SCRANTON, PA — This year’s Pennsylvania Aggregate and Concrete
Association (PACA) Summer Meeting moved to historical Scranton, PA,
home of Pennsylvania’s Anthracite Coal Industry, where members gained
insight on what the future holds in light of rising fuel costs,
increased economic uncertainty, and how the outcome of this fall’s
general elections might affect their industry. At the two-day event,
held June 18-19, meeting organizers called upon experts in the areas of
science, politics and transportation for a glimpse of what to expect in
the coming years. Eric Kratz of the Pennsylvania Business Council and
Dennis Powell, president and CEO of Massey Powell Associates, and Dr.
Paul Anstrom, director of the Hybrid and Hydrogen Vehicle Research
Laboratory at Penn State University, together painted the picture of a
political and business climate that calls for caution in
decision-making in the coming months. What’s Ahead?
On the political scene, research analyst Eric Kratz said that at this
time, Democrats are expected to pick up four to six seats in the U.S.
Senate, and 10 to 19 seats in the U.S. House of Representatives.
“How does that affect us in Pennsylvania,” Kratz asked. “From what I
see, Pennsylvania will remain status quo (in its Democrat/Republican
balance). Nationally, the Democrats will pick up some seats however.”
In the presidential election, Kratz said that if Hillary Clinton had
been designated as the Democrat nominee for President, she would have
easily won Pennsylvania in her bid for the White House. With Obama as
the nominee however, the outcome in Pennsylvania remains to be seen.
“Southwestern Pennsylvania, while they tend to vote Democrat, are
conservative Democrats,” said Kratz. “John McCain can certainly carry
some of those districts (since Hillary will not be running). If Obama
turns out the ‘young’ vote, then everything could change.”
In state elections, Kratz said that there would be significant changes
in the legislature, especially on the transportation committees in the
House and Senate. Several committee members are either retiring or are
facing challenges from opponents that may not have the same kind of
dedication to funding the infrastructure in the way that previous
members did. “The climate is in the Democrat’s favor,” said Kratz.
“They should pick up a few seats.”
How that will affect the aggregate industry is difficult to tell. “The
Pennsylvania Congressional Delegation will remain status quo, perhaps
picking up one seat for the Democrats,” he said. “In the Pennsylvania
Senate, again status quo. In the House I see 103 seats for the
Democrats, and 96 for the Republicans, (giving the Democrats a clear
majority, with a gain of two to five seats).
On the business side of the equation, Dennis Powell said that the one
word that sums up the transportation infrastructure is the word,
“Change.” “Change can be a little scary, but as we get a handle on
(what that really means) and can manage the change, that gives us a
wonderful opportunity,” he said.
“The fundamental shift that we see today (in the transportation
industry) is in politics,” he said. “As we shift from the kind of
government that we have known, this whole reform movement that we have
seen over the past few years, is only the first wave. As we shift from
an ‘inside-out’ model of government (where deals were cut (inside the
confines of government) and delivered to the public), to more of an
‘outside-in’ kind of politics, where the people direct the flow of
legislation, we need to change.
“I see this taking place over the next several years because of the
kinds of communication that we have in this country,” he said. “Being
able to educate the people at the grass roots level creates a
tremendous shift in our politics. We need to embrace it, understand it,
and use it to our advantage.”
According to Powell, the political cycle is not favorable for the
improvement of our infrastructure. Implementing solutions becomes
extremely difficult when citizens are confronted with the options of
what to do to solve these problems. Citing the attempted sale of the PA
Turnpike to outside investors or the changing of I-80 from a Federal
Interstate to a private pay-as-you-drive turnpike, these proposals are
met with widespread opposition. “Solutions are very hard to come by,”
said Powell. “Votes are even harder to obtain. The problem has grown to
where politicians are no longer able to deal with it. Moreover, there
is no comprehensive vision to tell us where we are going in the next 10
years.”
Powell said that we need to change the conversation away from a
“find-need-and tax model, to that of an invest-grow-and prosper model.”
“We need to be the ones to create the vision of a 21st century
transportation infrastructure,” he said. “We need investment and
private industry to take the lead.”
Powell said that according to U.S. civil engineers, the needs of the
national infrastructure are estimated to be $1.6 trillion. He added
that this report on infrastructure spending, suggests that we are only
spending about 40 percent of what is needed to keep our systems sound
and up to date. He said that this data was gathered at a time when the
rates of consumption of fuel, and with the revenues created were under
old fuel consumption models. With today’s fuel costs increasing, and
consumption decreasing, the accuracy of the numbers in the report would
change for the worse.
“We cannot afford congestion any longer with today’s fuel prices,” said Powell. “Sitting in traffic is no longer an option.”
Powell suggested that those in the aggregate industry consider
Pennsylvania’s licensed drivers as “customers” because they “buy”
transportation, and that the industry “sells” transportation. “There
are 8 million licensed drivers in the state of Pennsylvania,” said
Powell. “That’s 70 percent of the people. We need to approach them
differently.”
Powell said that Pennsylvania has more than 15,000 bridges statewide
that are more than 20 feet in length that are coming due for
replacement. “The 50 year bridges that were built in the 1950s and
1960s are like a tsunami coming upon us,” he said. “We do not have the
resources to deal with the problems that are coming in the near
future.” He said that when the local roads and bridges are added to
that, those at the city and township level, their 77,000 miles of
roadway and 6,500 bridges are extremely underfunded, since those
entities only receive about 10 percent of the total gas tax revenue
funds. He added that these funding needs are one of the major drivers
in local property taxes, and this is an untold story that this industry
needs to tell.
“(Our industry needs) to become a priority like education,” said
Powell. “Education is the number one priority in Pennsylvania. It is
funded consistently with substantial increases every year.”
Powell cited data showing the overall increase in school student
population between 2003 and 2004 and again in 2006 and 2007. He said
that the population of Pennsylvania’s Public Schools grew by 237
students, total. Meanwhile, state funding for schools continued to
increase significantly over that same period. “Funding education is
good politics,” said Powell. “Our industry needs to become good
politics as well.”
Powell said that an area for concern in Pennsylvania is that monies
from the gasoline tax fund (money originally designated for roadway
use) are being redirected to mass transit systems in the Philadelphia
and Pittsburgh areas. “With reduced levels in gas tax monies because of
reduced consumption, this becomes a problem very quickly,” said Powell.
“Additionally, about 18 percent of the money that is supposed to go to
roads and bridges goes to fund the State Police force, and that number
is growing.”
Since the gasoline tax is a fixed amount per gallon, rather than a
percentage of the total, inflation has reduced the purchasing power of
the monies generated in the fuel tax. “We are also projecting reduced
revenues of about 25 percent by the year 2020,” he said. “The Federal
government has not acted on the tax rate since 1994 and the state
government since 1997. Federal purchasing power is down about 45
percent, state purchasing power down about 38 percent.” With industry
inflation, the problem is magnified.
Powell concluded by saying that the cost of delay has us only being
able to fund construction and repairs of our roadways and bridges at a
level equal to about 40 percent of what was planned when the tax levels
were created. Transportation of the Future
Wrapping up the session on a technical note, Dr. Joel Anstrom suggested
that the future of transportation is “Here, Now!” Highlighting the
institutes research on Hybrid, Electric and Fuel Cell technologies as
means of propulsion for “tomorrow’s” vehicles, Anstrom said that
workable models of this kind of fuel alternatives are being studied at
several places around the world.
Anstrom noted that according to the U.S. Department of Energy, only 16
percent of the power provided by conventional fuel sources reaches the
rear wheels of the vehicle. “Most of the power is lost in the engine,”
said Anstrom. “Most engines are currently only 25 to 35 percent
efficient. Other power is lost in the transmission and drive train
components before reaching the drive wheels.”
“The answer to this and the technology that is being applied to fix it
is advanced electric motors,” he said. “These are showing up in hybrid
cars and trucks. MAC for example, is working on a prototype truck.” He
said that in many cases, electric power is already being used in
transportation applications, such as buses and light trucks because
electric motors perform better and are more efficient.
According to Anstrom, fuel cell technology, simply stated, is a
sophisticated kind of battery. “It is a battery that you can keep
pouring fuel into (hydrogen and air), and you will produce electricity,
water and a little bit of heat,” he said. “They are very efficient.”
He noted that in addition to battery/electric power, ethanol, biofuels
and compressed natural gas are also being looked at as alternative fuel
sources in the years ahead. “Many of these are looked to as direct
replacements for gasoline and diesel fuel,” he said. “Work at Penn
State is going on where we are looking at obtaining synthetic diesel
fuel and jet fuel from coal.”
Anstrom said that hybrid gas or diesel/electric-powered vehicles are
currently in production and under additional development by U.S.
manufacturers at this time. Despite being more costly and somewhat
heavier than their conventional counterparts, they use less fuel and
are more efficient at the same time. He noted that hybrid vehicles are
approximately 65 percent efficient. However, with the advent of hybrid
powered vehicles, revenues that fund roadways will need to be collected
in new ways.
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