Sunday, May 04, 2008

Transportation and Oil

Both are in crisis. Both are controversial. And in both cases, the United States Government is to stupid to see it.

These two crises are one - in more ways than one.

Both have been precipitated by long years of public and governmental complacency and by the inability of private sector businesses to see beyond the current quarter and the bottom line. Both are fed by the lack of public imagination of our politicians and by the ability of special interest groups to influence public policy.

Case one: Much of our government and most of the public doesn't think there is a transporation crisis or an oil crisis. They think of it more in terms of high prices and/or lack of service. They believe that the businesses that provide product or service can remedy any problems by not overcharging the public.

Case two: Controversy over the place for Passenger Rail in our society hasn't stopped for one second since private Passenger Rail fell in the late 60s. About the same time, controversy over whether we should be getting oil from our own shores began.

Case three: The public does not see and crisis unless it is presented as such by the media. Ditto for the government. Government and legislation chases problems that are in the news, not those that never make the front page or Nightline.

Case four: Investing in both transportation and oil production or refining right now is a risky business. The bottom line is months (many quarters) if not years away. The pension funds and the trust funds that control the equity won't stand for it.

Case five: If you can't think of an easy fix for the problem, oil or transportation, then no fix is better than a partial one. We can ride it out until a good fix comes along. This is foolhardy and won't work.

Case six: Fixes are going to cost money, and they won't come about if railroads (read Amtrak), airlines and oil companies just lower their prices. They are already all disincentivized by government, and loss of profit motive removes even more incentives for innovation.

Case seven: Environmental activists have done wonders for us since the 1970s. Think DDT and detergents in the waterways. But many if not most are now over the edge and looking for a cause that hasn't been tackled. Most of the causes are minor ones, at best, and don't require the heavy-handed approach that the major ones did. They need to pull back from both oil and transportation projects so we can actually get something done in this country. Dubai wouldn't be as spectacular if they had environmentalists to tell them they couldn't transform the pristine desert environs.

Just a few thoughts. We will shut up now.

©2008 - C. A. Turek -
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