Colonial Pipeline, Greensboro, Hurricane Harvey and gasoline supplies...

"Colonial Pipeline begins in Houston, Texas and ends in Linden, New Jersey, traversing 11 other states along the way. Our system includes 5,500 miles of pipe, services 7 airports directly and provides fuel to multiple Department of Defense installations each day. We have 15 storage tank locations strategically positioned along the pipeline to serve our customer’s needs and connect to more than 260 terminals."

http://www.colpipe.com/home/about-colonial/system-map
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Following the passage of Hurricane Ike in September 2008, this pipeline was operating at a severely reduced capacity due to a lack of supply from refineries in the Gulf Coast that had closed, causing gasoline shortages across the southeastern United States."

https://en.wikipedia.org/wiki/Colonial_Pipeline

Perhaps Greensboro Should Control Our Own Future

In a previous post here at EzGreensboro.com our own  Does Colonial Pipeline have the parts ready to go or do they need to be produced?

"The welds have to be inspected with xray...
How long will the inspections take before the pipeline can be used?
How long is the bypass going to be?
Do we actually have a 45 day supply at the tank farm?
Are they going from valve to valve or cutting in between?
If the parts exist, how far away are they and how long will it take to get them here?
If there is only premium gas being delivered, is there a shortage of regular at the tank farm?
Who owns the gasoline at the tank farm?
Does all/most of Greensboro's gas come from the same facility?

 

It could make a huge difference. A few years ago when I needed an $18,000 pump (track motor) for an excavator (track hoe) I had to have one made at the factory in Korea as no one, not even the manufacturer, Daewoo,  stocked them as not to have to pay inventory taxes on them.

It took 30 plus days to make the part.

You see, unlike most who type away at blogs or call themselves journalists, I've actually worked in construction, transportation and even delivered materials to pipe lines. And the construction trades, just like manufacturing of all kinds, routinely rely on what is know as JIT (Just In Time Delivery) to get products delivered to them.

You see, no one wants to pay inventory taxes year after year, after year on parts or products they might take years to sell or use.

As a matter of fact, JIT was primarily invented as a means to help companies stop paying inventory tax.

Does that mean companies inventory nothing? No. It just means companies inventory a lot less than they used to and rely on trucks which rely on fuel which relies on pipelines to get the parts where they need to go.

Could it be we'll be out of fuel before the replacement parts are made to fix the pipeline? Somebody better be thinking ahead or the new parts might not ever get there.

Colonial Pipeline has announced plans to deliver gas by ships and trucks but ships and trucks run on fuel too. More price hikes on the horizon.

Maybe it's time we rethought this entire thing and built a transportation system that isn't quite so fragile. One of the things I've proposed for years is a moped factory right here in Greensboro, North Carolina building gasoline, multi-fuel, hybrid and electric mopeds as well as 3 wheel enclosed cab mopeds. No, mopeds aren't for everyone but even those of you in cars would benefit from the lower fuel prices caused by more people riding mopeds and fewer people driving cars.

I even gave it a mention in my platform for Mayor of Greensboro.

Another thing that needs changing is inventory taxes. Inventory taxes need to be stopped. I don't know if the City of Greensboro levies any kind of inventory tax but if it does then that will come to an end if I am elected Mayor of Greensboro. After all, companies only pass it along to consumers.

And if I'm elected the City of Greensboro will lobby the State and Federal governments to stop inventory taxes altogether.

As I was writing this the cable TV, Internet and electricity all went out here where I live and work. Sure, it was raining but only gently, no electrical storms, no thunder. I thought, Wow, Duke Energy uses natural gas supplied by those same pipelines to generate electricity, did they run out?

Of course the power quickly came back on, natural gas isn't really transported in the same pipeline and if Duke did run out of gas they are set up to quickly switch to coal but the trains that haul that coal run on diesel fuel supplied by none other than... you guessed it, Colonial Pipeline.

"Colonial transports various grades of gasoline, diesel fuel, home heating oil, jet fuel and fuels for the U.S. military. The products Colonial carries are fungible, meaning they are interchangeable. The different brands of gasoline take on their specific brand qualities when additives are placed in the product by our customers, and after the product has left the pipeline.

Colonial has active product codes for 38 different grades of gasoline-including reformulated gasoline (RFG) and multiple vapor pressures for each grade, seven grades of kerosene (including two for military), 16 grades of home heating oil and diesel fuel (including diesel fuel marine for the U.S. Navy and light cycle oil) and one grade of transmix. Of the 62 codes, 29 are for fungible products and 33 are for products that must be shipped on a segregated basis."

And yes, there is Plantation Pipeline which follows the same path running right beside Colonial Pipeline but obviously one pipeline cannot meet the need as stations are running out, gas lines are forming everywhere and prices are expected to keep rising.

And maybe it is just a temporary thing. The question is: how long is temporary? Perhaps it's time we started asking ourselves, how can Greensboro control our own future?

Some of the answers to that question can be found in my platform for Mayor of Greensboro in 2017.

And building a megasite in Randolph County so that residents must drive 30 to 40 miles one way to work each day is not one of those solutions.

I'd love to know your ideas as well.

Gasoline Prices, Gasoline Tax and Politicos

Gasoline prices have fallen. Technological innovation has brought more oil supply and therefore more gasoline to the market place. A welcomed price break for consumers. Yet the same welcomed price break for consumers presents a political incentive to increase gasoline taxes. The argument comes with plenty of notional propositions including the need for additional tax due to slack demand of gasoline. That demand, in part, is slack due to vehicles achieving better gas mileage. (1)

Problem is, demand for gasoline is increasing, merely not increasing at the pace of supply available, therefore price falls. Demand is increasing and the tax per gallon of gasoline is generally fixed, meaning twenty gallons of gasoline at $3.69 yields the same tax revenue as twenty gallons at $2.14 (the tax per gallon is fixed whereas the total price per gallon is variable). Therefore, tax revenue is increasing, not decreasing, despite fuel economy of the aggregate fleet. Besides, the fuel economy of the aggregate fleet is a result of politicos and their legislation not a result of individual choice. (2)

Maybe the subject of gasoline tax revenue requires a visit to public choice theory.

The public choice theory argument is: Politicos champion the building of infrastructure and concentrate focus on the price to build and the wonderful things the “building” will bring. Yes, the benefit exceeds the price in their “economic development” calculation (or non-calculation as the case may be). Yet the same politico ilk fails to price long term maintenance price into their “building“, meaning taxpayers, decades later, are forced to pay the under funded or unfunded maintenance feature of the past “building“.

One might conjecture that the situation is akin to the classic case of cascading unintended consequence regarding “monument building”. Monument building is a public choice theory proposition of politicos building things with other people’s money as a monument to their “doing something”. Matter-of-fact, politicos are so vain as to name the monuments after themselves or their favorite past politico of the same ilk. Meanwhile, the-last-man-standing pays the price of cascading unintended consequence regarding “monument building”. The ongoing maintenance, which the monument required but was not properly priced in by politicos, requires a future set of taxpayers (you) to be saddled with the price to maintain something that has not been properly maintained.

The building phase is a period ripe for political constituency building with other people’s money. Surely politicos would enjoy the maintenance phase, and direction thereof, regarding other people’s money. Yes, during the “repairing” stage of their own making due to a under-funded or unfunded phase, politicos would like to spend your money again.

Stated alternatively, the-last-man-standing pays the price of cascading unintended consequence regarding “monument building” of under funding and/or unfunded maintenance. The politico frames the under funding and/or unfunded maintenance phase, and call for more tax revenue, as unrelated to, or exogenous to, their own political dupery and nitwitery of under funding the “monument building” phase in the first place. Hence a new tax revenue stream for a new period of “repair” is called for, and not so incidentally, ripe for political constituency building with other people’s money. Wash, rinse, dry… begin process again. Sweet!

Politicos many times rely on special interests to make their case for tax increases. Special interests that will directly benefit from the tax revenue being spent, focused up them as it were, always champion a tax increase. Enter the U.S. Chamber of Commerce business group and AFL-CIO union federation: special interests extraordinaire! You guessed it! The U.S. Chamber of Commerce business group and AFL-CIO union federation back a tax hike on gasoline. If anyone can solve their own problems with the use of other people’s money, it certainly is this coalition (or more succinctly under the theory of ‘syndicate’). (3) (4)

Returning to the monument building episode, politicos frame the building phase as economic development but rarely if ever price in the long-term maintenance of the monument they propose to build. If the maintenance price is factored in their “economic impact guess”, their wild guess, will look much less rosy. If the taxpayer knew they and those coming after them would be required to pay ongoing maintenance, many times far in excess of the original monument price, taxpayers might reject politicos building things with other people’s money as a monument to their “doing something”.

If one ponders the debate point of infrastructure crumbling, then one might want to find “why” infrastructure crumbles. Is the crumbling due to lack of tax or lack of foresight? Is the crumbling due to monument building with ongoing maintenance not factored in when politicos want to spend other people’s money as a monument to their “doing something”?

Also, the debate point of infrastructure crumbling is sophistry. Road, bridges and general social overhead capital is in better shape today than anytime in the last twenty years. Oops! (5) (6)

One might also consider the political class as the quintessential shirking partner. Yes, the partner that wants part of the gain without putting forth any effort. That’s right, anytime one gains, be it through irksome toil such as work or technological innovation reducing price, any gain one enjoys, becomes fertile ground for the shirking partner, the political class. (7)

Finally, the gasoline tax is a regressive tax hitting lower income individuals hardest. Should the working poor or those climbing the economic ladder from below pay more now that they have increased their meager disposable income due to technological innovation?

　

Notes:

(1) In Low Gasoline Prices, an Opening Emerges for Higher Taxes, WSJ, 01/08/2015

http://www.wsj.com/articles/in-low-gasoline-prices-an-opening-emerges-for-higher-taxes-1420747684?mod=WSJ_hpp_MIDDLENexttoWhatsNewsForth


(2) Ibid

(3) Ibid

(4) A Theory of Syndicate, Pichler and Wilhelm.

http://gates.comm.virginia.edu/wjw9a/Papers/syndicate1.pdf

 (5) New report shows state highways in good shape, USAToday, 09/01/2010

http://usatoday30.usatoday.com/news/nation/2010-09-02-roads02_ST_N.htm


(6) 19th Annual Highway Report, Reason Magazine, 09/02/2010

http://reason.org/news/show/19th-annual-highway-report


　

(7) From Economic Man to Economic System, Harold Demsetz

http://www.amazon.com/Economic-Man-System-Institutions-Capitalism/dp/1107640857/ref=sr_1_1?s=books&ie=UTF8&qid=1420921465&sr=1-1&keywords=From+economic+man+to+economic+system