Transcript: A Driving Force: Energy at the Department of Transportation
THE CNA CORPORATION &
CHINA STUDIES CENTER
A DRIVING FORCE:
ENERGY AT THE DEPARTMENT OF TRANSPORTATION
WELCOME AND MODERATOR:
TERRY PUDAS,
DEPUTY DIRECTOR, FORCE TRANSFORMATION
OFFICE OF THE SECRETARY OF DEFENSE
INTRODUCTION:
STEVEN WEHRENBERG,
DIRECTOR, FUTURE FORCE.
UNITED STATES COAST GUARD
SPEAKER:
ROBERT A. DEHANN,
ASSISTANT SECRETARY,
U.S. DEPARTMENT OF TRANSPORTATION
NOVEMBER 19, 2007
Transcript by
Federal News Service
Washington, D.C.
STEVEN WEHRENBERG: Ladies and gentlemen, if you will grab your last cookie there and find a seat, we’ll get started. Are all of the cookies gone, Mitzi? These would be the special, no-fat diet cookies, right?
Ladies and gentlemen, thank you very much for coming to our, I believe, our 20th energy conversation. My name is Steve Wehrenberg; I’ll be your moderator this evening. It’s going to be my honor not to introduce our speaker, but to introduce the introducer of our speaker. There’s a good reason for that, though. I’ll explain that in just a moment.
First of all, just a couple of administrative announcements; our new website proceeds. We’re suffering through some artistic work at the moment and we hope to have that up and have you registering through that site in January for future events such as this one. As is usually the case, our protocol this evening will be, our speaker will speak and if you have a burning question that requires clarifying or you can’t possibly proceed, I suppose you could ask it. We would prefer that you hold your questions until the end. There are two microphones set up, both will be live. It’s called a self-queuing question-and-answer session, so whoever you elbow aside, that’s how you would get to the mike before them, I suppose. Oh, if you would be so kind as to turn the sound off on your cell phones and other electronic devices, that would probably be pretty useful. It is at about this point that mine usually goes off to remind me about that.
I have a couple of things that I just want to point out before we get started this evening. I’m holding in my hand the fourth and synthesis report of the IPCC. And I have to say – that was released this weekend, for those of you who haven’t seen it – it’s not all good news by any means. It says a lot of interesting things about how we really need to get our act together if we’re going to make this a sustainable world. And of course, the juxtaposition of that next to energy has always been a very important issue for us, not just energy security in the immediate sense, but energy security in the large-scale and sustainability sense.
I’m also holding a Wall Street Journal article, the title of which is “Oil Officials See Limit Looming on Production.” I think that’s an interesting title. I think these two things taken together tell us that we’ve come a long way in the past 20 months or 20-some-odd months. Everybody seems to have learned quite a bit; we’re happy to take credit for as much of that as we can possibly take credit for here, but it certainly has turned into an interesting national dialogue at this point.
If you think for a moment, though, that we can declare victory and go home, I have a note here from a friend, alerting me to tune into “Good Morning, America” on the 28th of this month from 7:00 to 9:00, at which point you’ll be able to see the Coeur d'Alene lighting ceremony where millions of lights are energized simultaneously. It is at the top of the list of most decorated places in America and you get to watch that for three hours over time there, if you really want to put that much time into it. It’s pretty spectacular and, quote, “bigger every year.” It’s also, quote, “paid for by the taxes of the multi-millionaire buyers of our lakefront condos” that they visit by personal jet a couple of times a year. So we are not declaring victory quite yet. There appears to be a little way to go, a little way to go.
It’s a real honor tonight to introduce an individual who has been very instrumental in the fact that you’re sitting here. Terry Pudas is, well, let me just introduce him. He’s been – he retired from the Navy in 2001. He was in the Office of Force Transformation at OSD from 2001 to 2005, when he became the acting director of that office. One of the things that, of course, he would remark as being one of the greatest accomplishments of that time was being the person who decided to begin this set of events. And he was our first funder and our able ally ever since. So it is through his efforts that this has sustained itself over, now, 20 months or something over 20 months.
He is, of course, the Office of Force Transformation is no more. Terry has moved on. He is a research fellow at the Center for Technology and National Security Policy at the National Defense University, primarily focused on, you guessed it, transformation and related national security issues. Terry is a true transformer and will probably turn into a plug-in hybrid right here – (laughter) – for those of you who have seen that movie. And I’ve been looking forward to this moment, Terry, because I knew you could do that. So with – and I will add only one more thing. If you find yourself having to leave before the night is over and I get another chance to remind you, please drop your nametags off so that we can recycle them. See, it’s all part of our way to help the environment. Terry Pudas –
TERRY PUDAS: Thanks, Steve. First of all, I am Terry Pudas, formerly of the Office of Force Transformation, as Steve mentioned. I had the very, very good fortune, a couple of years ago, of being convinced by somebody with a lot of energy, Mitzi Wertheim, that we ought to undertake this particular set of seminars. And I guess it’s been a real thrill to sort of watch how it’s grown, the number of people that it’s reached, the diverse audience, the diverse subjects that we’ve listened to. And of course, what’s really exciting is that the sponsorship has grown dramatically when I read the flyer, which is a really, really big deal.
So you might ask yourself, so why did the Office of Force Transformation delve into the energy piece? Quite frankly, part of our charter was to look at those things where we believe there was an intersection of national security and where large-scale change was needed. And so, we actually started looking at this particular subject about three and a half, four years ago. And clearly, it’s up on everybody’s scope now, a lot of people working on it. And I think I counted up, too, Steve, and I think it is 20, okay, so that’s really a good thing.
Anyways, I appreciate the opportunity to participate this evening and introduce our distinguished guest speaker. The seminars that I’ve attended before, we’ve heard an awful lot about the supply side. We’ve heard a lot about alternative energy sources. Of course, we’ve heard a lot about the climate and environmental issues. But of course, there’s also a demand side and the transformation infrastructure obviously plays really big in this particular equation.
One thing that’s become clear to me anyways, as I’ve listened to all of these different seminars, and I heard it again at CSIS last week, is that this is a solvable problem. Okay? However, in my mind, it’s really dominated by behavior and the other key issue is, there’s not much time.
So our presenter this evening is deputy assistant secretary Bob DeHann from the Department of Transportation who’s going to share his thoughts on a whole host of topics, some of which were listed on the flyer. And probably the one that I’m most interested in hearing about is this one of congestion, which we all participate in probably every morning and every evening in this town. And so, I’m going to take especially good notes when you talk about that. We want to especially thank him this evening for agreeing to fill in for his boss, deputy secretary Admiral Barrett, who was required to work on some urgent issues.
I’m not going to review his entire bio. It’s listed there, but I do want to point out a couple of things. He became the Assistant Secretary of Transportation in September of 2006. And in this capacity, he assists the secretary in fulfilling the department’s twin objectives of ensuring a safe transportation system and reducing congestion across all modes of that system. He also manages the Office of Transportation Policy and its team of transportation analysts. Please join me in welcoming Assistant Secretary Bob DeHann.
ROBERT DEHANN: I’m alienating people already. (Laughter.)
MR. PUDAS: It’s the heat lamp.
MR. DEHANN: I am very pleased to be here tonight and I appreciate the warm introduction. I’m particularly pleased to be here on behalf of Admiral Barrett, my deputy, who has been a tremendous leader at DOT and has been an asset to me personally as we both strive to serve our secretary, Mary Peters. I came back to the Department of Transportation at the same time Secretary Peters came back to the Department of Transportation. And I can tell you that her performance and the department’s performance have greatly aided by having someone of Tom’s capacity and breadth of knowledge in the deputy’s office. It’s a very hard job being the deputy in an executive agency and I think he pulls it off quite well.
So I’m very pleased to be here and I appreciate the invitation from Mitzi to come and speak with you tonight. I’ve got perhaps a little different focus than some of the other speakers that you’ve had. We at DOT principally do three things: we regulate the safety of the transportation system in the country; we operate the air-traffic control system in the country; and we do a range of other sort of cats-and-dogs things. Anybody who’s been on a transatlantic or transpacific flight in the last month has probably flown to a market that my department has helped open up through a bilateral aviation treaty. So that’s sort of the range of what we do.
We do not primarily do research into energy or look at energy issues. But of course, we are deeply affected by the energy outlook, the energy market, the problems that energy poses for our operators and the shippers and the passengers who depend on them. And of course, we actually regulate the energy field because we are the regulator of the nation’s pipeline system from the end of the refining process to the point at which it gets into the tank, we are the agency with principal responsibility for the safety of that operation. So we have a stake in a system that’s efficient; we have a stake in a system that is working correctly. And of course, we have a stake in seeing that the industries that the country relies on are not imperiled by inadequate or damaged supply mechanisms for energy.
So tonight what I’d like to talk about really is one of the principal thrusts that the secretary has brought to the department and that is congestion. The congestion problem in this country is getting quite bad and part of it is related to energy. So let me speak to that for a few moments. The transportation-related energy consumption that we have in the country is, of course, substantial. And in most markets, in most places, in most specifics, shows no signs of abating any time soon.
Married up with that, of course, is a growing congestion problem in the country, from really every single mode, with the exception of pipelines; we have a congestion problem of significant proportions. Our strategy and a strategy I’ll talk about in greater detail tonight is to reduce congestion and improve the system’s performance while, hopefully, we reduce consumption and emissions at the same time. It is, ultimately, in our view, at least from our perspective and within our responsibilities, about system performance. It’s not necessarily about money, which is one of the first questions that people have when we’re talking about congestion and gridlock in the country is, why aren’t we spending more money on this or that priority. It’s really about getting the system that we have to perform better.
So here’s an overview of what I’d like to talk about tonight. First, I’d like to look very quickly at transportation and energy and the nexus between the two topics. I’d like to talk in some detail about the congestion crisis that we believe we have and have had in the United States for many years. And I’d like to talk about what we’re doing about the congestion crisis and then try to bring it back around to the energy issues that connect up with that.
First, a couple of basic slides – in terms of end-use sector shares, that is where it’s used, where the energy is used at the end of the line, transportation is a major player. The transportation, of course, if you add it all up, accounts for 11 or 12 percent of our GDP. Just the aviation sector alone, you’re talking about $900 billion worth of economic activity every year. So it’s an important part of the economy, but it’s also an important part of our energy consumption.
Here’s a graph – by the way, I got all of this information from the Department of Energy so I can deny responsibility for any errors that I make later. (Laughter.) You can see that the petroleum use in BTUs is expanding dramatically and that trend is anticipated to continue. The natural gas consumption that we use in the system is actually natural gas that is used to power our natural gas pipelines. And basically, because we’re not building a lot of new pipelines, it’s not expected to increase.
Here’s a more interesting chart, perhaps, that compares from the pie chart that I had before, the various pieces and shows where we think that they are going to go in the next few years. You can see, essentially, that the transportation world is going to continue on its current projection. And the industrial world is going to taper off, we think.
The reason for that is that there are a number of entities or sectors within that industrial sector of the economy, some subsectors, where production is either becoming more efficient or where it is tapering off itself. We are talking about chemicals, cement, petroleum refining, and steel are the biggest offenders. At the same time, that that’s happening, you can see the transportation needs in the country are expected to continue to increase. The reasons for that are pretty obvious. The economy is now largely dependent on international trade. Depending on who you talk to, the trade component of our economy accounts for 25 to 28 percent of overall GDP. We are now seeing, this will be the largest single year of exports by dollar volume in the country’s history.
So to move all of that freight, to get people where they need to go, to move the record number of passengers that we’re moving around in the air, you have to have a lot of fuel.
MS. : (Off mike). Bob, when you do this, can you just identify the colors because the people in the back I don’t think can read to see?
MR. DEHANN: Yeah, I’m not sure what those colors are on that one. (Laughter.) There is a series of extremely closely related shades of blue in this chart. Let me just summarize this chart by saying, again, transportation in terms of emissions is largely the same as transportation in terms of percentage of consumption of fuel. So in terms of greenhouse gas emissions, the three or four major greenhouse gas emissions, transportation accounts for about two billion teragrams, which is a million metric tons, of CO2 equivalent emissions. But the important data to get out of this chart really is that light-duty trucks and passenger cars, which are together about 60 percent of the total transportation piece of the pie, are big and getting bigger. And you will not even see rail on there because rail is such a small piece. It’s actually noise in the overall consumption. Diesel locomotives are much cleaner and the fact is, they simply move freight with incredible efficiency.
So that’s the sort of general landscape for transportation, consumption, and emissions. Linked to that, although not entirely related, is a congestion crisis that we think is worse and getting worser, if I may use the phrase. The 2005 data just came in and if you add in all of the indirect costs, surface transportation congestion, that’s highway and transit congestion, it costs the country about $200 billion in 2005. That breaks down into primarily, and that’s 4.2 billion hours of delay and almost three billion gallons of fuel that’s wasted. The losses from this is essentially time, economic time. But of course, the loss in fuel is significant as we head toward $100 barrel of oil. That economic value of that 2.9 billion gallons is likely to increase.
There’s also a significant congestion problem in the air, which I won’t belabor for anybody who’s been over to Reagan or anywhere else recently. So it’s a problem. Actually, let me go back for a second and say a couple of words about this. Remember, in 2003, I think we had some significant blackouts in New York City. That period of blackout, of course, cost the country hundreds of billions of dollars in economic activity. And enormous safety concerns in New York and all of the rest prompted calls for legislation in Washington and in Albany, et cetera.
Imagine that tonight, there will be a quarter of a million people on the Beltway in first gear and nothing will happen. We have become basically sedate to the problem that congestion poses to the economy, to the transportation system, to our way of life. And we would never tolerate that in other sectors such as energy. Another way to think of it is, if we had cell phone outages reliably – reliable, predictable cell phone outages from 5:30 to 7:30 every single night in this city, what would happen? No one would tolerate it. And yet, for some reason, traffic congestion we do tolerate. We, as a nation, have essentially incorporated it into our lives.
My secretary thinks that is wrong and unfortunate. And here’s some of the details as to why, if you break it down. This is the top 14 areas of congestion in the country. Most interesting, perhaps to this group, is the 90 million gallons of excess fuel that is wasted – 91 million – is wasted in this area every single year. (B-roll.)
So if you look at this chart, you can see just the tremendous numbers here that the set, the largest metro areas in the country, this is not a problem that is plateauing; it’s not getting any better; it’s getting a lot worse. And the cities that are behind these cities, that are coming up behind them – places like St. Louis, Memphis; Chattanooga has a major freight-rail problem that is costing the country millions and millions of dollars. This is a preview of excitement to come in the rest of the country.
So the wasted energy, specifically, that we get, of the 2.9 billion gallons that I mentioned before, about 1.7 of it goes into the largest populations, the largest urban areas, which of course makes sense. Why does this happen? Well, anybody who’s bought a new car knows there is a significant difference between the EPA rating for highway and for city driving. The main reason for that, of course, is jackrabbit starts, stops, idling, et cetera.
The other thing is that vehicles tend, from an environmental point of view, vehicles tend to burn extra fuel and emit extra pollutants when they stop and go, particularly nitrous NOx levels, which increase substantially with hard acceleration. Another chart that is perhaps not all that helpful to those of you in the back – so let me summarize. We had done a study through the National Academies of Science showing what happened at different speed profiles and acceleration profiles to the carbon monoxide and NOx levels. You can see, or maybe you can’t see, that when you get to a certain point in acceleration, you see spikes in the emissions that you get from the performance. So this is perhaps by way of clarifying the obvious, but the face is that if you are traveling at 55 miles per hour or 45 and it’s a steady stay operation, you get a lot less environmental harm. You get a lot better fuel economy than you do when you are jammed up trying to get across the 14th Street Bridge.
This is another example of the problem or another way of slicing the problem. You can see that for urban areas, the average congestion, the very large urban areas that I had on the chart that were listed by city a moment ago, the average congestion that they face on the highways is about the same as the highest of the next 25 largest cities. But notice the overlap there. The point is, of course, that the cities coming up behind the largest metro areas are gaining in terms of the congestion problem that they exhibit.
We have had, in the country, what can really only be described as a supply-chain revolution over the past 25, 30 years. And one reason, I think, that most economists would say we have avoided a major recession since 1982, is a supply-chain revolution that has smoothed out the delivery cycles, imposed cost-discipline on our own manufacturers, both with respect to their own competition domestically and internationally, giving consumers greater choices, which tamps down inflation and generally improves the state of the economy, kept down the peaks and valleys that we’ve experienced.
Now, I don’t want to take too much credit for that. That may be something that the Fed can take credit for more, but there is a role there. What happens when your transportation system and particularly your freight system doesn’t get the job done? This is the result. You have retailers who have gotten used to, in their business plans, adjusting time inventory business models, to the extent that they have congestion in their cities, particularly in urban and narrow ex-urban areas of the county, they can’t rely on that. Instead of adjusting time, they now have a just-in-case inventory system. But because our retailers have shed a lot of those responsibilities, they then impose that responsibility back on their suppliers.
What we’re finding is that the transportation difficulties that we have end up costing the supplier doing the job. General Motors now has some facilities in the Detroit area where they require trucks making deliveries to show up within a 30-minute timeframe. Imagine if your doctor operated this way? If you show up early, you’re penalized. If you show up late, you’re penalized. So it’s not only a question of whether the system performs well, that is, whether you can drive at a reasonable speed without a massive backup, but also whether the reliability and the predictability of the system is such that you don’t need to leave two hours ahead of when you thought you would need to be there on a clear day.
Another example of the congestion and the threat it poses to economic productivity is the Ambassador Bridge, also in the Detroit area, where literally we have a bilateral relationship in terms of trade with Canada that’s more important than most of our entire economic relationships with other countries. The cost there, you can see $150 to $200 million because of delay – and that was the 2000 number – is only worsening even as Detroit has what you would have to say is not its best decade.
Now, that’s a lot of problem and not much solution. So what are we doing about it? Our strategy to reduce congestion, which Secretary Mineta actually kicked off and Secretary Peters has spearheaded, involves a number of different elements that are intended to get at the root of the problem. And they are, frankly, an effort to get us away from the bridges to nowhere, economic investments by the government that are not rationally based and are not intended to solve the problem that the system is imposing on the economy. So what does it involve? These are the elements or many of the elements. I will let you absorb the secretary’s –
MS. : You’d better read it because they can’t see it.
MR. DEHANN: Okay, let me do that. Mobility is one of our country’s greatest freedoms, but congestion across all of our transportation modes continues to limit predictable, reliable movement of people and goods and poses a serious threat to continued economic growth. Congestion no longer affects only roads in large, urban areas, but it’s spreading across America. That’s my secretary last year. You will notice that similar words came out of the president’s mouth last week because of the aviation situation that we’re facing. And more on that in a moment.
Let me quickly run through some of the elements of this program. We have decided to spend about $850 million and maybe $1 billion in this coming year on what are called urban partnership agreements. These are essentially contracts with cities, five of them who won the application process, to engage in some kind of major demonstration project that will involve a mixture of several different elements – tolling; transit, bus rapid transit in particular; advanced technology, technology that you can use right away, but technology that is not currently widely used; and telecommuting, to some extent.
That’s the urban partnership agreement. It is sort of the spearhead of what we want to do and it is designed to attack the problem where the problem exists, in the major urban areas where the vast, vast majority of our congestion exists. Another element of this is a program we call corridors of the future. We have a lot of freight corridors that are very popular, as you might guess. Particular freight corridors in almost any mode of transportation are going to attract a lot of attention because that is where the efficiency is to be had. Of course, moving freight between major population centers is, you know, that’s gravity. That’s what happens in an economy that’s driven to a large extent by big-box retailers who are expanding in ex-urban areas and so forth.
The program is designed to get at the problem that we’re having in corridors, for instance, on I-95, where you have tremendous backups of trucks so that they actually avoid 95 and go to I-81. In fact, I-81 got its reputation as a very dangerous road that has a lot of fatalities because trucks and trucking companies were trying to avoid the run from, essentially, New York to D.C., which is tremendously congested. Now, of course, the congestion that you experience on 95 goes down south of Richmond. And I’ve often found myself saying, where are the people? All of these cars were all backed up, there are all of these trucks – where are they going? But the freight movement process in the country, the component of our transportation system on the highways that is now devoted to freight movement is much larger than it used to be.
So we have to have solutions for that. That’s the Corridors of the Future program. It’s a very small amount of money, but in our world of earmarks and lack of discretion, it matters. We’re going to try to build on this in future years. Forty-three percent of the country’s imports come through one place, the ports of L.A. and Long Beach. So what you do with respect to that port and that port alone has a huge impact, particularly when you consider that the single most economically feasible transcon rail link in the country goes through the desert in Arizona and can only be linked through – until the Mexicans build some ports – can only be accessed from water-born cargo through L.A. and Long Beach.
And obviously – I don’t need to read it to you – port congestion is a major problem for the economy, but it also has environmental and energy impacts because, of course, if you are a ship waiting offshore who cannot find a berth at the port, you are going to burn extra fuel. If you are a trucker trying to get into the port there and, in fact, in many other places, and you can’t get in, you may spend an extra night staging at a rest stop or along a highway. Anybody who has been to New Jersey recently and has seen the trucks line up near the ports – they are there because they have a window of time when they can get in at say 6:00 a.m. and they better get there first. So they’re going to sleep the night before 10, 20 miles down the road.
This is a major problem for us and I’ll be candid. We are doing our best to pull together state, local, other federal agencies to come up with solutions that will reduce truck idling, that will reduce overall congestion on the surface and that will take some steps to do some environmental remediation, such as what’s called cold ironing, which is the process, which is a term that means you basically plug in your power at the port instead of running the engines on the vessel to supply your port power.
These are all very difficult things to bring about in a multi-jurisdictional, multi-pronged effort that involves a lot of different folks with some different agendas, but we are trying to work toward it and it is something that we think is going to have to happen in L.A. and Long Beach. And then, we will want to export that model around the country to ports that are going to be experiencing the same problem in 10, 20 years like Galveston, Charlestown, New Jersey.
Okay, what does this have to do with energy? Well, we are studying the benefits of congestion reduction, the specific benefits that that has on energy consumption. And I’ll give you a couple of examples from countries that are ahead of us in doing what’s called congestion pricing in their cities. You may have read about Mayor Bloomberg’s plan to create a cordoned-pricing operation in New York. That is one of our urban partnership, I’d hasten to add. And so, we’re studying what we’ll get out of that in terms of energy from other countries that have had their schemes in place for longer.
For instance, congestion pricing in London resulted in a reduction in greenhouse gas emissions by about 16 percent between 2002 and 2006. There’s also an example from Stockholm, which actually has a system that’s been up and running for a longer period of time. The fuel savings come from – in case you hadn’t guessed it – from trip reduction; from switching modes, from getting people off, out of their car and into a bus or subway car; and from improved vehicle performance, from being able to operate at a more consistent and higher speed. The studies also showed significant reduction in traffic accidents and urban air pollutants.
A surprisingly high amount of environmental damage is done by accidents, particularly in terms of water quality. And of course, we have 43,000-odd people killed every year on our roads in this country alone. So this is one of those instances where solving the congestion problem helps you solve a lot of other problems that you didn’t start out thinking you were going to attack, but are.
Another piece of the congestion initiative – and I’ll just mention it briefly because it’s not directly germane here – is the use of what are called public-private partnerships. These are contractual mechanisms; they’re really just transactions that give an extended lease to a concessionaire who then operates the facility for the public entity and we think, in many circumstances, can do it better. One of the ways that you get – and we are, by the way, studying the environmental implications of building facilities for P3s as we call them, public-private partnerships. There’s not much to go on yet except for the fact that if you’re going to do a toll road, which we support, and you’re going to do it right, in many states, the best option is to have a private concessionaire operate the facility, build it and then operate it.
We’re also trying to incorporate into all of this the technologies that we can get off of the shelf and put into place right away. This is not about research; this is not about developing the next thing; it’s about taking technologies that are not widely deployed and encouraging communities to deploy them now. And it’s not actually, frankly, entirely about technology. The Skyway, which is a road of about 11 miles in Chicago, was leased to a foreign consortium of five or six different entities led by an Australian entity for 99 years a few years ago. And one of the things that that operator is doing is going up and down the road with a huge magnet tied to the bottom of a truck to essentially remove FOD from any kind of obstructions from the road.
MR. : What’s FOD?
MR. DEHANN: It’s a – sorry, aviation term Sorry, aviation term which I crossed with a highway term – to get that off the road. And what they have told us, and this is what they have told us, is that they have found that that has actually had a real impact on the accident rate.
MR. : So they’re recycling all of the federal – (inaudible, laughter).
MR. DEHANN: Yes, no, I don’t know. It’s a good question, but I don’t know. Okay, let me turn to one of the easier targets when it comes to environmental remediation and that’s aviation. We’re talking about congestion so let me back up and talk a little bit about aviation congestion and then, again, turn it towards the energy side. This is all, again, clarifying the obvious for anybody who’s flown recently, but our aviation is not performing up to snuff. We’ve lost – and this is just the 2000 number, $9.4 billion, in the form of lost fuel, lost productivity, et cetera.
Because we know that the number of passengers who are going to want to fly is going to be about a billion by 2015, we know that the problem is not going away. And it’s important to clarify that this is not just a system that has too many, too many aircrafts in the pipeline. It’s a fundamental problem about the nature of the system that we have in place which is based, essentially, on 1950s radar technology and a workforce that is still doing the exact same job that it did when FAA was founded in 1958.
We need to get away from that and for a number of reasons, one of which is emissions. However, it’s a very serious problem and I would be happy to talk about our reauthorization bill with anyone who wants to, but it’s a very serious problem. But we need to put the aviation emissions issue into proper perspective. Our emissions are, in fact, not growing substantially. We are hauling a lot more people and a substantially higher amount of cargo and generating less CO2. Now, why is that?
Well, part of it is that we had 9/11 and 9/11 prompted, for unrelated reasons largely, the removal of a lot of gas guzzlers and inefficient aircraft from the fleet. These are aircraft that were, that are, frankly, perfectly fit to be operated safely, but they became economically unviable to carriers, particularly network carriers when the bottom dropped out in 2000 and 2001 of the carriers’ business plans, particularly business travel, which dried up substantially and has never actually, in terms of pricing power, come back to where it was in those years.
So long story short, they had a powerful incentive to get rid of the gas guzzlers from their fleet because of that situation, but also because fuel is now, and probably will remain so for the foreseeable future, the number one cost driver that they have. It accounts for about 30 percent of their cost, which is more than labor. Anybody who has been – I’m certain there’s some folks from the Air Force, active or retired, here right now and you probably know people who are in the commercial pilot world. Anybody who has watched aviation for the past 30 years would be shocked to see an aviation world in which labor costs are not the number one point of dispute and stress for the carrier. It’s not the case anymore; it’s fuel. And with a $100 barrel, you have to think that that’s going to continue.
Now, I said that we need to put it into perspective. Even though aviation is only responsible for about 2 to 3 percent of greenhouse gas emissions, it is a very public thing. It is a very, very public thing and in Europe, it’s an extremely controversial form of transportation, growing more so. I was just over in Europe and you get questioned from anybody from a foreign government about the U.S.’ position on aviation emissions. And I’ll come back around to that. So we think that it needs to be in its proper perspective. But it’s also important to do something about it.
Okay, what is the solution to aviation congestion and, we think, to a large extent, to aviation emissions and consumption? It’s all about the lingo. And I can run through these, but many of you will know what these terms mean. We have tried to reduce the separation minima that separate aircraft in crowded, particularly transatlantic corridors so that you can put more airplanes into the same space, which means you have fewer delays getting off the ground in Europe or on this side of the ocean.
We have installed what are called required navigation procedures at airports around the country to create more tubes, if you will, to get into the airport, in and out. We have and – required navigation performance and required navigation procedures are variants of each other. Required navigation performance requires aircraft that are equipped with trained crews to land within these tubes so they consume as little as possible getting in and out of the hubs, particularly the hubs is where this is important.
Where we can, we have put together what are called continuous descent approaches, which are, in layman’s terms, as I understand them, because I’m definitely a layman, the ability to go like this on an actual glide path into the airport as opposed to going like this, taking different clearances for different altitudes as you come in. And we are doing, we would like to do some research and to deploy some technology called CLEAN. It’s a terrifically bad government acronym, but it’s called CLEAN, that we think will help the manufacturers improve the airframe and engine significantly.
Again, they already have a huge incentive to do this. What’s the goal? It’s important to – when you’re talking about aviation and emissions and energy, you want, I think it’s important to distinguish between what we want to do, at least in this administration, and what a lot of other folks around the world want to do. What we want to do is have greater efficiency, reduce fuel burn and useless fuel burn on the ground and in the air, particularly around the major hubs, which is where the problem really is so that we have a system that flows better. It’s the same principle on the roads. That is a goal that’s important; we embrace it; we recognize the need for efficiencies and environmental responsibility.
The alternative approach is to seek to be perfect, to go to carbon neutrality or zero carbon or zero emissions and to impose on industry and the traveling public, frankly, a burden that they will never really meet, that will never be fulfilled, which is to say to tell people to stop flying. And that brings me to the European Union’s scheme, which has been around for awhile, was announced last year and is an effort to create a, to roll in international aviation to the European cap and trade program so that when you take off from San Francisco to Frankfurt, the minute that aircraft leaves San Francisco, it’s emissions are counted against the United States if it’s a U.S. carrier and that carrier in particular for its annual emissions ceiling. But if that aircraft is on climb going to Tokyo, those emissions are not touched at all. This is the European’s effort to impose a cap on all of the emissions that occur throughout the entire EU-connected services that happen.
I mentioned brief our reauthorization proposal. Our reauthorization is called Next Gen, which is a name not only for the bill, but also for the concept of the next generation air transportation system. And that is to rely on efficiency, such as GPS in the cockpit and what’s called ADSB signals in the cockpit, to allow the pilot to build on all of the technology that I just mentioned with all of the alphabet soup and be able to have total awareness of what they’re doing so that the air traffic controller becomes less a director of the operation and more an overseer of the operation. That, we think, will lead to enormous efficiencies in the air and on the ground and will yield enormous savings in fuel and therefore, emissions.
So that is a warp-speed run through the congestion initiative that we have and how it affects – I hope I’ve been able to relate it effectively to how it affects the energy picture. I did not go into some of the research that we do at DOT because this is where our focus is right now. There is research; I’d be happy to talk about it in the Q&A. But the congestion initiative, we think, hold enormous promise not only to improve the performance of the system and thereby aid the economy, but also to reduce the consumption and the waste of people on all of our modes of transportation.
So with that, thank you, and I’d be thrilled to take your questions.
(Applause.)
Q: (Off mike) – is that better? There we go. There seem to be a lot of assumption in the plans going forward and I wanted to ask, kind of generally, what the assumptions are about energy resource availability into the future, the longevity of those resources. And given that, what are the right things to be doing and assuming in the transportation of the future?
MR. DEHANN: Did everybody hear the question? Okay, that’s a very hard question. I think that, as I said when I started, we have several jobs, a couple of which we’re going to do regardless of the energy situation at all. I mean, we’re going to be a safety regulator under any secretary with any energy picture under any administration. I think that your question really goes to what our research priorities ought to be. The priorities that we have really cover the waterfront. We are involved in alternative jet fuels research although our program is very small compared to the Air Force’s program, sin fuels, et cetera. We are involved in biofuels research to try to figure out what that would mean in a fleet that knits and regulates. We are involved in hydrogen. We are trying to figure out the way to regulate hydrogen vehicles to make sure that they’re safe, right, because that’s our primary responsibility. But we’re also doing research on hydrogen to research hydrogen and its utility. We’re working on plugging in hybrids, et cetera.
I don’t have a specific answer for you in terms of where we think things will go. If you believe that we are headed towards peak oil that is going to solve, frankly, a lot of the issues that we at DOT grapple with every day. I don’t think we’re there, but that’s just my view; I’m not an energy analyst. And I take my cue from DOE in terms of where the market is going and what information – as you could tell from my charts, right? So I don’t know where that is going. One thing I would say is, the market is going to provide a lot of solutions when the price signal is there. If you have $120 a barrel of oil for the next X number of years, you will have a cellulosic ethanol research rush. That will happen.
And we will figure out a way to make the cellulosic ethanol thing work. So I’m sort of glancing about your question, but that’s where we think –
Q: I think you touched on it there. I just would encourage you to look at the timeframes it takes to bring alternatives online if you make certain assumptions about the fuel and energy resources you currently have. And given the timeframes to bring on alternatives, does it make sense to pursue one path versus another?
MR. DEHANN: Ah, the pathway question. The pathway question is, I’m glad to say, not ours ultimately to handle. (Laughter.) Here’s where I think our role – here’s where our role comes in. Whenever the pathway sort of gains momentum – whatever that way maybe or whatever multiple pathways gain favor and take charge and get momentum, we have to be there with a regulatory solution that ensures safety of people and operators and shippers, et cetera, right, without impeding the innovation that they’re bringing to bear. So we want to make sure that we are effectively regulating, without being a barrier to market entry and innovation.
Q: Thank you.
Q: Scott Cho from the Naval Research Laboratory. I was curious, I didn’t see you mention any thing about trains and the implications there for freight and, you know, this country has invested a lot in the highway system in the ’50s and we’ve become potentially overly reliant upon the highway system and those modes of transportation. I’d be interested in your comments about what DOT does do with trains and if there are plans to make them, you know – I don’t know how you would do it. I guess you’re involved with safety and that kind of thing so you can’t really inspire it but you could do some research, I suppose.
MR. DEHAAN: Well, I mean, the first thing about rail is that the railroads, much to everyone’s surprise, I think, who, you know, people who are not following the industry closely, have put in an enormous amounts of investments in efficiencies and better technologies and cleaner diesel and frankly, just more capacity. And one of the biggest environmental wins we get is when we put cargo on railcars.
Q: Well, that’s what I would have thought. I mean –
MR. DEHAAN: But they are incented to do that because they have that motive.
Q: In the ’70s, these issues came up. I actually was involved in learning about them at the time when I was a graduate student. But not just diesel, I mean, you know, if it’s electricity, you can power the things by nuclear power and that was the big emphasis at that time. Well, I just don’t know how DOT fits into this sort of thing but these are all issues I think.
MR. DEHAAN: Well, let me say a note here about deregulation. The aviation, rail, and motor carriers were all heavily regulated right down to the food that they served until the early 1980s. So the Staggers Act, which deregulated freight rail service in this country really allowed us to turn our rail system around from freight railroads that were going bankrupt to freight railroads now that are the envy of the transportation providers in other sectors and in fact, are coveted by Wall Street all the time.
Q: But the rails require a mode that, you know, if it were all electronic instead of diesel, they’d be, you know, that’s a significant way to have new technologies come in like nuclear and the government probably should be doing something about that, I would think.
MR. DEHAAN: Well, I mean, I agree with the sentiment but the question is how do you take a private operator that owns the trackage rights and the infrastructure and has invested billions of dollars into that and then tell him to do it differently.
Q: Well, but you know, they did do that with the highway system. The government stepped in and built the highways. They could rebuild the rail system. Now, DOT can’t do that. That’s a political decision but something should be done about that, I think.
MR. : Well, you just take that message home.
MR. DEHAAN: Okay.
(Laughter.)
Q: I’m Bob Hershey. I’m a consultant in your clean program for aircraft. You mentioned noise abatement among the other things. And I wonder if DOT has been looking at the tradeoffs of noise versus energy versus congestion and convenience for the flying public?
MR. DEHAAN: That’s actually an excellent question. I mentioned continuous descent approaches, the CDAs. One of the problems with CDAs that you get into is that the airspace was initially designed for multiple different altitudes on final approach so the communities would be spared noise issues. So we can only do CDAs where the communities allow it. I mean, frankly, we can do it where the litigation risk is less than average. (Laughter.)
So could you shut that off now? (Laughter.) So I think that’s an excellent question. We are thinking about that. The CLEAN program is not the law. It’s in our authorization proposal but there is definitely a tradeoff. I would note, however, that engine technology, particularly the new GE engines that are going on the new 787, are dramatically lower in noise if the manufacturers are to be taken at their word and I take them at their word at this stage. Those are technologies that are going to improve things dramatically.
I should also mention, by the way, that we have spearheaded or shepherded a redesign of a New York/New Jersey/Philadelphia Airspace that will improve the noise level for about 600,000 people and will cut delays at the airports in those three cities, we think, by about 200,000 hours a year. So we’re making strides in that area too.
Q: Am I next, Bob? Bob, my name’s Jim Jordan. I’m with Maglev Research Center in New York Poly. We would like to recommend to the department that they put the United States into the Maglev worldwide race with the Japanese and the Germans by building a maglev test facility to ensure the safety of the maglev vehicles and the type of guideway as a matter of policy and say our recommendations are to add to the existing interstate highway, national highway, and railroad rights of way as you approach cities to put a maglev guideway on those routes and it would increase the capacity.
It’s sort of like building, say, six to eight more lanes on all the interstate highways with a maglev system that would carry both passengers and freight. Those patents belong to the United States. They are invented by U.S. citizens and it just doesn’t have a guideway. The Siemen’s German Government Consortium built their own maglev test facility. Not Siemens, but the German government did. The Japanese built their maglev test facility and they’ve essentially beaten us in bringing one to the market. But we believe our government could, by investing in a maglev test facility at a very low cost, could in fact create a means to privately build a maglev guideway system for the country at no cost to the taxpayers except for building the test facility to ensure the safety of the vehicles and the guideway system.
Now, it’s difficult to gain access to the Department of Transportation decision authority or the president on this issue, so I’m, tonight, making an appeal to you to please consider that because it would end most of your congestion problems, most of your energy problems in terms of oil – that kind of energy – and it would free up the domestic air carriers and give them a lot more less trips to make. It would make the UPS/FedEx-type of overnight freight delivery a thing of the past because we’d be carrying their trucks on a maglev carrier. And that alone is going to relieve the highway congestion in most of the major cities.
The ability of the U.S. invention to electronically switch could empty the port of Los Angeles and Long Beach single-handedly and keep it all cleared out electrically faster than any of those systems that I could possibly know and I’m a considerable expert. I’ve been in business for 35 years. I think I know every freight handling system there is in the world. So anyway, that’s my recommendations. Well, good evening to my colleague from the Naval Research Lab and I support nuclear power. (Laughter.)
MR. DEHAAN: Hi.
Q: You didn’t have an answer to that?
MR. DEHAAN: It wasn’t a question. (Laughter.) And the good guy has an answer though.
Q: Obviously traffic congestion – my name is Don Airbuck, by the way. I represent the American Society of Agricultural and Biological Engineers and obviously there are a lot of implications to highway congestion, no doubt about it. But you mentioned that there were 2.9 billion gallons a year of fuel wasted. Well, 2.9 billion gallons is about 2 percent of what we burn. You know, 2.9 billion gallons would fuel my car for quite awhile but in the grand scheme of things, it’s really not all that much. In fact, if we improved our corporate average fuel economy by half a gallon, it would accomplish the same thing. So I think there are a lot of opportunities there too.
MR. DEHAAN: Well, we’re working on that too.
Q: Not very hard though. (Chuckles.) And the other thing is, actually, if we didn’t have any congestion in terms of fuel consumption, we might well burn a heck of a lot more fuel. (Chuckles.)
MR. DEHAAN: Actually, I would dispute that, that we would burn a lot more fuel if we didn’t have congestion. And I hope I’m not mischaracterizing your argument, but I think this is the boogeyman of induced traffic. This is the notion that when you create extra lanes, people simply drive more, they burn more fuel, and we should just shut that down. We disagree and more fundamentally, actually, we believe in the ability and the right of communities and states to engage in their own land use planning, which is ultimately what is driving that. We’re not the Department of National Land Use Planning or anything like that. So I would dispute the notion that that is the problem.
I’d also say that the gallons you’re citing as being essentially a drop in the bucket in terms of our overall consumption, that may well be true, but in terms of economic harm to the country, it’s enormous and in terms of environmental problems it’s enormous. When you have in the same sense that nobody who doesn’t have a job likes to be told about the low unemployment rate, nobody who is suffering an environmental problem in their community wants to hear that the problem is not that big. To the mayors in the inland (ph) empire in L.A. and L.A. area, this is an existential question. So, I mean, as inadequate – and I think that’s probably a fair word to describe the degree of the solution that we’ve come to already – as inadequate as what we have done is, we recognize the severity of the problem.
Q: Hi, I’m Bill Horak from Brookhaven National Laboratory and you mentioned the apparent success of congestion pricing programs in London and Stockholm for vehicular traffic and that you’re actually including that as part of your partnership program with cities. Do you have any plans to expand that to other modes of transportation, say congestion pricing at airports or congestion pricing at marine ports?
MR. DEHAAN: The shorter answer is yes, particularly in aviation. We are in the middle of a sort of what’s called an aviation rulemaking committee with aviation stakeholders concerning New York, specifically. And one of the options on the table and an option that the secretary has been quite frank that she supports, at least serious consideration for, is congestion pricing at JFK, LaGuardia, and maybe Newark.
There have been 30 years of discussion among economists and – pardon me – transportation planners about the illogic of pricing access to airspace and airports at peak times in the day exactly the same as you would at 10:00 P.M. on Saturday night. When you get on the Metro in D.C., you pay a congestion fee. Doesn’t matter when you get on, you’re paying something of a congestion fee. When you get on in rush hour you pay a bigger one than if you get on at, again, 10:00 P.M. on a Saturday night. So the short answer to that question is yes. I think that port congestion is farther down the road. In ports, we relate to the port operators, the port authorities, so they would have to impose those systems. But we are making some programmatic money available to them that wasn’t available before under one program so that they might be able to investigate that. We hope that happens before the administration is out.
Q: Thank you.
Q: I’m Phil Collins, D.C. attorney. I know you spoke about the market solutions to congestion through higher prices if fuel becomes less available. Now that the market solution that will be thrust upon us, hopefully over a slow period of time so we could adjust perhaps in a situation like the ’73 and ’79 oil crisises, which we did not adjust as well to. It might be an economic problem. Why don’t we take the bull by the horns, you know, like Noah with the ark, preparing for the flood he knew was coming or Joseph in Egypt preparing for the bad year he knew was coming.
Why don’t we tax the populace now like Noah taxed his family’s labor and Joseph taxed the labor and the goods of the people in Egypt to provide higher taxes on fuel so that we have a target price for gas and oil that’s going to be climbing over the future that would provide a cushion for any sudden downturn by foreign countries and also provide a transition to help with, not just congestion, but also the transition to other fuels and become more economical. There would be less environmental effects, as well. So we would actually plan for what we know is going to happen in advance. I think the mechanism of tax, have you looked into that?
MR. DEHAAN: An increase in the – we watch the Highway Trust Fund. The Highway Trust Fund is the dedicated fund –
Q: That’s about 8.3 cents now nationally.
MR. DEHAAN: – through which the highway programs are funded, at least at the federal level. No, it’s about – it depends what you’re driving but passenger vehicle, it’s 18.8 cents a gallon and then you have the state tax on top of that, which is usually somewhere in the 10, 14, 12 range. We watch the Highway Trust Fund extremely carefully. It’s going to go into the red in 2008 and so there are many calls to increase the gas tax.
For a number of reasons, we are opposed to that. First of all, the tax itself funds the system and if you are taxing people with the idea of reducing consumption, you are schizophrenic. At the same time, we are encouraging people to drive better mileage cars. We will be trying to drive them into paying a tax that is increased.
Number two, an increase in the gas tax, unless it is massive, would not fund the system improvements that we need. There was Chairman Oberstar who is the Congressman in charge of the transportation committee in the House, promoted, after the Minneapolis bridge collapse, a 5-cent dedicated surcharge to the Highway Trust Fund. He has pulled that back because of the opposition that he got from almost all corners.
So there is not a consensus to raise the tax. We don’t think that the tax will help us fund the system improvements that we need adequately and as I said at the top, it is somewhat schizophrenic to be trying to fund and encourage people to get into more fuel-efficient cars at the same time when you’re telling them to pay more at the pump.
Q: Wouldn’t they get into more efficient cars if they had to pay more? Wouldn’t that be actually not schizophrenic but sane and sensible?
MR. DEHAAN: Well, okay. It depends on your goal. It depends on your goal. Are you trying to adequately fund the system and the improvements that you need to make to the system? If the answer to that question is yes, then a large and substantial increase in the Highway Trust Fund – or the gas tax rather, is not going to get you where you need to go. We know this. Every amount of study that we put into this has agreed to it.
Q: (Off mike.) If you succeed, you cut off your income.
MR. DEHAAN: Correct. Correct.
Q: Well, have you looked into the situation – you mentioned London and Stockholm for international comparisons, have you looked into European gas taxes for comparison? Is there studies ongoing into that area or not?
MR. DEHAAN: You mean studying whether the European –
Q: Solution for higher taxes is a bad situation or a good situation that we might want to adopt, particularly for an administration, which doesn’t have to face another election. If this is a problem that requires leadership that there is perhaps a chance to persuade the public then a lame duck administration would have a better opportunity to do that.
MR. DEHAAN: I cannot tell you for certain that we have or have not looked at the impact of European taxation system on consumption.
Q: And transportation congestion and environmental factors.
MR. DEHAAN: But I would say to you that in that respect, outside the urban areas, Europe is a much different model. If you have $6.00 gasoline in Scotland, people are not driving and they don’t. They take public transportation all the time. Now, is that a choice that the country wants to make? That is not a choice that we choose to make and we don’t believe the country would support it.
Q: Hello, I’m Gail Staba. I work for the Transportation Research Board and National Academies and I want to ask a question that you might have a little bit more control over. (Laughter.) It seems to me that the Department of Transportation has the capability to get people in a room to actually do creative things together and you have a lot of programs that you’ve mentioned in your slides, which you’re exactly doing that. And I want to hear a little bit about kind of the mechanics and who some of the superstars are that usually don’t come to the table that we should all be looking at to kind of solve our problems of greenhouse gases and air quality and fuel consumption.
MR. DEHAAN: TRB is a superstar.
Q: Oh, you’re so nice. That wasn’t what I was looking for. (Laughter.) I mean, it’s interesting to me that the railroads that you talked about are private companies, very traditional. They’ve decided they’re going run, you know, 10,000 foot trains now and so they can, you know, haul a ton of our, you know, telephones and television cross country. Who are some of the others that we should be looking towards?
MR. DEHAAN: Well, I mean, I think that the folks that we work together very closely with are in some of the think tanks. Some think tanks and some interest groups that you would not traditionally associate with a Republican administration. (Laughter.) For instance, the Sierra Club is a enthusiastic supporter of congestion pricing, particularly the demonstration project that’s going in Portland right now. We’ve got some other environmental groups that are very supportive – at least not personally supportive. They are supportive of the concepts that we are arguing on behalf of.
So we look to them and we look to the think tanks and we look to work with the state partners. The owners and most of the time the operators of transportation facilities in this country 90 percent of the time – on the surface side at least – are local and state government and so you have to have their buy-in if you’re going to do anything significant at all. I mentioned the Urban Partnership Agreement. We have urban partners who run the gambit politically, including some mayoralties that are not so friendly with the administration in other respects. So I think the important thing is to reach out to people that you can find some common ground with on the specific issue you’re tangling with and try to figure out how to move forward there.
Q: Hi, my name is Bill Verk (sp). I work over in the Navy Department. One comment, then a question. I was just in Singapore for the last couple of years and one the things that I noted over there is they have a very robust economic incentive program for everything a person does with a vehicle. And the one that I’d like to highlight is the anti-congestion piece, which is a system where you have a device in your car – every car has to have it and you essentially have some sort of credit card in there where it deducts a couple of dollars every time you go into a high congestion area.
The beauty of this system is it’s efficient in that there’s never any money that changes – you know, there are no toll booth or any of that so it’s pretty easy to do and it works pretty well except the rates aren’t high enough because there is plenty of congestion still. (Laughter.) The question I’d like to ask is do you have any particular concerns with DOD or Navy from a transportation perspective? Thank you.
MR. DEHAAN: (Chuckles.) If you’ve got your checkbook, I’d love to talk to you afterward. But –
Q: I don’t have a checkbook, I’d just like to know what your concerns are.
MR. DEHAAN: I think that the principle nexus between – well, there are probably a million – but the principle nexus that we have more on a day to day basis is the BRAC process and the change of various facilities including Navy facilities from one place to another. Communities come to us and say you’ve got to help us. There is a program we have called Defense Access Roads that is funded by DOD and provides money to our state highway partners to fund the improvements that they need so that people who are expanding at a DOD facility can get in and out. You’ve probably read a lot about Belvoir. In Pensacola, there is major BRAC move that is causing them some heartburn. But I wouldn’t say that it’s a concern. It’s part of doing business.
Q: I guess I’m not following you. I don’t understand how – I understand how the BRAC process works pretty well, but is your concern with the fact that bases are put on the list or that people try to BRAC-proof their base? I’m not following what your issues.
MR. DEHAAN: No, I mean, it’s not a concern. I would say, off the top of my head, we don’t have a concern with the Navy. I think we probably work, from my perspective and my personal experience going back and forth to the Pentagon, for me we have an excellent relationship with DOD and we work on a range of things, including for instance, satellite policy.
Q: Okay.
MR. DEHAAN: But in terms of the BRAC specifically, we are reactive. We don’t get involve in the BRAC process. We simply try to help communities and state DOTs accommodate the additional people that they’re looking at.
Q: Thank you.
MR. : (Off mike.)
MR. DEHAAN: Do we work with DOD on restricted air? Yes. The question was do we work with DOD in terms of restricted airspace? We do. I mean, the most prominent example of that is what’s called the ADIS (sp) around here where we plug in with DOD and a number of other agencies to make sure – you know, we both have our equities but in my experience, that’s a very strong collaborative process.
Q: I’d like to return to the 2.9 billion gallons.
MR. : And you are?
Q: Adam Siegel, Energy Consensus, Energize America, other hats. (Chuckles.) Switch hats. Let’s try with the 2.9 billion. Let’s put it into a positive for a moment because there are some people criticizing it. We’re not going to have any silver bullet solutions. We’re going to have a lot of silver BBs, silver dust mites. Two point nine billion roughly equates to one day of the world’s consumption of oil. That’s not a meaningless amount, you know, and we can start equating to how many millions of tons of carbon dioxide it would take out of the air. But if we go back to one of your other of how things interact in every sense, is we have the Department of Transportation working to reduce congestion. We’re talking about the problems of the Highway Transportation Fund but if we take those 2.9 billion gallons out, I guess that’s a bad thing because we lose $500 million a year plus from the Highway Transportation Fund.
I think most of us here in this room would celebrate at the reduction of that use of fuel. Yet, you know, you were just saying there’s the perverse incentive of the reduced taxes. But thinking about those interactions perverse and otherwise, a lot of people in this room might want a lot of different types of transport. Right now, I think from the Highway Transportation or Transportation Funds, if a local government wants a road or state, they get 90 percent matching from the federal government. If they want to do rail, they’re lucky to get 60 percent, if I remember or 50 percent.
And therefore, where are incentive structures that perhaps you might want to see changed to make a more equal balance when we look at our transport system so that we’re funding equally all options at a minimum? (Inaudible.)
MR. DEHAAN: That’s all right. Let me start with the equal funding, first of all. We spend through the Federal Transit Administration many, many billions of dollars a year on transit projects, both sort of what are called new starts and what are called small starts and then basically block grants to transit operators. What we found, frankly, is that over time, transit ridership has not really increased in line with the projections of the projects that we’ve funded. We’re trying to spend the transit dollars more intelligently. That’s number one.
Number two, you’re exactly right to describe that as a perverse incentive, going back to the fuel tax. What we have said and what we will probably propose in some broad sense, if not in an actual bill, is a transportation funding – a surface funding mechanism that gets us away from the fuel tax and that incentivizes communities to do all the things that I mention in the congestion initiative such as tolling.
You don’t need – it’s important to point out that the fuel tax itself is not technically speaking a user fee. It does not actually impose a cost on a user that is commensurate with the burden he places on the system or frankly, the value of the transportation that he gets. So that cost that we impose on the user are way out of whack with what the user impose on the system. We think that in some way the new system of funding has got to accommodate that and recognize that truth and do something about it to bring back the cost in line with what the users impose. If you land an A380 – and it’s an aviation problem too. If you land an A380, which we will shortly be doing at San Francisco and you’re Singapore Airlines, you need to pay more money for use of that airport than somebody who is landing a Cessna or even a 737. But our system doesn’t recognize those differences, so that’s in part the answer.
Finally, as to your question about rail, we have – and maybe you know this, we engaged in a – in this administration, in a struggle to reform the way in which we fund Amtrak. It has not been successful. We are still providing operational subsidies of significant dollar amounts. In fact, we fund the beverage deficit that they have, which is $90 million a year, a small example of a larger problem. So the rail funding solution is a long way away.
I should mention we do have a program called a RIF program in the Federal Rail Administration that makes loans to small rail operators. Well, not all small but many rail operators. It’s intended to get those operators funds that they could not otherwise get on the market. We get applications from folks who often times then come back to us after they file their applications and say, sorry Wall Street’s happy with me. They’re going to underwrite my operation so we don’t need to do that. And if they can make a go of their business, then that’s great. It will take cars and passengers off the roads. But that’s a challenge and it’s an ongoing challenge and it’s probably going to be a challenge no matter who comes after us.
Q: Hi, my name’s Dave King and I’m an energy policy analyst in the department and my question is about pipeline infrastructure. I think I heard you mention earlier that you’re responsible for safety in the pipeline. As you may know, many of our DOD facilities receive their fuel through the pipeline system that crisscrosses this country north and south and east and west. And as you think about the safety aspects of that pipeline, is security of that pipeline wrapped into those safety considerations? And if so, is it an interagency effort that might be involved to addressing security relative to the pipeline?
MR. DEHAAN: It is an interagency.
Q: Thank you.
MR. DEHAAN: It’s a TSA responsibility now.
Q: Oh, okay.
MR. DEHAAN: It is a TSA responsibility and it is something that we are working with them. I would say we are perhaps more involved in collaborating with TSA on that piece of the pie than we are in other modes where TSA is more matured and has great experience. Aviation jumps out as an obvious example.
Q: Right.
MR. DEHAAN: So it is a concern. We are working on it and as you know, the relative scarcity of pipelines in the country increases the consequence of an event in any of the pipelines as we saw in Katrina, frankly.
Q: Right. Yes. Okay. Thank you.
MR. NURENBURG: Any other questions? Well, please – Thank you very much, Bob. We’ll let you off.
(Applause.)
MR. DEHAAN: Thanks.
MR. : (Off mike.) When is the next –
MR. NURENBURG: Well, thank you so much for asking. (Laughter.) On December 10th, I think probably here, we will have a DOD R&D energy panel that will consist of three or four different representatives from various parts of the department and the departments, talking about R&D efforts within the DOD. So, that’s December 10th and we look forward to seeing all of you and make sure you bring your friends. If you’ll be so kind as to make sure you make these go away, you know, on your way out the door, that would be great. Again, we’re recycling them. I thank you all for being here this evening. Again, thank our guest for his great job at trying to answer these questions anyways.
MR. DEHAAN: Thank you.
(END)
