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~ USA Headed for a 5th Revolution! Why?

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Category Archives: Infrastructure & Fixed Fuel Prices

#114 Fixed Fuel Price: Incentives for More Domestic Production (Part #10)

21 Saturday Feb 2015

Posted by Jordan Abel in Economics, Infrastructure & Fixed Fuel Prices, Innovative Thinking: Ideas and Products, Societal Issues

≈ Leave a comment

(Readers: The blog centers around the author’s prediction that the US will experience a 5th revolution by 2020-2025.  Some early vignettes precede the revolution; later vignettes follow the revolution.  Many characters appear regularly.  More about the blog and the author.)

(Background for this series of entries. Earlier POTUS asked Jordan for ideas how to convince politicians and the public that it would be a good idea to fund rebuilding US infrastructure by fixing the price for gas and diesel fuel.  Original conversation with POTUS Entries #104, #105.)

Scene: Jordan’s office.  Receives call from POTUS.

Jordan:  “Hello, Mr. President.  Nice to hear from you.”

021214_1242_24Resultsof1.gifPOTUS:  “Jordan, I called to thank you for all the help getting Congress to support the idea of funding rebuilding infrastructure with a fixed fuel price.  That was quite an achievement.”

Jordan:  “I didn’t really do anything.”

POTUS:  “You might not think so but I do.  The key was support from the oil-and-gas industry executives.  When they bought into the idea, Congressional Republicans had no reason to resist.”

TurtleneckJordan:  “Pleased I could help.  What else is on your mind?”

POTUS:  “Jordan, so cynical.  Why would you think I called about something else?”

Jordan:  “Why?  Because you are not bashful about asking.  And I appreciate being asked.”

POTUS:  “Well, since you are so eager, I do have another request.”

Jordan:  “Why do I volunteer like this?  What do you need help with?”

POTUS:  “Need you to be on call for the group putting together the details how to implement the fixed price for fuel plan.  The concept is easy to understand but there are some sticky details.  And we’re going to need some rules.”

JUsed Car royalty-free-car-salesman-clipart-illustration-443283ordan:  “You’re not suggesting some companies might try to game the system?”

POTUS:  “Of course not (laughing).  But we really need some clear rules for a couple of areas.”

Jordan:  “Such as?”

POTUS:  “For starters we need to agree on the maximum fuel price.  If the retail price is $5.00, do we set the maximum portion for fuel price at say $3.00?  And how do we adjust that price over time?”

Jordan:  “What about source of the fuel?”

Poil-clip-art-2589801-illustration-of-oil-rigOTUS:  “We need to have a high percentage of fuel from domestic sources.  One of the benefits of the plan is to increase availability of domestically produced fuel.  But how much is enough?”

Jordan:  “What about some protection of the environment while encouraging domestic production?  Republicans are going to push for drilling in the Arctic National Wildlife Refuge.  How will sensitive environmental areas be protected?”

POTUS:  “You’re getting the picture why I want you to be on call.  You have a more balanced perspective on these issues.”

Jordan:  “Alright, I’ll make myself available.”

POTUS:  “Good.”

Tax CutsJordan:  “Here’s a thought.  One way to make encourage domestic production and avoid environmental areas is to offer a tax incentive to extract more oil from existing fields rather than drilling new.”

POTUS:  “I forgot you were involved with an oil-and-gas company.  You must be an expert.”

Jordan:  “My knowledge might fill a couple of thimbles, which qualifies me as dangerous.”

POTUS:  “Welcome to Washington.  Many of the so-called experts here don’t have enough knowledge to one thimble, let alone two.  You think the incentives would work.”

thimbleJordan:  “Yes.  For example, I know that mapping technology – think GPS but underground rather than satellites – and integration of certain software programs can point out many untapped reservoirs, or reservoirs that have lots of oil and gas left behind.”

POTUS:  “How much do you think?”

Jordan:  “I’ve heard the geologists and petrophysicists claim that in the US alone at least 70% of the oil and gas remains untapped…and it might be as high as 90%.”

POTUS:  “That’s the kind of data we need to counter the argument about drilling in ANWR and other sensitive areas.”

Jordan:  “I can get these geologists and petrophysicists guys to testify before Congress if necessary.”

POTUS:  “That would be great.  By the way, what’s a petrophysicist do?  I’ve never heard that term before.”

Jordan:  “Neither had I.  It’s the guy who analyzes the rock formation for how much and how fast the oil or gas will flow…and a bunch of other stuff.”

POTUS:  “Doesn’t a geologist do that?”

Jordan:  “At a macro level.  But the petrophysicist works with the driller…at least the good ones do.  Think of economics.  The geologist is more like macroeconomics.  The petrophysicist is more like microeconomics.”

POTUS:  “That helps a little bit.”

PP_For_Dummies_0_IntroductionJordan:  “Don’t feel bad.  I had no idea what a petrophysicist did.  Then I found a segment on YouTube based on a book titled “Petrophysics for Dummies.”  I watched it and, as they say, now I are an expert.”

POTUS:  “I might watch it, sometime…after I’m out of this place.  Jordan, thanks again for the help.  I’ll let the implementation team know you are available.”

Jordan:  “You’re welcome, Mr. President.  Call any time.”

 

 

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#113 Oil Industry Buys into Fixed Price for Fuel (Part 9)

14 Saturday Feb 2015

Posted by Jordan Abel in Economics, Infrastructure & Fixed Fuel Prices, Innovative Thinking: Ideas and Products, Societal Issues

≈ Leave a comment

(Readers: The blog centers around the author’s prediction that the US will experience a 5th revolution by 2020-2025.  Some early vignettes precede the revolution; later vignettes follow the revolution.  Many characters appear regularly.  More about the blog and the author.)

(Background for this series of entries. Earlier POTUS asked Jordan for ideas how to convince politicians and the public that it would be a good idea to fund rebuilding US infrastructure by fixing the price for gas and diesel fuel.  Original conversation with POTUS Entries #104, #105.)

Scene: Jordan on the phone with Oil Man, who recently gave talk at an oil-industry trade show.

Jordan:  “Oil Man, thanks for making the speech to the API (American Petroleum Institute) meeting.  Understand you did a great job.”

cowboy-clip-artOil Man:  “Thanks, Jordan.  Not sure all my colleagues liked it but the reception was better than I expected.”

Jordan:  “No one booed?”

Oil Man:  “At least not too loud.”

Jordan:  “I thought your link to the Gettysburg Address was masterful.  ‘Two score and about 10 years ago…”

Oil Man:  “Well, it was just about 50 years ago that the energy world changed.  Those little Middle East…”

Jordan:  (Interrupting Oil Man) “Don’t call them that Oil Man…at least not on the phone.”

Oil Man:  “That’s what they deserve to be called…little you know what’s.”

TurtleneckJordan:  “Why do you feel that way?”

Oil Man:  “C’mon, Jordan.  At times I wonder what world you live in.”

Jordan:  “Keep going.”

Oil Man:  “Not to worry.  I was going to continue talking anyway.  If it had not been for American oil companies doing all the work, the ‘you-know-what’s’ would still be riding around on camels and living in tents.”

Jordan:  “Calm down, Oil Man.  Be more diplomatic.”

camel-rider-36033Oil Man:  “Why?”

Jordan:  “When the oil companies got involved, I’m not sure they really analyzed all the possible outcomes.  Sometimes actions have unintended consequences.”

Oil Man:  “Face it Jordan, you are turning into some pointy-headed academic.  We help these guys and then they turn against us.  You of all people should appreciate that.  Many of them don’t think you ought to exist.”

Jordan:  “I agree they’re rough on Israel.”

Oil Man:  “…and many deny the Holocaust.  And you call that ‘rough’?  I’d call it being a real a-hole.  Now, see how polite I was.”

Jordan:  “I think the only reason they leave Israel alone is there’s no oil…plus the superior Israeli military.”

Oil Man:  “How ‘bout that.  Moses spends 40 years wandering around and picks the one spot in the area with no oil.  I guess that’s funny…but in the long run probably best for Israel.  One gets more creative when resources are tight.”

Jordan:  “Back to the topic at hand.  Talk more about your colleague’s reception to the fixed_price_left_imgidea of fixed price for fuel.”

Oil Man:  “Frankly, the reception was much better than I ever imagined.  I think most of the oil-and-gas CEO’s will support POTUS’ proposal.”

Jordan:  “Good.”

Oil Man:  “But the reason for supporting is probably different from what you think.”

Jordan:  “Another unintended consequence?”

Oil Man:  “Exactly.  Executives like the idea of a fixed price because it makes it easier to run the business.”

Jordan:  “Reduces competition?”

Oil Man:  “Not really.  In fact, it probably increases competition, especially from alternative energy sources.”

Jordan:  “You mean wind and solar?”

Oil Man:  “Yes.”

Jordan:  “Then what’s the attraction?”

Oil Man:  “A fixed price for fuel reduces…effectively eliminates…the impact of the wide swings in spot process for oil and gas.  Those swings where like a whipsaw.  When spot prices were high, the oil companies were in hog heaven.  When prices were low, exploration stopped and widespread layoffs occurred.  The whole process was…I should say is…terribly inefficient.”

Jordan:  “So you think the fuel companies – including companies selling alternative fuels – will support the idea…and actually develop more domestic fuel sources.”

Oil Man:  “Think about second half of 2014.  Price of oil drops like a rock.  And what happens?  Oil companies, even the big ones, stop exploration.”

Jordan:  “Isn’t that good for companies producing lower-emission fuels?”

Oil Man:  “Did you learn anything in school?  Profits at oil companies are plummeting because fuel prices are falling.  Why would that be good for alternative fuels, which fallingPricescost a whole lot more?”

Jordan:  “Capitalism at its best…letting the market sort out the weak players and who should stay and who should go.”

Oil Man:  “Except with the current system the US is more dependent on foreign sources – and being so dependent really does hurt national security.”

Jordan:  “Well, well.  So the old Texas oil cowboy is not quite so rough-and-tumble after all.”

Oil Man:  “You’ve known me a long time.  And you know that part of my ‘tough-guy’ persona is for show…and many of my colleagues as well.”

Teddy_Bear_PocketJordan:  “So deep down, oil guys are really like cuddly teddy bears??

Oil Man:  “I wouldn’t go that far but I know many in the oil industry…and many will find this hard to believe…care about America and care about the environment.”

Jordan:  “May I quote you on that?”

Oil Man:  “Might as well lose all my credibility.  Yes, Jordan, you may quote me.”

Jordan:  “Great.  Thanks.”

Oil Man:  “Now, please let me go before I throw up over my own remarks.”

Jordan:  “OK bye, Oil Man.  Talk soon.”

#112 Oil Man Supports Fixed Fuel Price Proposal (Part 8)

04 Wednesday Feb 2015

Posted by Jordan Abel in Economics, Infrastructure & Fixed Fuel Prices, Innovative Thinking: Ideas and Products

≈ Leave a comment

(Readers: The blog centers around the author’s prediction that the US will experience a 5th revolution by 2020-2025.  Some early vignettes precede the revolution; later vignettes follow the revolution.  Many characters appear regularly.  More about the blog and the author.)

(Background for this series of entries. Earlier POTUS asked Jordan for ideas how to convince politicians and the public that it would be a good idea to fund rebuilding US infrastructure by fixing the price for gas and diesel fuel.  Original conversation with POTUS Entries #104, #105.)

Scene: Jordon on the phone with Oil Man, a well-respected executive in the oil-and-gas industry and former grad-school classmate of Jordan’s.

Jordan:  “Oil Man, nice to see you at the Super Bowl party.  Been a while.”

cowboy-clip-artOil Man:  “Yea, it was nice.  I enjoyed the chat and I especially liked the outcome of the game.”

Jordan:  “Well, what’s your reaction to POTUS’ idea about funding infrastructure?”

Oil Man:  “You mean what’s my reaction to raising taxes on fuel?  You know how Texans view taxes, especially those imposed by Washington.”

Jordan:  “OK, so it’s a tax.  I understand that and I think POTUS will call it a tax.  If he doesn’t, everyone else will.  Now what about the idea?”

Oil Man:  “At first, I thought you were nuts to bring up the idea.  Typical liberal wanting to raise taxes.”

Jordan:  “But now you’ve changed your mind?”

Oil Man:  “Changed my mind about you?  Never.  But I admit…and I really hate to admit…the idea makes sense.”

JTurtleneckordan:  “So you’ll be a spokesperson for the project?”

Oil Man:  “Hold it buddy.  I said this idea makes sense.  I didn’t say anything about being a spokesman.  Spokesman, Jordan, not spokesperson.  Do I look gender neutral to you?”

Jordan:  “What will it take to convince you to be a spokesperson…oops, spokesman?”

Oil Man:  “You not like me?  I thought we were friends.  Why would I want to subject myself to ridicule from my colleagues?”

JMickey-Mouse-fingerordan:  “I thought you were a tough guy.  Little Oil Man afraid of some criticism?  Ah, might hurt his feelings.”

Oil Man:  “Let me push up my glasses with my middle finger.”

Jordan:  “So you’ll do it.”

Oil Man:  “Where did you learn to manipulate me so well?  No, I’m not afraid of a little criticism.”

Jordan:  “Good.  Now how do we get your colleagues on board?  If we don’t get them on board, the idea will be DOA by the time it reaches Capital Hill.”

Oil Man:  “Congress still that much of a problem…even after the Revenge Revolution?  I thought you’d have Congress under control by now.  The Revolution really jolted thinking iCongressn the oil industry.  But most oil people are still hard-right Republicans and not very sympathetic to anyone politically left of them.”

Jordan:  “Understand.  You included in that hard-right category?

Oil Man:  “Yes, I’m included…and you know that.”

Jordan:  “That’s why I asked you to get involved.  If you support the idea, the hard right will have a tough time saying ‘no.’”

Oil Man:  “Alright, I’ll support it…but on one condition.”

Jordan:  “That is?”

Oil Man:  “You let me write the outline of my remarks.  I want to use my own words, not some wishy-washy crap from a DC-based PR firm. “

Jordan:  “Deal.  When can you have a draft ready to review?”

Oil Man:  “You are pushy.  Give me a few days.”

Jordan:  “Time is tight.  And your support is critical.  I’ll call in a few days.”

Oil Man:  “Why am I agreeing to this?”

Jordan:  “Because it’s the right thing to do…and you know it.”

Oil Man:  “I know.  Goodbye Jordan.”

(To be continued)

#111 Working with “Opinionaters” (Part #7 of Rebuilding Infrastrucutre)

31 Saturday Jan 2015

Posted by Jordan Abel in Economics, Infrastructure & Fixed Fuel Prices, Societal Issues

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Scene: Jordan alone in office working on the paper for POTUS.  Earlier POTUS asked Jordan for ideas how to convince politicians and the public that it would be a good idea to fund rebuilding US infrastructure by fixing the price for gas and diesel fuel.  The paper is overdue, POTUS is frustrated and Jordan struggling to finish.  Original conversation with POTUS Entries #104, #105.

Jordan (mumbling to himself): Need to get this draft finished.  The Super Bowl starts iTurtleneckn a few hours. Usually not a great football game but fun to watch.  Besides I’m supposed to meet some friends at a party.  Get out of here for a while and relax.

The entire project now seems to make sense.  I mean, can you think of a better and more equitable way to fund rebuilding infrastructure than having a fixed price for fuel?  Everyone shares in the funding.  The higher fuel prices are an incentive to increase fuel efficiency on cars and trucks…plus the lower fuel consumption reduces emissions.

So what can sidetrack a perfectly logical, practical plan that should have widespread Congresssupport among the voters, private industry and the Congress?  Should be relatively easy to implement…right?  We’ll be lucky if it flies.

A major question is whether POTUS has the passion to turn the idea into a reality.  No doubt the Republicant diehards will resist the idea.  For Republicants, having private industry lead rebuilding infrastructure would be considered a smart investment and Republicants would support it.  But the very same plan, if lead by government, Republicants would consider wasteful and inefficient.

If private industry raised prices to help fund such an effort, there would be no resistance from Republicants since higher prices were necessary.  When government makes such a proposal, it is considered an unfair tax on the wealthy and any and all effort to raise taxes, no matter how rational the idea, must be thwarted.

POTUS knows all this but is he willing to strong-arm Congress to approve the plan?  Chances of approval are much better since the Revenge Revolution…but many good legislative ideas still seem to get bogged down in Congress.

Plus, the radio talking heads will have a field day with this proposal.  Somehow…and I really do not understand how…the radio psychobabblers and the Fox News bobble heads have brainwashed a large percentage of the population.

Good example is their proposal for an amendment forcing a balanced Federal budget.  Do the idiots proposing the amendment have any idea of the consequences?  Forcing a balanced budget in a recession is exactly the opposite of what should occur.  A balanced budget in a recession creates a death-spiral for the economy.

parrothead_tnsFunny…well, not really funny since the potential effect is so tragic…is the true lack of understanding of economics by these parrot-heads.  At dinner the other night, I was floored when Sonny said to me, “Well you have your opinion and I have mine.”  Sonny, I hate to remind you again that I was dealing with facts and loads of empirical evidence, not just an opinion.

What was even more maddening is when pressed for facts, Sonny – like many others brainwashed – changed the subject and started to blame someone else.  Hey pal, don’t go around spouting off stuff you claim are facts but have no support for.  Oh, well, that’s an ideal world I’m wanting to live in.  I guess “opinionaters” don’t let facts get in their way.

But POTUS is up against some influential “opinionaters” so he will have to make a spoliticstrong case for the benefits of higher fuel prices.  He might even cite some of the opinionaters’ irrational arguments.

Boy, am I glad I am not a politician.  Schmoozing is not my game.  Plus some of the politicians have no shame, which really galls me.

Enough kvetching, already.  Let’s wrap up this draft.  Final check – what are the real problems with the idea to fund rebuilding infrastructure with higher fuel prices?

Real problems.  None, at least from my end.

Perceived problems.  Well, probably three and all about equal.  First is the perception ttaxpayerhat the extra cost for fuel is a tax.  The perception will exist even among those who support the idea.  And, they’re right.  POTUS can call it something like “infrastructure investment” or some other euphemism.  At the end of the day, it’s a tax.  Worthwhile but still a tax.  Let’s just cut the BS and call it a tax.

Second perception is that some of the money will be spent on non-infrastructure issues.  I agree that’s a valid concern.  Addressing the concern would be a good way to get Republicants involved and to claim partial victory with their constituents.

royalty-free-cell-phone-clipart-illustration-1067376Third perception problem is oil-and-gas industry will claim the fixed price takes away their profit potential.  Hooey.  But we need to address and demonstrate how their profits can be more stable and higher over the long-term.

All these problems are theoretically manageable.  What a great term, “theoretically manageable.”  Reminds me of some academic class.  But the problems can be addressed successfully with the right people involved.  We can talk about the right people when I meet with POTUS.  In the mean time I need to talk to my namesake about lining up the oil guys.  I wonder if he’ll be at the Super Bowl party tonight.

N122913_1337_14BringingU2.pngow, time to bail out of here, go have a drink and a good time.

(To be continued)

#110 Does the Plan Pass the “Practical” Smell Test? (Part #6)

29 Thursday Jan 2015

Posted by Jordan Abel in Economics, Infrastructure & Fixed Fuel Prices, Innovative Thinking: Ideas and Products

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Scene: Jordan alone in office working on the paper for POTUS.  Earlier POTUS asked Jordan for ideas how to convince politicians and the public that it would be a good idea to fund rebuilding US infrastructure by fixing the price for gas and diesel fuel.  The paper is overdue, POTUS is frustrated and Jordan struggling to finish because of a series of interruptions.  Original conversation with POTUS Entries #104, #105.

Jordan (talking to himself):  Alright, I really need finish the draft.  POTUS Turtleneckmentioned the need for rebuilding infrastructure in the State of the Union speech.  Now people are asking for details.  Why am I so far behind on this?

I’ve got most of the draft completed.  What’s left to cover?  Plan details will take a while to hammer out.  However, I need to make sure the plan is reasonably practical before it hits the press.

Practicality – does it pass the smell test?  Is the plan practical or is this some ‘inside-the-beltway’ mirage that has no chance in the real world?

do-i-smell-whatSetting a fixed price for fuel – gasoline and diesel – is practical.  Setting the price is the easy part.

What about profit margins?  The oil-and-gas executives and the fuel-station operators could gouge prices under this plan given half a chance.

What if the plan ensured that the infrastructure tax – quit calling it a tax?  The “infrastructure investment” would be limited to say $2.00 to $2.50 per gallon?  Having a ceiling on the amount of infrastructure investment would be an incentive to the oil-and-gas companies to increase domestic exploration and production.  The ceiling would also encourage the companies to reduce costs.

Funny, I suspect the oil-and-gas guys will scream about more government intervention scream-1-1024with this proposal.  But they don’t seem at all upset that the industry and the companies are whipsawed by a limited number of oil traders, who basically decide the price of oil.

I need to ask these guy, “Would you rather have fate in your own hands or someone else’s?”  But Texas being Texas, I can hear them now.

If they’d stop and think about how the proposal could benefit them directly, they might support it.  As crazy as it first seems, under this plan the oil-and-gas companies could increase profits and have a more predictable cash royalty-free-cell-phone-clipart-illustration-1067376flow.  But they’ll never buy that idea on their own.

I need to find a respected oil-and-gas executive who can carry the torch on this idea.  And I know just who to call.  He’ll say no at first, then have a drink or two, sleep on it and call back saying he supports the idea.  I need to call him.  (To be continued)

#109 Privatizing Functions of Gov’t: the Fallacy (Part #5)

20 Tuesday Jan 2015

Posted by Jordan Abel in Economics, Infrastructure & Fixed Fuel Prices, Innovative Thinking: Ideas and Products, Possible Solutions

≈ Leave a comment

Scene: Jordan alone in office late working on the paper for POTUS.  Earlier POTUS asked Jordan for ideas how to convince politicians and the public that it would be a good idea to fund rebuilding US infrastructure by fixing the price for gas and diesel fuel.  The paper is overdue, POTUS is frustrated and Jordan struggling to finish because of a series of interruptions.  Original conversation with POTUS Entries #104, #105.

(Jordan talking to himself.)  Getting support from Republicans for $5.00 gasoline is Turtleneckgoing to be tough, even those elected after the Revenge Revolution.  They seems obsessed with privatizing a whole range of functions of government, including infrastructure.

Claiming societal benefits by privatizing many government functions is a fallacy.  Look, government is not the most efficient organization at many tasks, but…and this is what many people fail to grasp – Republicans and some Democrats…government is a system that works most efficiently when tasks are grouped or integrated.

Any one task might be completed more efficiently by private business.  But “outsourcing” these tasks results in even more inefficient government.  I can hear the RantRepublicans screaming now.

Many Republicans congressman and many business leaders seem to forget a key lesson from private enterprise.  The lesson?  Companies that are more vertically integrated make the most money.

Historical examples.  General Motors, when it was the most vertically integrated might as well have printed money it was so profitable.  More recently, Apple, has become hugely profitable because it controls the integration of apple logohardware and software.

Vertical integration – I wonder if the lawyers in Congress really understand what it means and the potential benefits vertical integration offers.  Probably not.  OK, I’ll need to include a definition for POTUS.   The Wikipedia definition is a good overview.  http://en.wikipedia.org/wiki/Vertical_integration

POTUS will have to link the discussion of vertical integration to why many functions of the Federal government should be vertically integrated and how vertical integration applies to rebuilding US infrastructure.

Maybe we start the conversation with a discussion of roads.  During the Obama Administration Republicans kept pushing to privatize rebuilding the infrastructure.  Many Republicans said the government should have private enterprise provide the capital to rebuild roads, bridges, water treatment facilities…and a bunch of other stuff.  But, with the private capital came one caveat – the companies could charge the public tollfor using the privately funded infrastructure.

What a dumb-ass idea.  It basically turns control of the public infrastructure to the private sector.  Why?  Because some Republicans were opposed to any function run by government?  I dislike the idea intently…and I hope POTUS opposes strongly.

What if the company decides profits are more important and neglects maintenance and repair of infrastructure?  What if the company decides to increase fees or tolls?  The company could also decide the terms of the contract are onerous and then declares bankruptcy.  And what is the public left with?  The tab for repairing the infrastructure.  Meanwhile the company has reaped profits…maybe raped the public is more appropriate.

The idea of private water and sewage treatment is even more risky.  A failure by the company could have a huge negative impact on the public with virtually no accountability by the company.  I need to have POTUS remind people of the financial Prisonercrisis of 2008.  Let’s see, how many executives from the banks and Wall Street firms went to jail?  Goose egg, nada.  There was no accountability then.  The only difference today is the Revenge Revolution and people are fed up with executives and corporations not being held accountable.

The public might not understand effective oversight of private companies requires government staff.  Republicans, of course, will claim “market forces” will keep the companies competitive.

Excuse me…but the last I looked roads, bridges and water treatment facilities were all monopolies, not free-market enterprises.  Monopolies do not have a natural check-and-balance system.

Since we’ve had the Revenge Revolution I think there’s a better chance people will understand why infrastructure should be funded and managed by government.  Using private companies to help rebuild infrastructure is OK and keeps government out of certain businesses.  But government needs to manage the process.

Once POTUS makes this argument, he’ll need to talk about why $5.00 gas is necessary.  Avoid getting into too much detail about cost during the early sessions.  021214_1242_24Resultsof1.gifIt’s an easy way to get sidetracked.  But he needs to make the case that $5.00/gallon gasoline will make enough funds available to fund rebuilding infrastructure.

Maybe he should mention the Apollo program of the 1960’s.  When President Kennedy said the US would put a man on the moon in less than a decade, I think the budget was 3-4% of GDP.  Need to confirm but seems right.  That program was highly successful with vast spin-off benefits.  Rebuilding could have the same benefits.

OK, I think this section is OK for now.  I’ll need to polish and make sure it flows smoothly.  But POTUS needs to make the strong argument that government, not private companies, needs to fund and manage rebuilding infrastructure.

(To be continued)

#108 POTUS Infrastructure Project: Perception (Part 4)

08 Thursday Jan 2015

Posted by Jordan Abel in Economics, Infrastructure & Fixed Fuel Prices, Innovative Thinking: Ideas and Products

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Scene: POTUS’ office calling Jordan.  Earlier POTUS asked Jordan for ideas how to convince politicians and the public that it would be a good idea to fund rebuilding US infrastructure by fixing the price for gas and diesel fuel.  Original conversation with POTUS Entries #104, #105.

Jordan:  “Hello, Jordan Abel here.”

Caller:  “Mr. Abel, this is Harriet Breadsaker in POTUS’ office.  He asked me to remind 021214_1242_24Resultsof1.gifyou that you owe him a draft of how he should propose the idea of a fixed price for gasoline and diesel fuel.  When can we expect the draft, please?”

Jordan:  “Part of its complete.”

Caller:  “Mr. Abel.  Maybe my question was not clear.  When will you send the draft for POTUS to review?”

Jordan:  “Give me another week.”

Caller:  “I’ll tell him more like 10 days.  Hope we don’t have to talk again.  Goodbye Mr. Abel.”

Jordan (mumbling to himself):  “I’ve got to get going on this project.  POTUS is already on my case.  What’s the next item I need to address?

(The balance of the entry is Jordan talking to himself.”

The next “P” is “perception”.  How did I overlook perception?  The issue of perception should be upfront.  Calm down, Jordan, you are where you are.  Just be diligent and plow through the balance of the “P’s” and you will make the deadline.  Besides you told POTUS it would be a “working draft” and not a final recommendation.

“Perception.”  I need to make sure as many people as possible understand the “extra” cost of fuel is really an investment in America…and not a tax.  People should consider cost to rebuild infrastructure as an investment.   Considering as an investment seems so obvious, but not everyone gets it.

I recall before the Revenge Revolution – sometime late 2014, early 2015 – just before the Republican Congress was sworn in, there was an article in the New York Times about the lack of support for increasing the gas tax.  Some Republicans were resisting a Federal tax increase and wanted responsibility for roads transferred to the states.  (15 01 04 NYT re Little Support for Gas Tax

I recall being dumbfounded anyone would think like that.  Can you imagine having a highway system without national standards?  No guarantee of consistency among the states for road quality, signage, bridges, etc.  Talk about a potential negative impact on commerce.  What were these Republicans thinking?

ORantK, there’s a few wackos still in Congress.  Fortunately the public threw out most of them following the Revenge Revolution.  POTUS still might need to throw the wackos a bone to avoid a fight or have the legislation stalled, especially in the Senate.  What bone?  Maybe consider allocating part of the revenue from the fixed fuel price to reduce the deficit.

Another head scratcher.  Why do some Republicans think the US should pay down the Federal debt…and some even want a surplus.  Why they think like that is beyond me.  What I do know is no matter what I say or POTUS’ says, or any professional economist loaded with empirical data says, that group will never change its mind.  Do these same guys really think commercial and investment banks have enough money to pay depositors or pay off their debts?  Wall Street prints money every day.

OK, enough sidebars, back to the issue at hand.  POTUS’ proposal needs to build a credible and well-understood argument that: (i) reinforces why repair to infrastructure is needed; (ii) emphasizes the benefits of a wide range of infrastructure projects, not just road and bridges; (iii) makes it clear the extra cost for fuel is really an investment, not a tax.  Jordan, stop even considering the word “tax.”  Take the word “tax” out of your vocabulary for this project.  Repeat after me: the extra cost is an investment, the extra cost is an investment; the extra cost is an investment.

board-clip-art-300x224An unresolved issue is how to allocate the funds generated.  To avoid the perception of partisanship, maybe the solution is to create a team of different key constituents – business leaders, academic, politicians and citizens.  Need to keep the team small – ideally no more than say 9 members.  Each team member could have a supporting workgroup.  A team larger than 9 will get out of control and not provide real guidance.  Recommendations from a highly respected smaller team will be more cohesive and more difficult for Congress to reject.

Just for fun, who could be on the team?  I’ll make a list and then prune it after checklistreviewing with some other people.  For now, let’s include representatives from: (i) auto industry (ii) airline industry (iii) water transportation (iv) communications industry (v) municipal infrastructure – water, sewer, local roads (vi) environmental groups (vii) 2-3 academics – engineering (civil), business, maybe an anthropologist.  That would make for an interesting group. (viii) electricity generation industry – need alternative energy also (ix) energy producers.  Alright you are already over the limit…but a decent start.

Whew.  Some progress.  No go get some coffee and take a short break, then back to work.  No more calls from old Harriet Breadsaker.  Be nice to Ms. Breadsaker, Jordan.

(To be continued)

#107 Selling the Idea of a Fixed Fuel Price (Part #3)

28 Sunday Dec 2014

Posted by Jordan Abel in Economics, Infrastructure & Fixed Fuel Prices, Innovative Thinking: Ideas and Products, Possible Solutions, Societal Issues

≈ Leave a comment

Scene: Jordan calling JC about meeting to review a communications proposal.  POTUS asked Jordan for ideas how to convince politicians and the public that it would be a good idea to fund rebuilding US infrastructure by fixing the price for gas and diesel fuel.  Original conversation with POTUS Entries #104, #105.

Jordan:  “JC, are you ready to review the communications proposal for POTUS?”

010414_1635_16TeachingS1.jpgJC:  “Jordan, send me what you have and let me look at it first.  You know I like to spend time reviewing ideas before making comments.  Besides, I have some errands to run.”

Jordan:  “Alright, I’ll send an email later today with some of the ideas.  When I get another section drafted, I’ll send that.  You review.  Then can we talk, please?”

JC:  “I know we can talk but yes we may talk.  You are finally beginning to understand how to work with other people.  It’s taken a while but I guess old guys can learn.”

Jordan:  “Old.  If I’m old, then what are you?”

JC:  “Younger than you.  I’ve always been younger than you…and probably always will be, don’t ya think?”

Jordan:  “OK, you win.  I’ll email a draft of some ideas later today.”

JC:  “OK, bye.”

Scene: Jordan begins drafting marketing-like plan for POTUS.    

(Jordan finds talking to himself helpful.) “I think most people understand that infrastructure needs to be rebuilt.  But will they understand why it makes sense to fund the rebuilding using mirror-clipart_jpga fixed price for fuel?  Fixed prices, especially ones set by government, are such a foreign idea to most US citizens.  Maybe the best approach is to pretend we are launching a new product or service.  Then use the ‘15 P’s’ approach.  The 15 P’s approach has worked well in the past.  Think I’ll try that.

Now, Jordan, listen.  Take your time and follow the steps in 15 P’s procedure.  Otherwise, you’ll get ahead of yourself.  You know it’s easy to take shortcuts.  And when you do, problems inevitably occur.  Remember the time you painted the room before you prepared it properly?  What a mess, and it took forever to fix.  Slow down Jordan and take your time.

Also, don’t worry about making all the wording perfect.  Remember, Jordan, this is a draft-stamp-hidraft.  A draft…not the final presentation.  Make some notes for yourself.  OK, got it.

What’s the purpose of the project?  “Create a fund for rebuilding infrastructure throughout the United States – rebuild and/or expand roads, bridges, rail lines (especially for public transit), water treatment facilities, airports and communications infrastructure.”

How will you position the project with the public?  Why is the project necessary?   “Rebuilding infrastructure will help increase US competitiveness in the world economy and help increase the standard of living for all US citizens.”   (Note: good concept that probably needs some more explanation, but not right now.  Work on that later.)

Where will the projects be located?  Projects will penetrate all 50 states.  All states have a need to rebuild infrastructure although the mix of what’s needed varies by state.  For example, more populated areas need to improve or build new public transit, while more rural areas need to improve roads and communications infrastructure.  (Note: water and sewage treatment a major issue in all states.  Might be separate section.  Also, need to emphasize reusing water rather than just processing.)

How will we pay for the infrastructure projects?  Create a fund based on the difference money_24077_lgbetween what the price of gasoline and diesel would have been in the open market and a pre-determined price.  Fuel prices will be fixed beginning a certain date.  The difference between a ‘free-market” price and the “fixed” price will be sent to a fund to pay for rebuilding infrastructure.  (Notes: (i) if there is a phase-in period for increased fuel prices, make sure it is very difficult to delay the increase.  Otherwise a constant political battle. (ii) Think about delaying the proposed fixed prices for gas and diesel until we can lay out clearly the extent of the problem.  If people understand, $5.00 per gallon gasoline might seem more than justified.)

How will the fund be protected against other uses?  Look what happened to Social Security Trust Fund?  Fund for infrastructure needs to be separated and protected from politicians diverting it for other uses…and not just some paper wall of protection as with Social Security.  The Highway Trust Fund seems reasonably well metro_north_logoprotected (Note: need to confirm.)  However, infrastructure extends well beyond highways and in some cases projects might appear to conflict with highway construction.  (Note: need to really make solid argument for public transit, especially rail, which is the most efficient in populated areas.)

How will the project be approved given the politics in Washington?  First step will be to conduct assessment of current state of infrastructure.  Second step will be to politicsdetermine what is required to make the US and a particular geographic area more competitive.  Focus the project initially on assessing “Where is the United States today with respect to how inferior infrastructure is slowing economic growth and costing US jobs?  Make the assessment as objective and credible as possible.  Also make sure the public understands that the investment in infrastructure is a way to accelerate economic growth and create jobs.  (Note: consider measuring using ROI.  Doing so will address Republican concerns about ‘tax-and-spend.’)

What people should be involved in the project?  Mmmm, good question.  Maybe I should create a list of the types of people affected negatively by inferior infrastructure.  Just jot them down as they come to mind.  You can sort the list later.  OK, here goes:

  • People who use public transportation, especially to get to/from work, medical appointments, school, etc.
  • Businesses which rely on cost-effective and timely transportation for inbound and outbound freight
  • People who use electronic means to communicate and/or order products
  • Transportation companies that deliver products – FedEx, UPS, USPS, freight companies, railroads, etc.
  • People who commute to work using private transportation. (Note: discourage more private use where possible.)
  • Schools that use the Internet for some instruction, data gathering
  • Homeland security, local police, fire, emergency services, etc.
  • Farmers getting crops to market

OK, it’s a big list already and you’ve only scratched the surface.  In fact most everyone in the US is affected.  So now, how do we put a group together that is representative and not mired in all the politics?  The project seems as if it’s such an apolitical issue…and it might be since we’ve had the Revenge Revolution…but I am always amazed at how Washington gets bogged down in politics.  (Note: Be careful and watch out for chat-roomsanimals wounded in the Revolution – they can lash out.)

Promoting the idea.  Maybe we should create a giant “chat room” and let people tell their own stories how inferior infrastructure affects them.  Let people sell themselves and each other on the idea.

OK, stop for now.  I need to send what I have to JC — I’m already a day late.  Make sure she knows it’s a draft and encourage her to comment on it.  Then I’m going to get a coffee refill and work on this some more.  Remember, Jordan, this is a draft and not the final document.

(To be continued)

(Readers: The assumed chronological date for most of the entries in this blog is after the expected 5th revolution in the US.  For more background about  the expected revolution – labeled the Revenge Revolution – and author, please view entry #01.) 

#105 Do What with Fuel Prices? Are You Crazy? (Part 2)

20 Saturday Dec 2014

Posted by Jordan Abel in Economics, Infrastructure & Fixed Fuel Prices, Innovative Thinking: Ideas and Products, Possible Solutions, Societal Issues

≈ 2 Comments

(Readers: The assumed chronological date for most of the entries in this blog is after the expected 5th revolution in the US.  For more background about  the expected revolution – labeled the Revenge Revolution – and author, please view entry #01.) 

Scene: POTUS called Jordan to discuss idea.  Call interrupted.  POTUS calling back.

Jordan:  “Yes, Mr. President.  Get the problem solved?”

POTUS:  “One of those events where I had to be there rather than any real problem.  L021214_1242_24Resultsof1.gifet’s get back to where we were.”

Jordan:  “We were discussing the idea of funding infrastructure using the gas tax.  But you never told me your specific idea.  What is it?”

POTUS:  “Simple.  Set fixed prices for gasoline and diesel fuel.”

Jordan:  “You talking about having the same price in all 50 states?”

POTUS:  “Yes.”

Jordan:  “What about the spot price of oil?  That get fixed also?”

POTUS:  “No.  Let the price of oil fluctuate.  Besides we cannot control the spot market for oil.  If we ever tried the Republicans and even some Democrats would scream.”

JMercantile Exchangeordan:  “So, when the price of oil in the spot market declines, the government collects more tax revenue.  And when the price of oil increases, the government collects less tax.”

POTUS:  “Simple, huh?”

Jordan:  “What about state taxes on fuel?  Do they fluctuate?”

POTUS:  “That’s up to the state.  If they want to gamble and collect more tax in down markets, that’s up to the state.  However, if they want to link to the Federal policy, states would receive a portion of additional Federal revenue.”

Jordan:  “When you first said fixed fuel price, I thought the idea was crazy.”

PcrazyOTUS:  “Thanks.  I view that as a compliment.”

Jordan:  “Then with just a bit more thought the idea didn’t seem so crazy after all.  Knowing the price of fuel will be fixed takes away a lot of uncertainty.  But what about the long-term price for gas and diesel?”

POTUS:  “Build in some adjustment for inflation – use the WPI or some other measure.”

Jordan:  “As a cynical taxpayer…”

POTUS:  “Jordan, you cynical?  Since when?”

Jordan:  “I’ll ignore that.  As a cynical taxpayer how do I know the taxes will go for repairing and improving infrastructure and not just some other part of the Federal or state budget?”

Jordan:  “Make the use of funds part of the legislation.  Put some real restrictions on the use of funds.”

Jordan:  “You think the approach will generate enough funds?”

POTUS:  “Well, let’s start with pricing gasoline at $4.50 per gallon and diesel at $5.00 per gallon.”

Jordan:  “Wow.  That’s way above current market price.  Won’t the price be a shock to the economy?”

POTUS:  “C’mon, Jordan, you sound like a Republicant.”

Jordan:  “Well, pardon me, Mr. President.”

POTUS:  “I hear you but think about this.  When gas prices increase 50₵ a gallon, even $1.00 a gallon, what happens?

Jordan:  “A lot of ranting and moaning but really not much else.”

PORantTUS:  “That’s my point.  Not much else happens.  Now think about the benefits of eliminating uncertainty…really the benefits of creating certainty.”

Jordan:  “Car and truck manufacturers can focus on improving mpg without the concern that fuel prices will fall and make the programs less marketable.  Same with air craft manufacturers and railroads.  The concern over uncertainty has slowed the adoption of many fuel-saving technologies.”

POTUS:  “Consumers could buy knowing the price for fuel.  And most importantly, we would have the funds to begin rebuilding infrastructure.”

Jordan:  “Earlier in this conversation you asked me to play Mr. Marketer.”

POTUS:  “And so, Mr. Marketer, how do we get people to want to pay $4.50-$5.00 for a gallon of fuel…and be happy about it?”

Jordan:  “If we go back to what Tip O’Neill said about all politics being local, then we need to make sure all projects are highly visible locally.  And we need to cover many different locations.”

POTUS:  “We also need to include projects other than road related.  Otherwise we are going to miss key infrastructure areas that need to be rebuilt.”

Jordan:  “You talking about railroads and mass transit?”

POTmetro-north1US:  “Yes, specifically rail-based transit.”

Jordan:  “What about communications infrastructure?”

POTUS:  “Yes.”

Jordan:  “Water and sewer projects?”

POTUS:  “Yes.”

Jordan:  “Airports?”

POTUS:  “Yes.  We’ve neglected each one of those areas.”

Jordan:  “Seems a bit unfair to put the burden on only the people who drive.”

POTUS:  “Seriously, Jordan, your brain gone dead?”

JBrain deadordan:  “Whadda mean?”

Jordan:  “Every product we buy has some cost included for transportation.  Even if you don’t own a car, you are paying for fuel riding a taxi, train or airplane.  Plus transportation costs affect grocery prices, clothing…everything.”

Jordan:  “Then your point is the cost of fuel is really a consumption tax.  The more you consume, the more you pay.”

POTUS:  “Exactly.”

Jordan:  “But isn’t the fuel tax also regressive?”

POTUS:  “True but if you really analyze the data, most every group of taxes when measured again real disposable personal income is regressive.  Besides, you have any otquestionher ideas how to fund rebuilding infrastructure?”

Jordan:  “Not right now.”

POTUS:  “When you do, let me know.  In the meantime we need to start an education campaign on why $4.50 and $5.00 fuel is good for consumers, businesses and the country.  And, guess what?  You are in charge of the campaign?  Got it?”

Jordan:  “Yes, sir.”

POTUS:  “Good.  Now you have a week to get a draft of the campaign together.  Say goodbye, Jordan.”

Jordan:  “Goodbye, Jordan…I mean goodbye Mr. President.”

#104 Paying for Infrastructure. A New Approach. (Part 1)

17 Wednesday Dec 2014

Posted by Jordan Abel in Economics, Infrastructure & Fixed Fuel Prices, Possible Solutions, Societal Issues

≈ 3 Comments

(Readers: The assumed chronological date for most of the entries in this blog is after the expected 5th revolution in the US.  For more background about  the expected revolution – labeled the Revenge Revolution – and author, please view entry #01.) 

Scene: Jordan’s office.  POTUS calls Jordan for some advice.

Jordan:  “Yes, Mr. President, nice to hear from you.”

white-house-clip-art1POTUS:  “Jordan, all well with you?”

Jordan:  “Fine, thanks.  I assume all OK with you…well, as much as can be expected in Washington.  What’s up?”

POTUS:  “A social call.”

Jordan:  “C’mon.  You calling me is never a social call.  What’s the issue and how can I help?”

POTUS:  “The issue is repairing the infrastructure in the US.  It’s horrible and needs to be fixed.”

Jordan:  “I agree.  As a country we have fallen farther and farther behind.”

POTUS:  “You know.  I know it.  But the deterioration has been gradual so a lot of people don’t realize there’s a problem.  At least don’t know it until something happens to them.”

Jordan:  “I equate the infrastructure repair problem to the proverbial frog in the pot of water.  If you put the frog in and the water is cold and then turn up the heat, the frog dfrog-in-boiling-water-photo-by-tim-sheppardoesn’t jump out and boils to death.  If you throw the frog in the water when it’s hot, it jumps out.  People don’t seem to realize the extent of the problem with infrastructure.”

POTUS:  “I’ve always wondered if the story of the frog in the pot is true.  But I guess it doesn’t really matter.  The story is a good way to think about the infrastructure issue.”

Jordan:  “You and I know the public is not good at looking ahead.  Preventive maintenance is not a strong suit for most people.”

POTUS:  “And preventive maintenance is not very sexy topic for politicians.  Think about it.  Would you rather cut a ribbon for a new bridge…or tell people we are going to repair the highway and they should plan on traffic delays for the next 12-18 months?”

Jordan:  “Not much of a political choice…at least the way most people think about issues.”

PPotholeOTUS:  “Maybe that’s the secret.  Reframe the issue.  You mentioned to me once before the need to reframe these kinds of issues.”

Jordan:  “Frame the issue so people…voters…look at the traffic disruption as a positive, not a negative.”

POTUS:  “OK, Mr. Marketer.”

Jordan:  “Former Mr. Marketer.”

POTUS:  “Whatever.  Put on your old marketing hat.  How do we convince people we need to repair infrastructure and…notice I said and…raise taxes to pay for it?”

Jordan:  “At the end of the day all politics is local.  Tip O’Neill said that how many years ago?”

POTUS:  “Sometime in the 1980’s.  But it is still true today.  Maybe we should take Tip’s advice to begin bridging the divide between Republicans and Democrats.”

Jordan:  “Part of the divide was eliminated with the new Congress after the Revenge Revolution.”

POTUS:  “But a lot of rancor still exists.  So if we frame the infrastructure issues as being local, then maybe we make some real progress.”

Jordan:  “We can position repairing the bridge and the disruption as a local project to help local area become more competitive and create more jobs locally.”

POTUS:  “Voters don’t really care much about national issues, let alone international issues.”

JRusted Bridgeordan:  “OK, then how do we convince people to pay for the cost of repairing infrastructure and be happy with the disruption?”

POTUS:  “Let’s talk about paying for it.  We can fund the repairs the same way they have been funded for many years…the gas tax.”

Jordan:  “Raise the federal tax on fuel?”

POTUS:  “Exactly.  Most people have no idea what the federal tax…or state tax…is on fuel.”

Jorquestiondan:  “I’m not even sure I know.”

POTUS:  “You made my case.”

Jordan:  “How much you thinking about raising the tax?”

POTUS:  “I have a different approach that should even satisfy die-hard, never-raise taxes Republicants.”

Jordan:  “I love the term Republicants.  What’s the idea for raising taxes?”

POTUS:  “I’ll let you know but I need to call you back in a little while.”

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