in Mississippi, Ohio and Germany, and it has another 35 facilities in the pipeline in North America and Europe. Says President John Keppler: “We believe realistically that we could invest $2 billion to $3 billion in renewable energy over the next five years.”

    Ironically, Intrinergy has no active clients in Virginia, although the company is in contact with a number of companies that are interested in its services.


    AES and Intrinergy are just two of the more prominent companies active in Virginia. There are many more enterprises creatively laying the groundwork for a transformation of the global energy economy, not to mention a growing number of financiers, attorneys and business consultants who supply the intellectual capital to identify deals and close them. I will bring them all to the attention of Bacon’s Rebellion readers as the opportunity arises.


  • Faulty Logic in the Offshore Drilling Debate

    The off-shore drilling debate is heating up here in Virginia and it’s generating a good deal of posturing and over-heated rhetoric.

    The posturing comes from General Assembly Republicans, who introduced a bill during the special transportation session that would have allocated a share of the state’s royalties to help pay for new transportation projects. Wow, that’ll be a big help… 12 years from now! The regulatory hurdles to exploration and drilling will delay exploitation of oil and gas reserves off the Virginia coast for years, and energy companies are more likely to chase more lucrative opportunities before investigating the Virginia coast.

    The Washington Post quotes Stewart Glickman, an equity analyst at Standard & Poor’s: “There would probably be far more interested in the eastern Gulf of Mexico than they would be in the mid-Atlantic. [But] it is a possibility at some point.”

    The over-heated rhetoric comes from the environmentalist camp. Some environmentalists oppose drilling under any circumstances, citing concerns about leaky pipelines, on-shore refineries, platform lights cluttering a pristine night sky and large-scale oil spills. Burning oil and gas, they add, contributes to climate change which could help raise sea levels and swamp much of Hampton Roads and the Eastern Shore.

    No one wants oil spills, and with oil likely to sell above $100 per barrel more or less forever, oil companies could afford to deploy whatever safeguards are needed to reduce the potential for oil spills to near zero. Someone ought to take a visit to the oil rigs in the Gulf of Mexico and ask how much oil spilled during Hurricane Katrina… or ask how much oil spills ever. If the safeguards aren’t sufficient to protect Virginia’s pristine coast, then I agree, let’s wait until we can guarantee that the waters will remain clean. But rather than assuming that offshore oil wells pose a big risk, let’s ascertain the facts.

    One argument against drilling seems especially disingenuous: Getting a few hundred thousand barrels per day from Atlantic Coast oil wells won’t make a dent on oil prices. We can’t extract enough oil, the argument goes, to impact global supply and demand. Well, that’s true… but it’s irrelevant. Pumping 25,000 barrels a day (to pick a number) from Virginia’s continental shelf would allow us to avoid buying 25,000 barrels a day of someone else’s oil. At $100 per barrel, that’s $2.5 million a day that’s being circulated in the United States economy, much of it in Virginia, not shipped overseas to support foreign despots. That would be a good thing.

    None of this logic obviates the need for a restructuring of transportation systems and human settlement patterns into more energy-efficient forms. Exploiting off-shore oil and gas can pump some money into the state’s economy but it won’t come close to meeting our long-term energy needs.

    (Photo credit of California oil rig: Solar Cola.)


  • No Tract Is an Island

    West Broad Village, the large mixed-use development underway on West Broad Street, rates cover story treatment in the Metro Business of today’s Times-Dispatch. The 115-acre project, which is rising upon one of the few remaining undeveloped tracts in the Short Pump area, will contain about 550 town houses and 340 apartments, 420,000 square feet of retail space and 668,000 of office space.

    Itโ€™s hard to imagine that western Henrico County needs more retail space โ€“ especially so close to the 1.2 million square feet in nearby Short Pump Town Center, not to mention the big boxes lining West Broad and Pump Road — during an economic slowdown that has bit deeply into consumer pocketbooks. But โ€œVillageโ€ officials profess optimism.

    One of the very things crimping the economy โ€“ rising gasoline prices โ€“ should help the residential component of project.

    With gasoline prices at $4 per gallon, people want to simplify their lives, maintains Patrick Ashley, a sales and marketing manager for Ryan Homes. โ€œPeople are telling me that the higher gas prices, the more attractive West End Broad gets,โ€ he told Louis Llovio with the Times-Dispatch. โ€œResidents will be able to walk to the grocery store and to work: go to dinner and shop, all without leaving the area.โ€

    Continued Ashley: โ€œFor someone who lives in, letโ€™s say, in Goochland and works in Innsbrook or even downtown, this is a great spot because the commutes are shorter. After work and the weekends, they can just park their cars and not have to worry about it.โ€

    Are higher gasoline prices enough to goose sales at West Broad Village? Will households forsake their single-family dwellings with big lots just to shave a few bucks off their weekly gasoline bill? The Villages at West Broad could provide an interesting test of consumer preferences — at least in the Richmond metropolitan region.

    โ€œLive, work playโ€ is the new mantra in real estate development as rising gasoline prices prove punishing to Richmond-area road warriors. The project literature calls upon the vocabulary of the New Urbanism school of urban design, which calls for mixed uses, people-friendly streetscapes and a balance between accommodating the interests of pedestrians and automobiles. While West Broad Village makes concessions to the surrounding auto-centric landscape of Henrico County — it surrounds its retail stores with the usual vast parking lots — it provides parking decks for apartment dwellers and homeowners, and it has paid keen attention to creating designing โ€œwalkable,โ€ pedestrian-friendly streets. As the website explains:

    There are seamless transitions from neighborhoods, to the โ€œmain street,โ€ to the public spaces and even to the adjacent school and park. Collectively, these spaces create a dynamic community framework, a community of neighborhoods social interaction can take place. …

    Tree lined streets with comfortable sidewalks bring back the small town feeling of a community in West Broad Village. Streets will be designed to a pedestrian scale without compromising the automobile. Intersections will consider the pedestrian, bicycle and vehicular movement. Multiple connections and traffic calming will be integrated into the network design.

    The developers are saying all the right things. How well the project will work in practice, wedged as it is into a classic landscape of “suburban sprawl,” is another question. West Broad Village is sealed off from neighboring development by a combination of wetlands, forested areas, upland reserves and parks, a โ€œcontinuous natural edge.โ€ The project map indicates little connectivity between the “village” and surrounding communities — other than the six-lane highway on West Broad Street. Traffic in and out of West Broad Village will add to the already horrendous congestion along West Broad.

    Unlike the genuine urban environments that the project emulates, the Village’s streets and sidewalks do not knit the village into the fabric of surrounding neighborhoods. West Broad Village is a pedestrian oasis in a sea of auto-centric, big boxes, shopping centers and cul-de-sac residential development. The village cannot create an authentic urban experience. Still, with gas prices rising, retailers and homeowners may find even a faux-urban oasis preferable to the auto-dependent, suburban alternative.

    (Cross posted with R’Biz.)


  • NATIONAL DISASTER

    Jim Bacon and EMR tune in on different MainStream Media outlets and today they saw different stories and came to different conclusions. Bacon reported on a Richmond Times-Dispatch op ed column by the US Secretary of Transportation (โ€œMary Peters on Virginia Transportation Policyโ€). EMR has been reading WaPo.

    In SundaySource, WaPo splashes a lot of colored ink on โ€œAn Airfare To Remember: As the Cost of Travel Soars, Couples in Long-Distance Relationships Are Feeling the Pinch.โ€

    True and touching but WaPo would do better to alert citizens to the economic, social and physical impact on citizen’s well being due to a deteriorating Mobility and Access system in the air, on the water and on land.

    It is all well and good to chew over the cratering of IntraRegional transport โ€“ roadway congestion, deteriorating bridges and other realities โ€“ but let us not forget InterRegional transport. The headline from a 22 June WaPo Op Ed by David Ignatius puts the air issue in perspective: โ€œFailing Airlines, Failing Government.โ€

    We considered the impact of the declining health of Air Enterprises in a column โ€œThe End of Flight as We Knew Itโ€ on 21 April 2008. Things have gotten worse since. Last week the EU finally voted (640 to 30) to start forcing Air Enterprises to pay the cost of their upper atmosphere impact. That on top of fuel costs…

    For years Air interests have pumped Agency and private Capital into a system of air Mobility and Access based on cheap fuel. They have convinced smaller urban enclaves that the saviors of their communityโ€™s economy will fly in and out of town. Uncle Sugarโ€™s pork barrel has doled out grants to build a system that now will be so expensive it will only serve a few at the top of the Ziggurat.

    Just yesterday WaPo reported that airport managers have come to the federal trough for help. (โ€œFeeling Airlinesโ€™ Pain, Airports Seek Help in D.C.โ€) Sorry, Uncle Sugar has spent all his money in the casbah โ€“ protection money for cheap petrochemicals โ€“ and he has nothing to show for it but war casualties and debt.

    On the water and on land, the problem is no better. In โ€œInterstate Crime,โ€ (28 February 2005) we outlined some of the problems with the Interstate System and the ideas floating around to โ€œfixโ€ it.

    Most now understand the profound negative impact the Interstate Highway system has had on human settlement pattern โ€“ for a refresher see โ€œInterstate Crime.โ€ A growing number are coming to realize dysfunctional result of relying on Autonomobiles for Mobility and Access โ€“ See THE PROBLEM WITH CARS.

    The foolishness of building a system of roadways that must be used by vehicles with vastly different weights and driven by persons with different skills is coming into focus as drivers get older and energy costs will result in vehicles that are smaller, lighter and more dangerous. See our 13 June Baconโ€™s Rebellion Blog Post โ€œAprera and the Tiger Riders.โ€

    The dialogue in Jim Baconโ€™s Friday 11 July post โ€œGet Over itโ€ on the physics of InterRegional Mobility and Access via rail makes it clear how far citizens, even citizens of good will, are from coming to a well considered judgement on a course of action with respect to any mode of travel.

    Where have the 100s of millions of dollars in transportation โ€œresearchโ€ gone over the past 60 years? To the Enterprises and Institutions that are the Haliburtons of the Autonomobile, the vehicle of choice of Business As Usual.

    It would be so nice not to have torn up the street railway system โ€“ the Federal District hopes to have its system rebuilt by 2030. And what about those thousands of miles of abandoned railroads?

    Seems like Ms. Peters should be worrying about the big picture, not giving op ed advice on finding money for IntraRegional short-term fixes. On the other hand she has not been in office for 60 years so it is hard to put all the blame on her.

    Where is Will Owen when we need him?

    EMR


  • Mary Peters on Virginia Transportation Policy

    Mary E. Peters, the U.S. Secretary of Transportation, has published a column in the Times-Dispatch today that displays a surprising familiarity with Virginia’s transportation-policy gridlock. Perhaps, as a federal employee, she is a resident of Virginia, which means she is affected by the actions (or non-actions) of the General Assembly. Or, perhaps her knowledge derives from the fact that Virginia is a national leader in tolling and congestion pricing — which happen to be the very remedies for the nation’s transportation woes that she advocates.

    Whatever the case, Peters makes far more sense than most national politicians who pontificate about transportation policy. She’s got the big themes right. Now she needs to work on the details.

    At the heart of her message, Virginia needs to change the way it funds transportation projects. She writes: “It makes little sense — and it’s certainly not sustainable — to increase our reliance on gasoline taxes at a time when we all recognize the need to decrease fuel consumption and increase the use of alternative fuel sources. … gasoline, car, property, and sales taxes have little or nothing to do with the use of highways and are ineffective at reducing highway congestion.”

    Translation into Bacon-ese: Transportation funding needs to address the demand side, as well as the supply side, of the equation. There needs to be a direct connection between how much, and when, people drive and how much they pay. If drivers pay their share of the cost of building and maintaining roads and highways, they won’t “demand” as much transportation capacity as if they pay by other means.

    Peters is a huge fan of variable pricing, or congestion pricing, as am I — the difference being that I recognize there is a gap between abstract economic theory and how congestion pricing is applied in the real world.

    Private toll operators, Peters says rightfully, bring private capital to the able, allowing projects to get financed that Virginia otherwise could not afford. Congestion pricing, she adds, manages transportation corridors on the basis of supply and demand, allocating scarce capacity in a manner very much like long-distance phone service.

    But the analogy with long-distance phone service is far from exact. There is abundant competition in phone service, with multiple players utilizing multiple technologies. Private toll operators strive to squelch competition in order to lock in their captive markets, as Virginians discovered when we got a peek at the contract between the Commonwealth of Virginia and Capital Beltway Express for operation of the Interstate 495 HOT lanes. (See “The Capital Beltway HOT Lane Deal.”) That was a deal, incidentally, that Peters’ office was intimately acquainted with, as the feds provided much of the low-interest financing to make it happen.

    The Beltway HOT lane contract protects the private operator’s revenue stream by imposing significant financial penalties on the state of Virginia for making transportation improvements that would undercut toll revenues. I would humbly suggest that the solution to traffic congestion is more competition, not less. On the other hand, it is questionable whether Transurban and Fluor, the joint venture partners, would have made the investment and taken on the financial risk without some assurances, so there are no easy answers.

    Still, Peters articulates the critical issues clearly when writes:

    Virginia’s leaders have a clear choice. They can ask drivers to pay more at the pump, more at the store, and more at the DMV — regardless of where they live or when they drive. Or, they can put in place direct user fees that will be targeted to areas where congestion is at its worst, and will actually cut traffic, speed commutes and improve the timeliness and quality of transit bus service. …

    Embracing direct pricing for road use would also have the added benefit of encouraging better decisions about land use, stimulate reductions in carbon-dioxide emissions and encourage more of the commonwealth’s commuters to try transit. In short, embracing tolling as a solution to Virginia’s transportation funding challenges would cut traffic, generate needed revenue, improve transit, and significantly benefit the environment.

    Now, if we could just get Madame Secretary to start talking about “balanced communities,” we’d really be making some progress!


  • Get Over It

    Gov. Timothy M. Kaine blasted Republicans yesterday for the collapse of the General Assembly special session on transportation, and the Republicans blasted him back. The blame game is inevitable as the pols mug for the cameras and play to the next day’s headline writers. But Kaine’s comments rang especially hollow.

    As Jim Nolan reports for the Times-Dispatch: Kaine “likened what he saw in the Republican-controlled House of Delegates to a situation comedy.

    “It was like a Seinfeld episode — a show about nothing,” Kaine told reporters at the Capitol, hours after lawmakers adjourned following a marathon 12-hour day, closing the six-day special session with no transportation fix for the state.

    “And in the House, it was a road session about nothing.”

    How rich. This comes from a governor who was so unprepared for the special session that he couldn’t even get his own party to introduce his bill in the state Senate. This comes from a governor who made zero effort to reach out to the opposition Republicans and, instead, stumped the state in series of public hearings, hoping to generate public sentiment — that never came — to pressure the Rs into capitulating.

    News flash: The entire special session was “about nothing.” If you want to point the finger, point it at the guy who called the special session. That wasn’t Sen. Richard Saslaw, D-Fairfax, chief muckety-muck of the senate. It wasn’t Del. William Howell, R-Stafford, head honcho in the House.

    Hands down, the transportation special section has been the biggest gaffe of the Kaine administration. The sooner the governor drops the subject and moves on to other things, the better of he’ll be.


  • It’s All Over But the Name Calling

    The special General Assembly session on transportation collapsed in a heap yesterday, with no one agreeing on much of anything. None of the three major proposals for raising revenue to fund transportation improvements managed to get any traction.

    There were three major proposals on the table, one submitted by Gov. Timothy M. Kaine, one by the Democratic-controlled state Senate and one by the Republican-controlled House of Delegates. (Actually, according to press reports, the House trotted out a couple of different ideas.) All died. Predictably, Democrats blamed Republicans, Republicans blamed Democrats and editorial writers wrung their hands at the inability to achieve a consensus.

    Here’s the reason that consensus is so difficult to achieve: When the debate is about raising taxes, the issue quickly focuses on who pays. While most of the constituencies involved want more money to spend, they all want someone else to pay. The real estate industry opposes grantor’s taxes. The auto dealer’s lobby oppose car titling taxes. Defenders of the poor oppose the gasoline tax. Richmonders don’t want to pay for roads in Northern Virginia.

    As I’ve noted before, politics is all about getting someone else to pay for what you want. With the terms of debate framed the way they are, a consensus is unachievable. The tax hikes are a zero sum game. If someone comes out ahead, someone else loses. When there is no electoral groundswell for higher taxes and the agitation comes overwhelmingly from business interests , the debate inevitably pits one set of business constituencies and regional interests against another — a recipe for gridlock.

    The only way to create a political solution is to craft legislation based on user pays principles: If you pay higher taxes or tolls, in return you get improvements to infrastructure that you use. Voters aren’t willing to raise a bunch of money and hand it over to the government — either at the state level or the regional level — where it disappears into a black box where only the special interests can influence how it is spent. Citizens want ironclad guarantees that they get something in return for their money.

    As I’ve preached over and over, the first place to start is with the gas tax. The problem with the Saslaw bill is that it would raise a whole lot of money and distribute it via the same arcane and opaque funding formulas and project-selection processes, subject to manipulation by the special interests, that exist today. To win voter trust, we need to set the gas tax not at some arbitrary level but at whatever level it takes to do two things: (a) maintain state roads and bridges, and (b) provide state matching moneys for federally funded projects. And nothing else.

    In the short run, such a measure would actually provide citizens a tax cut. That would make it easier to sell politically. Over the longer haul, as maintenance costs escalate, the gas tax eventually would float higher than the 17.5 cents per gallon charged today, bringing more money into the system than we have now. But citizens would be willing to accept those increases because they know that their tax money was paying for their share of road maintenance, not funding boondoggles.

    How, then, do we pay for new roads? I’ve explained it all before. Toll roads, whether operated by the state or by public-private partnerships. Congestion pricing corridors. Impact fees. Community Development Authorities. If road projects can’t support themselves in the open marketplace, there is no economic justification for them and they shouldn’t be built. Virginians would soon learn that the transportation “crisis” isn’t a crisis for anyone but the rent seekers who feed at the government trough.


  • The Capital Beltway HOT Lane Deal: Did the Kaniacs Give Away the Store?

    TheNewspaper.com, a blog that bills itself as a journal of the politics of driving, has made quite a scoop: It has obtained a copy of nine pages excerpted from the “Comprehensive Agreement Relating to the Route 495 HOT Lanes in Virginia Project,” dated Dec. 19, 2007, between the Virginia Department of Transportation and the Capital Beltway Express LLC.

    The blog summary of the contracts seems to confirm many of the worst fears of those who harbor doubts and suspicions about the HOT lane agreement — and I, a staunch advocate of HOT lanes, may well be forced to eat humble pie. In the end, I base my opinions on what the facts are, not what I wish them to be, so I bring this information to the attention of Bacon’s Rebellion readers to dissect and ruminate upon.

    While the agreement asserts VDOT’s “unfettered right” to make transportation improvements, in the interpretation of theNewspaper.com it contains measures that would, in fact, curtail VDOT’s latitude to make improvements to the I-495 Beltway and other projects that might threaten HOT lane toll revenue. Writes the blog:

    If [VDOT] determines that additional traffic lanes on the Capital Beltway Corridor are in the state’s best interests, the department shall consult with the concessionaire [Capital Beltway Express, a joint venture of Transurban and Fluor] as to an appropriate strategy to implement such additional traffic lanes. At the department’s sole discretion [it shall] permit the construction of additional lanes as part of the project with a view to minimizing any detrimental impact on the project or its ability to generate revenues…”

    As theNewspaper.com boils down the meaning of that last phrase, the agreement is structured “to ensure the area remains sufficiently congested so that motorists will have an incentive to pay to use the toll lanes.”

    The contract considers any improvement to the Beltway to be a “Department Project Enhancement,” which could trigger a “compensation event.” In such an event, Virginia taxpayers could be required to pay Transurban/Fluor compensation for lost toll revenue. Observes theNewspaper.com: “Given VDOT’s stated lack of funding, adding an extra monetary premium to the cost of any improvements effectively gives the foreign company the ability to prevent such projects from happening.”

    Compensation events are not limited to Beltway improvements. They extend to improved connections between the Beltway’s general purpose lanes and Interstate 66, and the Dulles Toll Road, says theNewspaper.com. In such an event, an “independent engineer” would conduct a traffic impact study and determine the compensation due the concessionaire.

    (I’m not sure that I read the agreement that way. From my perusal of page 69, the agreement specifically permits VDOT to make the improvements mentioned above, at its own expense, provided that… blah, blah, woof, woof… a bunch of impenetrable legalese follows. Readers better versed in reading contracts than I are invited to weigh in.)

    The agreement also contains provisions to discourage any increase in the number of motorists sharing rides, says theNewspaper.com. Quoting the agreement, “The department agrees to pay the concessionaire, subject to Section 20.18, amounts equal to 70% of the average toll applicable to vehicles paying tolls for the number of High Occupancy Vehicles exceeding a threshhold of 24% of the total flow of all permitted vehicles…”

    Bottom line: If escalating gasoline prices revives the popularity of carpooling, taxpayers could wind up making multimillion-dollar payments to Capital Beltway Express.

    The blogger casts this contract, which he regards as highly beneficial to Capital Beltway Express, in the light of recent revelations that Transurban, an Australian company, had mistakenly made $172,000 in contributions to various PACs of both parties. Recognizing that foreign contributions are illegal, the company has asked for its money back. See “Bring Your Own Checkbook” for details.

    (See also a discussion of how the firm benefited from federal financing in “Federal Subsidies for HOT lanes,” and the revelation that Capital Beltway Express will be required to maintain minimum HOT lane speeds of only 45 mph in “HOT Lanes at 45 MPH Not So Hot.”)

    I have contacted the Kaine administration press office asking for a response. With the General Assembly convening for the transportation special session, the spokesman I talked to said he could not promise to get back to me immediately, but would do his best. I will post the response as soon as I get it.

    (Hat tip: Jim Wamsley.)


  • The Latest Salvos in the Energy War

    Wise County coal plant: The Wise Energy Coalition for Virginia has vowed to fight in court the construction of Dominion’s hybrid energy plant in Wise County. Although Dominion has obtained needed approvals from the State Corporation Commission and Air Pollution Control board, opponents say they intend to challenge the legality of the air pollution permits on the grounds that they do no require Dominion to curb carbon dioxide emissions.

    Last week a state judge invalidated an air pollution permit for a planned coal-fired plant in Georgia because the permit established no carbon dioxide limits. The judge relied upon a 2007 U.S. Supreme Court ruling that allows carbon dioxide to be regulated as a pollutant, reports the Roanoke Times. But the federal government has yet to issue such regulations.The environmental battle against coal is gaining momentum. The Coalition notes approvingly on its website that New York’s Attorney General started an investigation of Dominion, “questioning whether the company adequately disclosed investor risks associated with new coal-fired power plants.” If built, Dominionโ€™s proposed coal-fired power plant would worsen global warming, accelerate mountain-top removal coal mining, encourage the construction of new transmission lines and further pollution Virginia’s air, land and waters.

    Offshore drilling: Meanwhile, General Assembly Republicans are still pushing offshore drilling. Although Democrats have killed an offshore drilling bill on the Senate side, Republicans pushed a measure, HB 6006, through the House Rules Committee in a 12-3 vote. The bill would dedicate future revenues and royalties from offshore drilling to Virginiaโ€™s Transportation Trust Fund.

    The Virginian-Pilot covers the issues here.


  • Virginia’s Transportation Debate with Oil at $150 Per Barrel

    It’s amazing how, in just a year or two, energy issues have pushed themselves to the forefront of the Virginia public policy agenda. Electric power… offshore drilling… transportation and gasoline consumption… Climate change and conservation… It’s equally astounding how little lawmakers’ thinking has actually changed.

    Energy policy was quiescent for more than two decades following the collapse of oil, coal and natural gas prices in the early 1980s. Virginia lawmakers were somnambulant, spending billions of dollars yearly on a transportation system designed around the premise of cheap energy. Even as soaring oil costs simultaneously (a) push up the cost of laying asphalt on new roads and highways and (b) depress demand, only a small number of state legislators appear willing to rethink transportation policy in a fundamental way.

    The contours of the transportation debate have changed little since petroleum was selling at $20 per barrel in 2002: There’s nothing wrong with the system that more revenues and more construction won’t fix. What passes for enlightened thinking today is the idea that instead of just throwing money at roads, we now need to throw money at roads and transit — but without enacting the land use reforms required to make transit work.

    It was only last September when I was blogging about the impact of oil at $100 per barrel. (See “Quality of Life, Human Settlement Patterns and $100 Oil.”) Not long ago, the price busted through the $150 per barrel level. What will it take to change attitudes? Oil selling at $200 per barrel? $250?

    I came across a short piece written by Jeff Rubin with CIBC World Markets. Demand in China and other developing countries continues unabated, often stimulated by subsidies, he writes. Recent Saudi promises to increase oil production by 200,000 barrels per day are meaningless compared to the four million-barrels-per-day decline in oil production expected for the rest of the globe this year. Meanwhile, supplies are restricted in oil-producing regions by under-investment in nationally owned oil companies (Venezuela, Mexico), political instability (Nigeria) or environmental restrictions (the United States).

    Rubin projects oil selling at $200 by 2010, only two years hence, which, under prevailing refinery margins, will translate into $7-per-gallon gasoline. He continues:

    As gasoline prices climb inexorably, American driving habits are going to have to undergo a massive change, mimicking the driving habits long adopted by Europeans who have faced much higher gas prices. Average miles driven will likely fall by as much as 15%, while the market share of light trucks, SUVs and vans will be literally halved, reversing the trend of the last fifteen years. But the most fundamental, and unprecedented change will be in the number of vehicles on the road.

    Over the next four years, we are likely to witness the greatest mass exodus of vehicles off Americaโ€™s highways in history. By 2012, there should be some 10 million fewer vehicles on American roadways than there are today โ€” a decline that dwarfs all previous adjustments including those during the two OPEC oil shocks. … Many of those in the exit lane will be low income Americans from households earning less than $25,000 per year. Incredibly, over 10 million of those American households own more than one car.

    Soon they wonโ€™t own any.

    Let me repeat a couple of key phrases: Average miles driven will fall by as much as 15 percent…. We are likely to witness the greatest mass exodus of vehicles off America’s highways in history… Soon, some 10 million poor American households might find themselves unable to afford a car…

    The debate over transportation funding is based on the same assumptions that underpinned the Warner-era VTrans2025 study, which listed $108 billion in โ€œunmet transportation needsโ€ over the next 20 years based on anticipated population growth and vehicle miles driven. To persist in such a debate in the face of soaring oil prices is breath-taking folly.


  • VCU and Tobacco: A Long and Profitable History

    Back in late May, I posted an opinion piece suggesting that The New York Times was correct in questioning the contractual relationship between Virginia Commonwealth University and Philip Morris USA. VCU seemed to be giving away the shop with research contracts that forbade discussion of their existence and required VCU to inform the tobacco giant right away if regulators or the media asked questions.

    In Richmond, of course, the latter wasn’t really necessary since the Times-Dispatch, whose top brass has tight ties to VCU, decided there was no story after a very cursory look. I, on the other hand, started getting phone calls and e-mails from current and former members of the VCU community who were greatly concerned about their university and their own careers if VCU was seen as a supplicant for Big Tobacco. VCU’s reputation was already being trashed in the national research blogosphere.

    Thus began a month-long reporting effort funded by Jim Bacon, the newly appointed editor of R’Biz, the business news component of richmond.com which operates R’Biz. The story, “In Pursuit of the Golden Leaf,” is available on today’s richmond.com.

    • VCU’s medical school and predecessor schools had such tight ties with the American Tobacco Company in the 1930s and 1940s that it funded just about the entire pharmacology staffs. So dramatic were the ties that a Stanford University professor is titling an entire chapter on VCU “Sold, American” in his upcoming book on tobacco research. The less-than-flattering title suggest that the Medical College of Virginia had been bought completely by tobacco interests
    • VCU started to improve its research situation in 2000 after a debacle in which federal regulators shut down all human research at all of its schools. The academic research ringer hired to help boosted R&D at VCU but she left in 2005 critical of new ties between the school and Philip Morris USA.
    • Dr. Eugene Trani, president of VCU, and his staff were greatly involved in “Operation Peat Moss,” a secret and ultimately successful plan to convince Philip Morris USA to locate a major research facility at the faltering Virginia Biotechnology Research Park instead of the Research Triangle in North Carolina in 2004 and 2005.
    • While Philip Morris claims that much of the research it does in Richmond is limited to smokeless products such as snuff, evidence shows it is involved in a major effort to use respiration devices used in cigarette research as vehicles for dispensing drugs through the lungs to fight such diseases as diabetes.
    • Both the University of Virginia and Duke have accepted far more research money from Philip Morris than VCU has. But unlike VCU, they insisted on controlling the research and make their relations public.
    • Some VCU faculty say there are fearful of Trani’s wrath if they speak out against the Philip Morris contracts. Yet, there appears to be great confusion on campus about what is going on. Trani’s absence at Havard this summer isn’t helping.
    • Trani has appointed a task force to explore his school’s corporate contracts. But the very administrator who oversaw negotiations with Philip Morris is heading the task force, which has decided he is not a conflict of interest. It remains to be seen if the task force will force change or sweep the controversy under the rug. The first public meeting is slated for July 16.

    There’s a lot more in the opus available on line. Check it out.

    Peter Galuszka


  • The City of Squares… Or, Bring Back the Grid

    When James Oglethorpe sketched out a design in 1733 for the settlement of Savannah, Ga., he didn’t have “smart growth” in mind. It was some 150 years before the invention of the horseless carriage, and the biggest “green” revolution occurring in his era was the spread of the plantation form of agriculture. Indeed, in laying out the city in the form of identical, easy-to-replicate wards, or squares, he did so with military considerations in mind.

    At the center of each ward was a smaller square, which Oglethorpe left as open space to function as a military exercise ground. The four corners of each ward contained a “tything,” 10 lots for housing. And on the east and west flanks of each square, he allotted larger parcels designated for public structures such as churches, banks or government buildings.

    The original plan called for six contiguous wards. As the city expanded, it replicated the squares repeatedly, eventually creating 24 of them, then re-developing three of them so that 21 remain. The military training grounds were converted into parks, usually focused on a statue to some great American, or a monument to a momentous battle. Wealthy ante-bellum merchants built magnificent mansions facing some of the parks. Most of the historical buildings remain today, although an occasional ’60s-era atrocity did manage to creep in. In the early 21st century, historical Savannah is an urban gem — one of the truly great places of America.

    As I explore in “The City of Squares” this week, the city exemplifies all the traits of smart growth: grid streets, small lot sizes, mixed uses, walkability and abundant green space. As a bonus, historic Savannah has adapted to the automobile remarkably well.

    So, what does any of this have to do with Virginia? Do we need to visit Savannah to embrace the virtues of grid streets and compact development? Well, that wouldn’ t hurt, if you’re looking to be inspired. But here’s what’s really cool about Oglethorpe’s replicatable squares: (a) They contain within themselves a balance of houses, jobs, stores and amenities, and (b) they provide a schema for extending the urban grid pattern incrementally as the city expands, while preserving that balance.

    Each ward is like an independent cell, containing within itself a balance of elements required for a quality life: 40 residential units (unless lots are combined to create larger dwellings), a central green space within a block or two walking distance from every dwelling, and space to accommodate shops, professional offices and small office buildings. Oglethorpian wards are not totally self-sufficient, of course. Residents cannot possibly meet all of their needs within the square, but they can meet some of them. This is the kind of balance of land uses at the “cluster” level that Ed Risse calls for.

    Like the cells of a living organism, Savannah’s wards work together. While the wards are interlaced internally with streets and lanes, providing multiple routes between any two points, the perimeter streets align to create thoroughfares, as can be seen in the aerial photo to the left. (Click on the image for a more detailed picture.) These handsome, tree-lined boulevards enhance the surrounding areas and comfortably accommodate pedestrians.

    Compare that to conventional “suburban” development in which a majority of roadway lane miles are contained in dead-end cul de sacs — private streets, for all intents, with minimal traffic — that provide no public connectivity whatsoever. All traffic funnels into connector roads and arterials that are easily bottlenecked.

    Thus arises the supreme irony: Because all streets contribute to mobility and access, historic Savannah supports a relatively high population density with a minimum of traffic congestion.

    These dynamics are are well understood and fully appreciated in the literature of the smart-growth and New Urbanism movements. What I haven’t heard discussed is how Oglethorpian squares provide a mechanism for extending the grid pattern outward from the core as the city grows. These squares fit together with Lego-like precision, all streets aligning perfectly for maximum connectivity. Plug and play, baby!

    The squares are small enough — 40 residential lots at most, no more than a modest subdivision — that they allow for incremental, organic growth. Furthermore, the internal structure of the squares are incredibly flexible. While Oglethorpe designed his squares with 40 single-family dwellings, lots can be combined for larger houses, or merged to create apartments or townhouses. Developers of the squares have the means to be highly responsive to the demands of the marketplace.

    Bring back the grid. It worked in Savannah, maybe it can work in Virginia, too!


  • With Gas Over $4 Per Gallon, Are You Ready to Rebel Yet?

    We’ve been preaching energy-efficient growth and development for years now, and we’ve remained stuck on the margins of public opinion. But now, with gasoline prices zooming past $4 per gallon, people are waking up. Oh, yes. Oh, yes, they are. When the Wall Street Journal runs a story on the front page, “With Gas Over $4, Cities Explore, Whether It’s Smart to Be Dense,” highlighting San Diego’s move to smart growth, you know the idea has gone mainstream. (Hat tips: Gay Leahy and Gregory Pimentel.)

    So, whatta you going to do? Read a Johnny Come Lately like the Journal and think you’ve got it all figured out? Or read the latest edition of Bacon’s Rebellion, where we’ve been wrestling with these issues in a Virginia context, practically since the first cave men decided that cave life was too confining, camped in the plains, and got eaten by a saber-tooth tiger?

    Here’s what we have to offer in the July 7, 2008, edition:

    The City of Squares
    The historical core of Savannah, Ga., is one of the great urban places in the United States. Modern-day Virginia could learn a few lessons from James Ogilthorpe’s unique experiment.
    by James A. Bacon

    The Wealth Gap
    Sooner or later, an economy built on wildly unequal incomes, cheap energy and debt-fueled mass over-consumption will collapse. Mass denial will not change this reality.
    by EM Risse

    Let the People Decide
    It’s time to fish or cut bait on the gas tax. Either pass a tax increase to pay for transportation projects or take it off the table so we can pursue other options.
    by Michael Thompson

    Bread and Circuses
    Governments dispense money for ends that the Constitution never envisioned. One way or another, we’re all on the dole now.
    by Norman Leahy

    Bubba Believes in Religion
    (and other true facts)
    by Barnie Day

    Nice & Curious Questions
    Running in Virginia: Triathlons, Duathlons, Adventure Races and More
    by Edwin S. Clay III and Patricia Bangs


  • The Decline of the World’s Greatest Nation State

    Two hundred and thirty-two years ago, our forefathers declared independence from a distant monarch and parliament to preserve their liberty.

    Who can we rebel against? We have no tyrant on the far side of a vast sea to blame our troubles on. The oppressors reside among us. Indeed, perhaps it can be said that we are our own oppressors.

    Such are the thoughts I have on this Fourth of July, having recently finished reading “Supercapitalism” by Robert Reich. (So many others affiliated with this blog have read the book that I felt compelled to do so, too.)

    Reich offers a simple but compelling thesis: Since the Not Quite Golden Age of the 1950s, an era in which industrial oligopolies and labor unions created a stable, growing economy in which the wealth was widely shared (excluding African-Americans, of course, which was why he calls it the Not Quite Golden Age), various economic forces have created more competition and eroded the power of the cartels and unions. Consumers have benefited from better, cheaper consumer products, and shareholders have profited from higher-performing investments. But those gains have come at the expense of Americans in their roles as employees and citizens. Incomes for all but a few have stagnated, and Americans are losing faith in democracy.

    While some might differ with his core thesis — for instance, the prosperity of the Not Quite Golden Age may have owed more to America’s preeminent position in the world following World War II than to its oligopolistic industrial structure — I find aspects of Reich’s book very persuasive. In particular, I found myself agreeing with his analysis in the chapter “Democracy Overwhelmed,” in which he describes how the political process has been taken over by moneyed interests.

    Business competition has become so intense, Reich argues, that “competition has spilled over into politics, as corporations have sought to gain competitive advantage through public policy.” The vast influx of money into Washington, D.C., has transformed the once-dowdy city into an imperial capital with the highest incomes in the country and all the trappings of wealth and excess. The number of lobbyists has increased, the money spent on lobbying has increased, the amount of money spent on campaign contributions has increased. Politically, businesses are nonpartisan. It’s all about gaining the power to influence the machinery of legislatio and regulation to maintain competitive advantage.

    I find this description to be right on target. I differ only in assessing how it came to be. Reich blames the trend on increasing business competition, or supercapitalism. “The demands of corporations seeking to influence the policy process have grown as competition among them has intensified. It has been like an arms race: The more one competitor pays for access, the more its rivals must pay in order to counter its influence.”

    That’s accurate as far as it goes, but it leaves out one important consideration: The business takeover of Washington, D.C., occurred only after the national political class had accrued unprecedented power over the economy. Since the New Deal of the 1930s, government has inserted itself into one economic sphere after another. The political class was a critical enabler to the takeover. Politicians and their minions and hangers on gain prestige and wealth through brokering the transfer of wealth from one industry to another, from one segment of society to another. The rise of Big Government was paved by legions of apologists and justifiers who moved public opinion to accept the need for intrusive government, as well as a multitude of judicial rulings that tore down traditional barriers to the accretion of government power.

    Be that as it may, the biggest “industry” in the United States today is indeed politics. For the most part this industry does not create wealth — it brokers wealth. Unfortunately, the trends that are so grotesquely on display in Washington, D.C., have filtered down to state capitals and courthouses across the country as well. The main difference between politics in Washington and Richmond is the size of the political class, and the constituencies that ply the politicians for favors.

    The corporate and professional interests that dominate the system at the state and local level correspond neatly with the array of legislative and regulatory powers that have accrued to state and local governments. At the top of the list is the cluster of businesses — developers, home builders, Realtors, construction and engineering firms — that make their living through the development of real estate and building of infrastructure. This is the “growth” lobby that we have discussed before on this blog.

    Close behind in power and influence are the electric and gas power companies, whose profits are regulated by the State Corporation Commission. Then comes the financial and insurance industries, the legal profession, the health care industry, and the educational profession. To see who the key players are in Virginia and how much they spend on influence the political process, you need go no further than the Virginia Public Access Project list of top donors by industry.

    As businesses take their marketplace competition into the political sphere, and as the political class enlarges the scope of its powers, the national preoccupation of America becomes the transfer or protection of wealth, not the creation of it. Rather than focusing on innovation and productivity, the real sources of prosperity, we collectively turn to government for what we want, and we battle over who pays for it. Our institutions are increasingly archaic, unable to adjust to the emerging Knowledge-era wealth creating system, and our national character is enervated. Once a nation of entrepreneurs, we hold out the tin cup. I can see no countervailing trend that will change this.

    God bless America. I still love this country, even though I despair for it.