Interesting View on the Future of Oil

The Economist magazine recently had an interesting take on the future of oil demand. Whereas many analysts see oil demand as perpetually on the rise given the emergence of China and India and their massive populations, the Economist sees other factors that counter the pressures added by these emerging economies. They speculate that world oil demand may be nearing a peak. If the Economist is right, Utahns could see cheaper gasoline prices sometime in its future.

“With billions of Chinese and Indians growing richer and itching to get behind the wheel of a car, the big oil companies, the International Energy Agency (IEA) and America’s Energy Information Administration all predict that demand will keep on rising. One of the oil giants, Britain’s BP, reckons it will grow from 89m b/d now to 104m b/d by 2030. We believe that they are wrong, and that oil is close to a peak.” Economist.com

Gasoline, airfare costs driving inflation in Utah

Rising transportation costs have driven inflation across the state this summer. In June alone, Utahns paid approximately 4 percent more for a gallon of gasoline than they did in May, and airfare costs increased by nearly 18 percent this month.

According to the Zions Bank Wasatch Front Consumer Price Index, transportation costs in the state, which are up 2.7 percent month-over-month, were pushed higher in June by the rising gasoline prices. Utahns paid approximately 13 cents more for a gallon of gasoline on average in the month of June than they did in the month of May. According to the AAA, this put Utah in the spot for the eighth-highest gasoline prices in the country.

In most states, average gasoline prices fell about 20 cents in June as gasoline inventories swelled to their highest levels since 1992 due to increased domestic production across the nation, according to the national CPI.

Although the increased price of gasoline was the chief driver of higher transportation costs, airfare costs also contributed by jumping nearly 18 percent this month. During the summer months, travel routinely increases, and because of this, airlines are more likely to increase prices.

According to the Wasatch Front CPI, during the last 12 months, overall prices in Utah have increased by 1.6 percent. In comparison, prices across the United States have increased at a rate of 1.8 percent year-over-year, according to the national CPI. Utah Business

The impacts of public transit on traffic

Average highway congestion delays increased 47 percent when public transit service was not available.

While some have questioned the benefits of mass transit systems, which are used by only a small fraction of commuters, research by Michael Anderson suggests that transit riders likely would otherwise commute along already heavily congested roadways and that congestion along those roadways would increase if mass transit were scaled back. In Subways, Strikes, and Slowdowns: The Impacts of Public Transit on Traffic (NBER Working Paper No. 18757), he studies traffic-congestion data from before, during, and after an October-November 2003 transit-worker strike in Los Angeles. He estimates that average highway congestion delays increased 47 percent when public transit service was not available.

Public transit receives 23 percent of all federal highway dollars but represents only 1 percent of all U.S. passenger miles traveled. Federal, state, and local government subsidies for public transit exceed $40 billion a year, and cover 100 percent of capital costs. There has been relatively little research, however, on the effects of mass transit availability on the peak hour congestion experienced by commuters on different roadways within the same metropolitan area. This is because the counterfactual -- the absence of mass transit access in cities with mass transit systems -- is not often observed.

Not surprisingly, Anderson finds that while average roadway delays increased during peak hours of the transit strike, the effects were largest on freeways running parallel with transit lines with heavy ridership. His estimates suggest a total "congestion relief benefit" of the Los Angeles public-transit system of between $1.2 billion and $4.1 billion per year. National Bureau of Economic Research

Utah economy continues growth, transportation investment key

Utah's growing in more ways than one. We have one of the fastest growing populations in the country and that is both a tremendous opportunity and tremendous challenge. You may have hear the phrase, "if you build it, they will come." Well, in Utah it's more like, "they're coming, so you better build it." With the state's population set to double by 2040, we need continued investment in our transportation infrastructure to keep the wheels of commerce turning.

The Salt Lake Chamber's Utah Transportation Coalition recently commissioned a study showing that Utah will see a significant payoff from continued investment in transportation. Salt Lake Chamber

Economic Benefits and Impacts of Utah’s Unified Plan

Salt Lake Chamber Executive Summary

Related: Utah lawmakers passed a law expanding 80 mph zones on Utah freeways. Utah started testing higher speed limits in southern Utah in 2008. Lawmakers expanded that this year to portions of Interstates 15, 80 and 84 on outlying areas of the state. UDOT spokesman John Gleason told The Salt Lake Tribune that those zones won't start to appear until August. Bloomberg Businessweek

Transportation plan will result in economic growth, group says

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The key to economic growth in Utah will be continued monetary support of the area’s transportation system, according to a new report.

According to a comprehensive study conducted by the Economic Development Research Group of Boston, further state and local government investment in broad-based transportation could result in more than 180,000 new jobs over the next three decades.

The report, commissioned by the Salt Lake Chamber’s Transportation Coalition, showed that if municipal governments and transportation agencies fully implement Utah’s Unified Transportation Plan, the result would be almost 183,000 cumulative new jobs created by 2040, $130.5 million in additional household income, $183.6 billion in additional gross domestic product and $22.2 billion in additional tax revenues from economic growth.

The study quantifies the total economic value to the state if the plan is funded and implemented. The study measured the total impact of increased transportation efficiency, improved goods movement and market access, increased business creation and attraction, and construction spending impacts. Deseret News

More states permit digital car‐insurance cards

After a busy legislative season, 25 states (including Utah) now permit drivers to show “e-cards” at traffic stops, according to a map prepared by the Property Casualty Insurers Association of America, a trade group that supports use of the digital cards.

The association’s director of personal lines policy, Alex Hageli, has said the use of electronic identification cards is more convenient for consumers, and can help reduce time spent by courts addressing tickets issued simply because (like me) drivers forgot to put the card in their wallets.

The association supports “flexible” rules allowing use of the digital cards as an option for insurers and consumers–meaning that those who prefer paper cards can still use them. New York Times

UPS plans on more natural gas‐powered trucks, stations

United Parcel Service Inc. said Tuesday it plans to buy about 700 natural gas-powered tractor trailers and build four refueling stations by the end of next year.

The logistics company is investing more aggressively in natural-gas vehicles and natural-gas infrastructure given that natural-gas prices are 30% to 40% lower than imported diesel and the U.S. natural-gas production is gearing up, UPS said.

The company has more than 1,000 natural-gas powered vehicles on the road worldwide, part of a fleet of around 2,600 alternative-fuel vehicles, which also include electric hybrids and all-electric vehicles.

The company already has 112 tractor trailers out of stations in Nevada, Arizona, and Utah, and has its own LNG fueling station in Ontario, Calif., it said. Market Watch

Utah gas prices increase 13 cents in past month

The cost of driving is climbing in the Beehive State. Utah saw a 13-cent increase in gasoline prices over the past 30 days —the largest hike of the five-state mountain region, according to AAA Utah.
Utah’s average price for a gallon of regular gasoline has steadily increased since the first of the year, with the current average price at $3.54. While that price was higher than March, it was 17 cents less that the same time last year.

All of the Utah cities tracked in the monthly AAA survey reported increases this past month. The average price in Salt Lake City and Vernal rose 15 cents, while St. George reported the smallest increase of just 8 cents.

Nationally, 22 states have prices lower than Utah. And the national average price was $3.58, 12 cents less than last month’s AAA gas report. Today’s 35-cent decline from 2012 was the largest decrease since October 2009.

“Retail gasoline prices in the country surged at the start of 2013 with a record breaking increase of 49 cents attributed to somewhat higher crude oil prices, but mostly due to a decline in refinery production and higher gasoline futures prices,” said Rolayne Fairclough, AAA Utah spokeswoman. “The falling retail gas prices across the country are a result of increased refinery production and economic concerns.” Deseret News

Stroll’s 2013 Locavore Index ranks states in terms of commitment to local foods

The Strolling of the Heifers has put together its second annual Locavore index rates the 50 states and the District of Columbia on how strong their local food systems are, and Vermont has once again come out on top. The index uses census and U.S. Department of Agriculture data, along with a per capita comparison of farmers’ markets, consumer supported agriculture operations (CSAs) and food hubs in ranking the states.

The Vermont-based local food advocacy group’s index incorporates farmers markets, consumer-supported agriculture operations (CSAs) and food hubs in its per-capita comparison of consumers’ interest in eating locally-sourced foods — also known as locavorism.

This year, Utah ranked 44th, after being ranked 37th the previous year. Population rose by over 70,000, but gained only one farmers market. But the largest difference was that the cooperative agreement between farmers and consumers dropped from 110 in 2011 to only 37 in 2012.

Local foods are more sustainable, healthier, better for the environment and economically positive than foods sourced from large-scale, globalized food systems. Local foods use less fuel through transportation, is typically fresher and healthier due to less time in transit, losing fewer nutrients and less spoilage. They also build local economies by circulating food dollars locally and creating local jobs through farms, processing and distribution systems. Strolling of the Heifers

Fueling Our Future, 2013-2040

Funding Utah’s transportation needs is a significant economic and fiscal challenge for state policy makers. Over the next three decades, Utah’s population is set to increase by over 60%. Coupled with this significant growth is the possibility of an increase in vehicle miles traveled. In the past, the state has relied on the Transportation Fund to support transportation projects, but this has changed in the last two decades as the state has had to rely on non-traditional funding sources. Despite the addition of these funding sources, revenue will not be sufficient to meet population, highway and transit growth.

This research report explains how transit, roads and highways are currently funded in Utah and provides information and projections on potential funding sources to meet Utah’s transportation needs.

Read the report here: Utah Foundation

Legislature studies 'local option' gas tax

Fuel-efficient vehicles, including hybrids and natural gas vehicles, help reduce pollution and can save drivers money at the pump — but they are also causing a nationwide concern as state governments attempt to make up for lost gas tax revenue.

Several studies, including one from Cambridge Energy Research Associates, shows America’s appetite for oil waning. Since a peak demand in 2007, demand of oil in America has been steadily and dramatically declining, with an expected continual drop of at least 7 percent over the next quarter century. While various factors can be attributed to this phenomena — including an aging population that is driving less —the main factor is that vehicles are becoming more fuel efficient.

According to J.P. Powers and Associates, fuel efficiency is the number one factor people take into consideration when purchasing a vehicle.

The problem comes from the fact that revenue from the 24.5-cent state gasoline tax used for repairing and maintaining roads — called the B and C fund — has been dropping, along with gas purchases. That means less money for the roads. These funds are not used on new projects, but to maintain current roads.

B and C road funds are collected by the state and distributed to counties and municipalities based on miles of road and population. In 2012, Utah spent $124 million for B and C road funds, of which approximately $1.5 million went to Iron County, $1.3 million went to Washington County and $1.5 million went to Garfield County.

With budgets shrinking, the state legislature is mulling ideas to raise more money for roads, including the possibility of a local option gas tax.

Iron County Commissioner Alma Adams said at Monday’s county commission meeting that such a program would see counties and cities opting into a tax to the tune of 5 to 10 cents per gallon. If they opt in, they would get an additional 10 percent in funding while they would lose 20 percent of funding if they opt out.



County Commissioner Dale Brinkerhoff suggested that increasing the tax on natural gas vehicles could be a better alternative. Currently natural gas is taxed at 8.5 cents per gallon as opposed to gasoline’s 24.5 cents per gallon.

Cedar City resident Ryan Gunn believes an increase in price at the pump for natural gas vehicles wouldn’t make it worthwhile to own one, citing increased costs when it comes to initial purchase price, conversion prices and maintenance.

While the final solution may not be popular, Kevin Kitchen, public information officer for the Utah Department of Transportation said something will need to happen to reverse the trend.

“We will do what the legislators tell us,” Kitchen said. “This is a problem every (department of transportation) across the country is facing.” The Spectrum

Utah gas prices up 37 cents this month

It was nice while it lasted, but what a difference one month can make.

In January, the AAA Gas Price Report showed Utah with the lowest fuel price in the country after dropping 50 cents from December, with six states registering average prices less than $3.00. Today, however, Utah’s average price is 37 cents higher, and no states report average prices below $3.00. Two states have prices over $4.00.

The current average price in Utah for a gallon of regular gasoline is at $3.27. Even with the dramatic increases, Utah has the fourth lowest average price in the nation, with only Montana, New Mexico and Wyoming registering lower prices than the Beehive state.

All of the Utah cities tracked in the monthly report showed double digit increases. Logan motorists saw prices climb 56 cents while Vernal’s price increased 16 cents. The remaining cities report increases between 30 and 37 cents. Deseret News

Are cheap parking rates a plague to a city?

City parking rates should be more expensive, said Edward L. Glaeser, an economics professor at Harvard, in an opinion article in The Boston Globe.

Glaeser considers cheap parking a plague of Boston. The low costs rob people of the time they spend circling streets to find the cheapest, or any, parking spot in the overcrowded auto jungle.

“When public policy underprices things, as the Soviet Union once underpriced groceries, the result is long lines and shortages,” Glaeser wrote in his article. “People pay with their time, instead of their money.”

A UCLA transportation expert, Donald Shoup, said rates should be high enough to create an 85 percent occupancy rate. This would leave enough turnover to create an empty spot every block.

But this cost Glaeser is encouraging is no small raise. He said it should cover the cost of building a parking spot, which he estimates at $30,000. He suggests the money that comes from raising these prices be used to provide better bike lanes and bus systems to help those who would no longer be able to afford parking as a traveling option. Deseret News

UTA adds more trains, makes other changes to commuter rail schedule

Riders on commuter rail will see some changes to their travel schedule this month.

The Utah Transit Authority announced Tuesday that implementation of adjusted FrontRunner and bus schedules will begin Feb. 19.

The changes come in the wake of extended FrontRunner service between Provo and Salt Lake City, which presented some challenges for riders trying to make connections with buses along the route, said UTA spokesman Gerry Carpenter. Service between Salt Lake City and Ogden had already been established with connection schedules on the northern route of the commuter rail line working reasonably well, but problems arose after UTA officially launched FrontRunner South between downtown Salt Lake City and Provo in December.

The agency heralded the new $850 million commuter rail line as a better, more efficient alternative to driving. But numerous delays and extended commutes resulted in less-than-stellar reviews by some riders. In response, the agency is revamping the schedules —mostly in Salt Lake and Utah counties —to improve overall system reliability, Carpenter explained.

After criticism from riders and community input, UTA developed a new timetable for its commuter rail line and connecting buses. Carpenter said the new schedule will add a bit more time to individual commutes, but should alleviate the timing issues and delays that have plagued the system for several weeks.

The new schedule will add nine minutes to the one-way trip from the downtown Salt Lake Central station to Provo and 11 minutes on the FrontRunner North route from downtown to Ogden. Bus routes have also been adjusted accordingly to make connections more convenient for passengers, he said.

UTA will also add more departures throughout the day and extend peak commuting times by two to three hours to accommodate increased passenger travel.

Long-term, the changes should provide a better commuting experience for all FrontRunner riders, he said. Deseret News

Rising gas prices pinching U.S., but Utah a little less

Pulling into the corner gas station cost more again Tuesday, with gasoline prices in Utah and nationally up week-over-week by the most since February 2011.

Prices are tracking crude oil futures that last week capped the longest stretch of weekly advances in more than eight years.

In Utah, a gallon of unleaded averaged $3.15, up 11 cents from last week and 22 cents from a month ago.

Although national analysts pointed to rising oil prices as the key driver behind the spike in fuel costs, AAA Utah’s Rolayne Fairclough was less certain.

"We’re not sure exactly why we’re seeing these increases," the travel services company  spokeswoman said. They are "dramatic ... without significant events, such as a hurricane or unrest in North Africa. Having said that, Utah is still the third-lowest average price in the country."

At the very least, pump prices are being influenced by oil’s rise. Crude futures are up more than $10 a barrel since mid-December and have increased eight weeks in a row, matching a streak that ended in August 2004.

Data showing rising activity in the manufacturing and services sectors in the 17 European Union countries using the euro supported oil prices. And a U.S. report indicated that the services sector continues to expand. Salt Lake Tribune

Utah, a competing state

Competing states are coming after Washington’s economic powerhouse: aerospace.

One of those competitors recently received a big boost from Forbes magazine. For the third year in a row, Forbes ranked Utah the Best State for Business.

Utah won high praise from Forbes, which wrote, “No state can match the consistent performance of Utah. It is the only state that ranks among the top 15 states in each of the six main categories on which states are rated.”

Boeing is opening a third plant in Utah to fabricate tail-section parts for the 787. The Salt Lake City plant will employ 100 people making an average of $65,000 a year. That brings Boeing’s Utah workforce to roughly 700.

Utah’s rise to economic prominence didn’t happen overnight. It has been a consistent long-term strategy initiated in 2004 by then-Gov. Jon Huntsman and Lt. Gov. Gary Herbert.

Today, aerospace and aviation companies in Utah employ more than 10,000 people who provide engineering, logistics support and maintenance for several U.S. Air Force jet fighter and cargo aircraft programs, as well as the Minuteman III intercontinental ballistic missile.

Janicki Industries, a family-owned, cutting-edge composite manufacturer headquartered in Sedro-Woolley, also located a $20 million aerospace plant in Utah to support the company’s work on the F-35 Joint Strike Fighter program. Janicki is exactly the type of aerospace company Utah targets to recruit because its high-tech precision molds are the future of aerospace.

Among the other pluses for Utah: energy costs that are 29 percent below the national average. KPBusiness Journal

Lower gas prices help tame Utah inflation in November

Utah consumer prices fell 0.7 percent in November, led by gasoline prices that dropped to their lowest level in 2012, Zions Bank said Wednesday.

The decrease between November and December is the largest non-seasonally adjusted decline in nearly three years, according to the Salt Lake City-based bank.

Falling fuel prices in Utah drove down transportation costs by 3.9 percent. Transportation expenses account for almost 20 percent of the average Utahn’s monthly expenditures.

Housing prices, including rent and hotel fees, decreased 0.2 percent from November to December. It was only the third time that housing prices fell in 2012, according to Zion’s Wasatch Front Consumer Price Index.

Nationally, lower gas costs offset more expensive food and higher rents to keep a measure of U.S. consumer prices flat last month.

The flat reading of the December consumer price index caps a year when inflation slowed. Consumer prices rose only 1.7 percent in 2012, down from 3 percent in 2011. Salt Lake Tribune

Utah has Lowest Gas Prices

Fill up while you can; Utah now has the lowest gas prices in the country.

According to a new report from AAA, the current average price for a gallon of regular gasoline in Utah is $2.90, a drop of 50 cents since the last AAA gasoline report on Dec. 11.

Only six states report prices below the $3 mark — Oklahoma, $2.99; Idaho and Minnesota, $2.98; and, Colorado and Wyoming, $2.92.

Since Dec. 11, Salt Lake City and Logan motorists have seen the greatest decrease of gas prices in Utah at 56 cents.

Ogden’s motorists experienced the smallest decrease at 45 cents.

Ogden’s current average gas price also sits at $2.90.

The national average price is $3.30, which is one cent higher than a week ago, and three cents lower than last month’s AAA gas report.

Utah’s average price is three cents lower than it was a year ago at this time. The national price is seven cents lower than a year ago.


AAA Utah spokeswoman Rolayne Fairclough said gas prices will likely continue to be lower in 2013 than they were in 2012.

“In the first 90 days of 2012, there were tensions with Iran that pressured the national price at the pump to almost 65 cents higher than they would have been,” Fairclough said. “We don’t have a similar situation moving the market this year, so we expect prices to be lower.”

Fairclough also said increased oil production and lower demand will also contribute to lower prices in 2013.

The national average cost for a gallon of regular unleaded gas in 2013 will likely peak somewhere between $3.60 and $3.80. Last year, the peak national average was $3.94 a gallon. Standard Examiner

Companies to Travel as Much or More than Last Year

Travel agents are expecting businesses to travel as much or more than last year, and companies will be looking for savings during their trips.

These are some of the findings released by Travel Leaders Group, based on the its annual Travel Trends Survey of its members and agents.

Nearly 80 percent of the Group’s business-focused travel agents are forecasting that clients will be
traveling as much or more than last year — with fewer than 10 percent of those polled saying their clients will be traveling less.

Even with looming tax increases and government spending cuts, more than 77 percent of the travel agents polled said they were optimistic about their business while another 18 percent stated they were neutral about prospects in the coming year. Salt Lake Tribune

Groups Seek UTA Fare Cuts as Board Hikes Ticket Price

Just after 10 anti-poverty and environmental groups asked the Utah Transit Authority board Wednesday  to work toward lower fares to increase ridership, cut pollution and assist the poor, the board adopted a  final 2013 budget that counts on an already approved 6 percent fare hike.

That will raise regular one-way fares from $2.35 to $2.50 for bus and TRAX trips beginning April 1 and is the last of several fare-hike steps approved last year.

The activist groups are pushing in the opposite direction. They handed a joint statement to the UTA board  that said buses and trains are "severely underutilized" with too many empty seats — and called for dropping fares and other steps to "double, or even triple, use of public transportation" by 2020.

"We want people to see a fare that obviously makes it cheaper to ride public transit than to hop in cars,"  said Laine Gardinier, vice chairwoman of the Crossroads Urban Center board. "Each fare increase creeps  us a little further away from that."


Other groups joining in the call for reduced fares included the Anti-Hunger Action Committee, Breathe Utah, Coalition of Religious Communities, Disabled Rights Action League, Salt Lake Community Action  Program, Utahns for Better Transportation, Utah Physicians for a Healthy Environment and the Wasatch  Clean Air Coalition.

UTA Board Chairman Greg Hughes invited the groups to discuss their proposals in detail in the future  with a board subcommittee.

The groups also called for better education on the benefits of transit and for improved connections to  make transit more attractive and shorten travel times.

Judi Short, the land-use chair of the Sugar House Community Council, complained that UTA has cut too  many bus routes as it opened new TRAX and FrontRunner train lines, and that worsened commutes for  many.

The budget adopted Wednesday increases spending on trains by 27 percent but keeps funding for buses  essentially flat. Funding for operating trains will increase from $47.15 million to $60.15 million during  the year. Buses will get a slight uptick, from $78.83 million to $79.17 million.

The budget for all operations — which also include paratransit, rideshare and other services — is $214.6 million, up from $199.1 million.

The new budget comes just after the opening this month of the extension of the FrontRunner commuter rail from Salt Lake City to Provo. Scheduled openings next year include a Green Line TRAX extension to  the Salt Lake City International Airport on April 14; a Blue Line extension to Draper in August; and the new Sugar House streetcar line next winter.

The new budget projects that with all the changes, overall ridership will increase by 4 percent next year. Salt Lake Tribune