62% of Californians Want High Speed Rail

That's the latest polling numbers from JMM Research on our high speed rail project, as quoted on the front page of the Wall Street Journal today:

California has long talked about a high-speed rail line to connect the San Francisco Bay Area to Southern California. After years of chatter about the project, a $10 billion bond measure to start construction will be put to a vote this year. Last month, 62% of voters polled by JMM Research said they would support the bond measure, up from 52% in November. Voters cited having an "affordable" transportation alternative, "reducing dependence of foreign oil" and "reducing traffic congestion" as reasons for supporting measure. "You could start seeing [voter opinion] turn in May, when gas was $4.50 to $5 a gallon here," says JMM Research President Jim Moore.

JMM Research is the in-house pollster for the official HSR campaign, but their previous polls were confirmed by the Field Poll, the state's most respected polling outfit, last month. 62% is a wonderful number, but I'm not overconfident - Prop 1(A) is going to be hard-fought struggle going into the November election. It's going to take a lot of effort and work to win this.

The poll is quoted in the context of a much bigger article on how high gas prices are changing the American economy. The article makes many of the same points I made on Sunday - that only long-term demand destruction, accomplished through the provision of alternatives, is going to allow us to handle this crisis without economic disaster.

Those who would point to the recent easing of gas prices as evidence that the crisis is over have missed the point entirely - gas prices have eased only because Americans started cutting back on their consumption. What that means is if the reduced consumption is not sustained and expanded, prices WILL rise again.

The WSJ article isn't perfect, though. Right after the section quoted above on HSR comes this:

Harvard University urban economist Edward Glaeser says there are limits to how much the U.S. can be expected to follow Europe and Japan. The U.S. population grew nearly fourfold in the 20th century, an increase that coincided with the rise of the automobile. Motor travel reshaped the country, allowing people to move away from the old coastal cities and transport hubs. In Europe and Japan, much of the population growth occurred before car travel took hold, so people are still clustered around old transport hubs. That makes it easier to forgo car travel.

However, as the article points out, high gas prices are destroying exurban growth and sprawl and driving people into the "old coastal cities and transport hubs." And as Matt Melzer pointed out last month, California's population distribution patterns closely resemble those of Spain, where HSR has been an outstanding success.

The WSJ article doesn't examine peak oil but it does suggest that the cost of oil isn't coming down anytime soon:

Demand from rapidly growing economies of China and India make lasting oil-price declines less likely these days. Despite the market's recent fall, prices remain above the prior inflation-adjusted peak of $106.15, set in April 1980.

The high prices have been a drag on an economy already sagging due to the housing downturn and shaky credit markets. Auto sales have fallen, airlines are cutting back on flights, small trucking firms are going out of business, and transportation costs are eating into corporate profits.

Much of the way America has come to live and do business is predicated on low energy prices.

It's becoming clear to businessmen and government leaders around the world that HSR is necessary for a prosperous 21st century economy. But those in California who complain about grade separations in Menlo Park, or the Pacheco alignment, or the possibility of small cost overruns here and there, are deliberately ignoring those fundamental, big picture issues.

California has lots of transportation needs, let there be no doubt about it. HSR won't solve them all. But by providing faster in-region commutes and faster in-state travel, using a sustainable, cheap, and potentially renewable energy source not dependent on high oil costs, HSR will help Californians reduce their oil consumption. As the WSJ explained, that in turn produces savings, jobs, and economic growth.

Ten years from now when HSR is up and running we'll look back on this debate and wonder why there was any hesitancy at all.

AB 3034 Delayed

***See Updates Below***

So after a weekend of frenzied activism to get Arnold to sign AB 3034...the Assembly adjourned for the day without taking action on the bill:

With a veto threat looming, lawmakers on Monday missed a deadline to replace November's $9.9 billion high-speed rail bond ballot measure with a better version.

Or did they?

Rail supporters believe the clock hasn't run out yet.

"We can still get it on the ballot," said Jo Linda Thompson, a lobbyist for the Association for California High Speed Trains. "We are pursuing it with all the energy we can."...

Lawmakers still have until Saturday to add a measure to the ballot, in this case Prop. 1a. The question is whether they could still remove Prop. 1, which will be included on guides mailed to voters that are scheduled to go to print soon.

The Assembly believes that they *do* have that ability, hence the delay. The Secretary of State's office will likely make the final determination, based on their reading of election law.

If it turns out the deadline to replace Prop 1 has passed, the Assembly should kill AB 3034 and go with Prop 1 as it currently exists, rather than add Prop 1A alongside Prop 1. I'm not exactly enthused about telling voters "No on 1, Yes on 1A!" because it's just not going to work.

Still, it's a shame this uncertainty even exists. AB 3034 was proposed months and months ago; it was the topic of the very first post on this blog way back in March. The Legislature had plenty of time to act on it, but the delay - especially in the Senate, by Republicans such as Roy Ashburn - put its proponents up against the wall. Arnold's temper tantrum doesn't help matters.

AB 3034 isn't necessary to high speed rail, of course. Prop 1 is a very good proposal and we strongly support it no matter what happens to AB 3034. It's another depressing reminder of the lack of urgency in our state on not just HSR, but mass transit and dealing with our dependence on expensive oil. I am confident Prop 1 will pass, but it will pass without very many politicians having shown leadership on HSR. Arnold wanted AB 3034 but prefers to throw a tantrum instead of getting it through the Legislature. Our two US Senators have been missing in action while their Nevada colleague gets $45 million to study a maglev system that'll never get built. Their leadership isn't necessary, but it would help reduce annoying problems like this.

So we'll see what happens to AB 3034. The activism we engaged in over the weekend was valuable, and if anything needs to be ramped up to ensure Arnold does support HSR, whether it's through signing AB 3034 or strongly endorsing and campaigning for Prop 1(A). Look for more activism as the general election draws near.

Finally, Speaker Karen Bass' office put out this video about high speed rail. It has some excellent quotes from Assemblymember Cathleen Galgiani, author of AB 3034, and it's especially gratifying to see her pushing the the cost of doing nothing is not zero frame I have been articulating since May.



UPDATE 1 - the AP reports Speaker Karen Bass called off the vote because of budget negotiations:

A spokesman for Assembly Speaker Karen Bass, D-Los Angeles, said the session was called off because of budget negotiations.

"The speaker is focused exclusively on the budget today," said Bass spokesman Steve Maviglio. ...

The deadline for listing initiatives in the supplemental voter ballot is Aug. 16, but lawmakers have extended that deadline in the past.

"The governor will continue to work with the Legislature to get the improved high-speed rail language on the ballot," Schwarzenegger spokesman Aaron McLear said. "There will be one high-speed rail initiative on the ballot, and the governor will be out campaigning for that."

So that clarifies things somewhat. As I explained over at Calitics this morning, the state budget itself is running up against the same ballot deadline we are - and since the budget solution is likely to include a few ballot measures, Speaker Bass chose to prioritize that over AB 3034 - especially if the legislature can itself extend its own deadline.

The quotes in the article, especially the one from Arnold's press flack, are also encouraging. Arnold seems to understand the issue and the need to ensure there's just one HSR prop. And of course it's very encouraging that Arnold will be campaigning for it - I think his term as governor is a failure, but let's face it, it's better to have him arguing for HSR rather than against it.

UPDATE 2 (Tuesday 12:40 PM): Cathleen Galgiani has announced that she will hold AB 3034 and NOT send it to Arnold for signature until a budget is passed. From a press release she sent me:

"I respect the Governor's desire to finalize the budget and urge my colleagues in the Legislature to work out a compromise immediately so we can all move forward on the important issues facing California," stated Galgiani.

"The Assembly is set to take up AB 3034 today and I expect it to pass with resounding support. AB 3034 is essential to Proposition 1 because it implements fiscal controls to ensure that the state bond funds are utilized in the most cost effective and efficient way. However, once it passes, I intend to hold the bill from Governor Schwarzenegger until the budget is finalized to ensure that Proposition 1 remains as strong as possible. With rising gas prices, congested highways and a rising population, Californians need more transportation options than ever."

If AB 3034 is signed by the Governor and sent to the Secretary of State before Saturday, August 16th, (the last day for new measures to be added to the supplemental ballot on November 4th) Proposition 1A - and not Proposition 1 - would appear on the ballot. Proposition 1A's title and summary, legislative analysis and ballot arguments would be in a supplemental ballot pamphlet, and there would also be language included to alert voters.

The short version: Saturday is the new deadline. I am doubtful there'll be a budget by then. But the sooner this is over the better, because it's time to start rolling out public activism for Prop 1(A).

Gas Prices and HSR

As expected, gas prices have begun falling. I will admit I did not think this would start until after Labor Day, as the fall is usually when the declines occur. But it began in July, and now we have some folks in the comments crowing that this means the crisis is over and HSR is no longer necessary.

If only.

Gas prices are on a long-term trend upward. As with any "trend" in economics there is typically a great deal of fluctuation along the way, with price spikes and price collapses. But as this chart from Chris Vernon at The Oil Drum shows, the trendline is quite clear:



30% year over year increases since 2002. As energy analyst and friend of California High Speed Rail Jérôme Guillet explains, the fundamentals still point to a long-term increase in oil:

One point that needs to be made again is that demand destruction in the US (or even in Europe, where it is hapoening too) is not enough on its own to bring prices down, because it needs to be larger than the supply growth in the rest of the world to limit the requirement for further demand destruction and price rises, given that production is still largely stagnant. And the problem is that demand is not growing just in China and India, thanks to rapid growth, it is also growing massively in oil producing countries themselves (Saudi Arabia, Iran, Russia, Venezuela), which often subsidize gas and which can afford it given that they have a natural hedge against (the subsidy gets bigger when oil prices are higher, ie when their own income is bigger, and the income growth is larger than the subsidy growth for those that export any volumes).

The phenomenon of peak oil is what's at work here, and it helps explain what's going on. As the supply of oil peaks, it becomes more difficult to boost production to satisfy growing demand. The price of oil will rise unless supply matches it - which as peak oil demonstrates, it can't - or demand will be destroyed. Demand destruction is good, but only if it happens through the provision of sustainable alternatives. Without alternatives to driving or flying, demand destruction is merely destructive, throwing economies into severe recession as people must reduce their oil consumption but cannot turn to anything else to make up for it.

What happened recently is that for various reasons in early 2008 - concerns about war with Iran, the declining dollar, and perhaps some speculation, the price of oil rose above the trendline. Now we're seeing some of those pressures ease and the price is starting to fall, especially due to evidence of demand destruction in the US. Problem is, if people start upping their gas consumption, prices will resume their upward march. The only solution is long-term demand destruction.

But it's STILL above $4 in most of California. And that's still far too high for most people to afford. It's been my belief that $3/gal was the true tipping point - when that price was reached and sustained for the first time in California, in 2006, the housing bubble began to collapse. And the downturn began in the places most dependent on cheap oil - exurbs like Modesto, Moreno Valley, Stockton, etc.

Jérôme goes on to explain what is really needed to deal with high gas prices:

In fact, I'll say again that our energy policies should focus on one thing first and foremost: demand reduction. Any reduction in demand that we manage in excess of what market forces would (precisely) force us to do will get prices down, and will save us a lot of money - and the smartest demand destruction is the permanent kind, that brings savings every month and every year rather than one-offs like giving up a trip.

We have to reduce our demand. Let's do it in an organized way rather than a panicked, haphazard, inconsistent way. And that's where government can help, by providing longer term pespective, informing citizens, pushing infrastructure in the relevant direction, and bringing up standards that apply to all equally and guide individual behavior in the right (Energy Smart) direction.

Price mechanisms work, but they are brutal, hurt the poor the most, and cause unnecessary disruption to economic activity, and pain to many. And they are fickle, as the current volatility (which, as I explained above, is likely to remain) causes rapidly changing signals which prevent decisions from being taken.

High speed rail is one of those long-term solutions that will provide "good" demand destruction - the provision of alternatives to oil that enable economies to grow and people to move around. We don't support HSR because gas prices spiked in 2008, we support it because gas prices are on a permanent, long-term increase, despite whatever intermediate fluctuations occur - and the only solution to this that saves us money and sustains a prosperous economy is non-oil mass transit like high speed rail.

In the summer of 2004 gas prices soared to the record level of $2.50 in Seattle, where I was living at the time. By January 2005 it had dropped to $1.95. But that didn't change the long-term upward trend, and so in summer 2008, in both Seattle and California, gas prices hit $4.50. We may see $3.50 or even $2.99 by the November election, but the next increase always wipes out that savings. Next summer may well see us break the $5 barrier (diesel already did so this year). Three steps forward and one step back is still forward movement.

So to those who point to $4.15 gas and say "neener neener," the joke is unfortunately going to be on you when we hit $5 in 2009. I don't know about you all, but I'd rather we got to work building high speed rail so that we have an alternative to oil sooner, not later. We've already wasted three decades. We have no more time left to lose.

ACTION: Tell Arnold to Sign AB 3034

We have until Monday to convince Arnold to drop his childish refusal to sign new bills and put his name to AB 3034. Contact Arnold and tell him to sign AB 3034:

http://gov.ca.gov/interact

Phone: 916-445-2841

UPDATE CalPIRG has a handy dandy form to use to contact Arnold about this.

Rafael also suggests we contact our Assemblymembers to ensure they act swiftly on this on Monday.

There's your weekend homework, folks. Get to it!