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March 9, 2018

Volume 39, Number 47

Longtime residents know to stay clear of downtown Austin when Spring Break and South by Southwest (SXSW) coincide during the same week as they will next week (in fact, the 10day SXSW congestion starts today).  Once the nightmarish crowds begin to flock to the downtown area, many residents just leave town.  But this year, theres good news for those leaving via the Austin airport, as numerous projects to reduce airport congestion are nearing completion.

There’s no way to avoid the fact that this annual influx of crowds to Austin impacts the Austin-Bergstrom International Airport (ABIA).  To give you an idea of the scope, consider this:  Scandinavian Airlines (SAS) for the first time is operating two nonstop, roundtrip flights between Stockholm, Sweden and ABIA just for SXSW.  This marks the first flights for SAS at ABIA, and the first nonstop flights ever between Austin and Stockholm.

Add to this, total passenger traffic at ABIA for January 2018 was UP 13.2% compared to the same month in 2017 (a year that smashed passenger total records).  And, January is traditionally the month with the fewest passengers.  So, construction at ABIA can’t be completed soon enough.

What are some of the new changes at ABIA?  A new retail component outside airport security is nearly 85% complete at the same location as the previous free cell phone lot.  In addition to 50 new cell phone parking spaces for those waiting to pick up arriving passengers, the retail complex will include ten covered Texaco gas pumps, a convenience store, a drive-thru Austin Java coffee store, a Subway sandwich and a taco shop.  And, for all the local hybrid cars owners, there will also be electric car charging stations available.

These improvements were undertaken to help ease longtime congestion at ABIA due to passenger pickups from (sometimes-delayed) incoming flights.  And, to further keep cars from “cruising” around ABIA waiting on arriving passengers, the new retail complex will also have picnic tables, restrooms and an aviation-themed playground for kids.

(By the way, the air carrier dominance at ABIA shows no sign of changing.  In January, Southwest Airlines passenger total was 396,931 … #2 American Airlines’ total was 200,256 … #3 United Airlines passenger numbers were 148,312 and #4 Delta Air Lines carried 131,494 passengers.  Each of the remaining air carrier totals serving ABIA dipped to five digits, not six). Read more →

February 23, 2018

Volume 39, Number 45

As you might imagine, there has been quite a todo after the Austin City Council voted to make Austin the first city in Texas to mandate/require that private businesses provide their employees paid sick leave.  It wasnt even close.  After much debate, the vote was 92 to implement the policy.  Now what?  Lets examine what is likely to happen now.

First of all, start with the fact the Councils controversial action is not slated to go into effect until October 1, 2018.  Private businesses with five or fewer employees were not exempted from the ordinance, but they won’t be required to provide paid sick leave until October, 2020.

How much paid sick leave is required?  A worker can accrue up to 64 hours, or eight days, of paid sick leave per year.  Small businesses, with 15 or fewer employees, get a slight break.  Workers at small businesses can accrue up to 48 hours, or six work days, of paid sick leave per year.

When we mentioned there has been a “to-do” since the controversial decision, criticism came from several quarters.  Check our Archives for the 2.2.18 edition where we detailed the opposition position from the Austin Chamber of Commerce.  Additionally it asked the vote be delayed 90 days – didn’t happen.

A TV station from Houston jumped on this story.  It interviewed Austin business owner, Peter Morales, who told KHOU “I have several friends in the construction industry, several companies, that are “specifically saying they are going to move outside the city limits.”  A conservative policy group weighed in saying the City of Austin “should ease regulations that prevent businesses from locating here, staying here and expanding here.  Instead, they add new ones.”

The most significant opposition came from a local State Senator (Donna Campbell) and a local State Representative (Paul Workman).  They can do more than simply wring their hands and express dissatisfaction – they can get it overturned in the State Legislature.  And, they indicated they will do just that, having already lined up support to overturn Austin’s action.

While the Legislature has regularly overturned what it terms “Austin overreach,” the problem is the Legislature doesnt meet until January 2019, three months after Austin’s paid sick leave ordinance goes into effect.  No one has yet publicly stated what might happen during this interim.  Dont be surprised, though, to see some sort of legal delaying action take place.  Stay tuned. Read more →

January 26, 2018

Volume 39, Number 41

Traffic issues abound in major US cities and, in fact, worldwide.  New traffic solutions, some quite controversial, are being tested or actually installed.  Austin is facing some of the same congestion/traffic problems that have triggered actions elsewhere.  But, so far, Austin has not officially adopted any of them.  However, it is important to track these trends just in case.

What are the trends?  How about congestion pricing?  This is where cities are so concerned about traffic in their downtown areas, they charge a premium if you drive downtown.  One US city is getting ready to levy a paypermile gasoline charge versus a per-gallon gas tax.  And, of course, the long-discussed increase in gasoline taxes.  Here’s what’s happening now.

CONGESTION PRICING.  Just this month, a proposal to charge motorists $12 to drive into the busiest parts of Manhattan started gaining steamLondon, Stockholm and Singapore already have congestion charges.  Trucks, Uber and Lyft would also be hit by differing amounts with Manhattan’s congestion tax.

PAY-PER-MILE GASOLINE CHARGE.  Seattle, in a coupla weeks, will start a one-year pilot program to charge 2,000 individual drivers a paypermile gas tax, instead of a pergallon gas tax.  “Oregon, California and other states have proved that it can be done, at least on a small scale,” according to Governing.com.

INCREASE GASOLINE TAXES.  This has been cussed and discussed for years.  But this month the powerful business lobby, the US Chamber of Commerce, said it will push Washington to increase the federal portion of the gasoline tax by 25cents per gallon.  (Texas state officials have shown zero appetite for increasing the state’s portion of the gasoline tax.)

The argument used to implement these money-raising options is the revenue will be spent on infrastructure improvements.  This is in face of declining gasoline tax revenues due to better gasoline mileage, hybrid or electric vehicles, lower gas prices, etc.  So the pitch to get additional revenue in addition to, hopefully, decreasing congestion is getting traction.

As we said at the top, no serious effort has emerged in Austin or at the state level to install any of these options.  And there are huge logistical problems to implement some of them.  But its our job to keep you abreast of trends elsewhere just in case they pop up here. Read more →

December 1, 2017

Volume 39, Number 35

An ordinance that would require Austin businesses to provide paid sick days is headed to the Austin City Council next week.  If it stays on the Councils planned action track, it could become law early next year.  City staff has been working on the draft measure, gathering input from a variety of sources.  And, as you would expect in Austin, there is disagreement on the proposal.

Of course, many Austin businesses provide paid sick leave for their employees, even though neither Texas nor federal law requires private employers to do so.  As of last count, more than 30 US cities have enacted such a mandate.  And, the feds have dictated that if a private employer has at least 50 workers, it must provide unpaid sick leave.

So, which categories of workers are pushing for this ordinance?  Backers of the proposal argue many local service, retail, construction and maintenance jobs do not get paid sick leave.  As one spokesman put it:  you should not have to choose between taking care of a sick kid and paying the rent.

However, it is more nuanced that that.  Tech companies, for example, maintain a onesizefitsall city reg would cause administrative nightmares, even if the tech company offers some form of paid sick leave.  And, some small business reps complain such an ordinance would raise costs.

When you step back and try to anticipate what is likely to happen, you have to analyze the makeup of this 10-person City Council.  Such an analysis would lead you to believe some form of a paid sick leave mandate is likely to be passed.  The initial content will start to become clear within the next few days when the staff presents its recommendations.

Assuming it does pass, it will not likely be the last word.  A lobbying group for small business indicated it will probably go to the Texas Legislature to put a stop to such an ordinance.  If actions of the previous legislature are any indication of what might happen, the odds are that any action by the Austin City Council will likely be overturned by a bill that would have statewide application.

While this is an educated assessment, nothing should be taken for granted.  The first public step should come this next week and will continue into 2018.  Stay tuned. Read more →

November 17, 2017

Volume 39, Number 33

The unprecedented housing crisis in California is worsening.  And, there is a genuine grass roots uprising gaining strength there to combat rising costs and lack of affordable living units.  In fact, more than $1 million has been raised to change California regs they feel are contributing to the crisis.  At the same time, Central Texas home sales were up 2.2% in October.  The local median sales price increased 4.3%.  Same song, umpteenth verse.  Is Austin heading down the same path that is hammering California?

We wrote in detail about the beginnings of this California housing uprising four months ago (click “Archives” for the 7.21.17 edition).  The effort was generally composed of leftleaning leaders going against leftleaning state and city governments that installed restrictive development regs.  Now it has expanded, and it has picked up steam.

The YIMBY’s are a network of pro-development “Yes-in-my-backyard” organizations.  They are fighting the sentiment against building more homes in existing neighborhoods.

They are led by millennials, who have been frozen out of the housing market and slammed by California’s skyrocketing rents.  And now, tech companies are funding the effort.

YIMBY’s do not buy into the theory that an influx of new wellpaid tech workers and other young people moving into a booming area are the main culprits for runaway housing costs and the displacement of working class residents.

They argue that a shortage of housing is primarily the problem – namely zoning restrictions keeping apartments out of single-family home neighborhoods, or dis-allowing granny flats on lots, etc.

Austin is nowhere near the dire straits Californians find themselves in today.  But, concerning signs are emerging such as sales inside Austins city limits dropped 1.7% in October, as the median price jumped almost 10%.  So far, we’ve seen no signs of YIMBY moves in the Austin area.  But, the City is in the midst of its years-long effort to re-write its land development code.  It is called CodeNEXT.  It’s controversial so far, and likely to continue that way.  But, its work is vital to the area’s growth plans.  Stay tuned. Read more →

October 13, 2017

Volume 39, Number 28

About a week after you read this, one of the most important deadlines for Austins economic future will have come and gone.  But you wont know the results until next year.  Were talking about the coveted site for Amazons second headquarters location.  Amazon claims it will invest $5 billion in its HQ2, and that it will generate 50,000 new jobs over the next two decades.  The deadline for site selection proposal submissions is October 19, 2017.

Based on multiple reports, more than 100 cities are scrambling to meet this deadline.  Talk about worldclass competition.  Talk about a worldclass prizeIts hard to overestimate the impact on the winning city (or area).  No matter what you read about various cities and their chances, it’s all speculation, some of it even well-reasoned.  (We’ve also been a part of this speculation/analysis.  To understand the process, check our September 22, 2017 edition in the Archives section of this newsletter.)

It’s important to understand that, of all the submissions, none will likely be the perfect location.  I mean, after all, Amazons wish list/criteria is such that no city/area can be a perfect ten on each item.  Add “incentives” that will be unique to each location and it further compounds the selection problem.  And, much of the Amazon HQ2 site selection team will have a gut reaction to intangibles that are not mathematically quantifiable – such as how they “feel” after a city/area visit – and how they like specific sites within a high-ranking city/area.

It goes back to the old adage of “if the solution is not perfect, then select the best of the options.”  Think politics:  “I don’t like this candidate” until an opponent emerges that you perceive to be worse.  Or, deciding which movie to watch.  “This movie doesn’t really appeal to me, but it’s probably going to be better than what’s currently available.”  They won’t flip a coin, but subjectivity will also play a role.

Amazon already knows a lot about the Austin area.  The company bought Whole Foods, and along with other operations, thousands of local employees already receive an Amazon check each pay period.  Heck, a recent Amazon distribution center in San Marcos in just a year of operation has about 3,000 employees, three times as many as promised.  Next step to watch:  whether Austin makes the Amazon HQ2 short list, after the 100 or so presentations are culled.  Amazon hasn’t indicated when the short list will be announced. Read more →

October 6, 2017

Volume 39, Number 27

The City of Austin is investing heavily in wind and solar power as a source for electricity, even though it is generally known to be more expensive than electricity generated by natural gas.  Currently, Austin Energy is also using several other power sources to provide cheaper electricity to its customers.  One of them nuclear power just passed a major test, at the same time it was receiving federal authorization to operate for another 20 years near the Texas coast.

Back in the 1980s, Austin, San Antonio and Houston invested in building the South Texas (Nuclear) Project in Matagorda County, near Bay City.  As a result, Austin owns 16% of the plant with a priority to access its power to generate electricity.  As you well understand, from construction until today, nuclear power has been controversial.  But nuclear power has been a “clean” industry and is relatively reliable and inexpensive.

One of the major concerns about the nuclear plant has always been its location.  The criticism:  the site made it subject to the ravages of a hurricane that could come roaring into the Texas coast.  Well, the monster Hurricane Harvey came and went.  And the 1,200 employees of the South Texas Project kept the plant producing power without missing a beat.

Another important recent development:  the US Nuclear Regulatory Commission has renewed the license for 20 years for the South Texas Projects two units.  The units are now cleared to operate through 2047 and 2048.  This is significant, because the renewal applications were first filed in 2010 (for licenses that were set to expire in 2027 and 2028).

By the way, the South Texas Project is one of the newest and largest nuclear power plants in the US.  Austin’s portion of power to provide electricity to Austin Energy customers is part of the projects 2,700 megawatts of power that is in use in almost 2 million homes.

Activists have been trying for years to get Austin out of using fossil fuels to provide electricity.  Efforts have been aimed at pulling out of a coalfired power plant in La Grange and the city is not adding another natural gas plant.  Of course, the same activists aim their criticism at nuclear power-generated electricity, as they continue to press for more reliance on solar and wind. Read more →

August 18, 2017

Volume 39, Number 20

Do you want to pay a tax to drive into downtown Austin?  A tax, not a toll.  Congestioncharging zones (CCZ) are already in place in some important cities, and being planned in others, as a way to reduce roadway crowding in central cities.  CCZs are just one solution being bandied about, that also have the added advantage of generating revenue.  They all have one thing in common changing the way you pay for driving a vehicle.

While congestion is one of the driving forces, dwindling sources of revenue are also a big contributing factor.  The standard taxes you pay at the pump for gasoline are becoming less and less adequate to handle the increasing number of vehicles, according to The Economist.  And, face it, local and Washington legislators have shown no appetite for raising gasoline taxes.

CCZ’s have their champions.  There has been no serious public discussion about a CCZ for downtown Austin.  However, even as we speak, New York’s Gov Andrew Cuomo is pushing a CCZ tax for access to Manhattan.  But, the outcome is far from certain.

Why?  Take a look at London.  A CCZ was put in place there in 2003, but the city is now seeing congestion rising again.  Seems market forces are at play in London.  Uber drivers, taxis and vans figured out they could pay one tax for entry and spend hours driving around picking up riders, increasing congestion.  So the CCZ may go down as a failed experiment.

Still, fuel tax revenues are drying up even as more vehicles crowd roadways.  The problem of reducing revenue is multi-faceted:  better gas mileage (fuel efficiency has roughly doubled in the past 25 years) … more electric/hybrid cars, that are subsidized to increase production, etc.  So, some form of payby-mile is gaining steam.

A variety of ways to charge you for driving a vehicle are in the experimental stage – all bolstered by scary, unbelievable leaps in technological capabilities.  In less than three years, Singapore will use a GPSbased system to vary the amount it charges drivers based on distance, time, location and vehicle.  At the same time, drivers will receive real-time info about the cost and “busyness” of roads, encouraging them to consider other routes.  Closer to home, California and Colorado have received federal grants for trials of various pay-to-drive schemes.  We’ll detail what Oregon is doing with 1,500 drivers in the next item. Read more →

August 4, 2017

Volume 39, Number 18

For the first time in 2017, a travel warning has been issued for a favorite destination of Austinites, Mexico.  No, it doesnt have anything to do with drug cartel violence.  This warning cautions those vacationing in popular resorts about possible tainted or low quality alcohol.  What?  Yep, seems several dozen imbibing Americans have been stricken after as little as one or two drinks.  In fact, one US citizen died.

The USState Department singled out vacation resorts near Cancun and Playa del Carmen.  Those who have been affected by the booze claimed to have a drugginglike sensation, memory loss, becoming ill, and/or blacking out.

 

 

For a further update on what is happening in Mexico, who better to turn to than a former US Ambassador to Mexico with deep ties to Austin former Texas Secretary of State and president of the Texas Exes, Tony Garza.

Garza says “over the past few weeks, there has been some great news coming out of Mexico’s energy sector.”  He specifically mentioned a “consortium of international energy companies had discovered enormous shallow water oil reserves,” and said he met with USEnergy Secretary Rick Perry about “our strong and vitally important crossborder energy integration.”

But, his brutally-honest assessment also includes some bad news.  “The countrys murder rate has skyrocketed this year, with 11,155 people killed from January through May alone (a 32% increase from last year).”  He further said:  Governmental “corruption allegations have also shown no signs of abating.”

Additionally, he cites uncertainty surrounding NAFTA trade renegotiations.  Austin and Texas are heavily involved in NAFTA trade deals.  But, this entire subject is caught up in the push-pull of international and national politics.  So, who knows where negotiations will end up.

Garza importantly raises a “timing” red flag.  Discussions are scheduled to begin in early fall.  “But the negotiators will have to move fast,” Garza warns.  “Theyll be under intense pressure to wrap up discussions by early 2018, before Mexicos presidential campaign picks up steam.”  Check out the next items for related Austin energy developments. Read more →

July 28, 2017

Volume 39, Number 17

During Rick Perrys 14year tenure as the states governor, he regularly touted the Texas Miracle” – his term for the economic dynamism of the Lone Star State.  He was an aggressive advocate for the oil and gas industry, while presiding over Texas leadership in the production of wind and solar power.  Now, with Texas in his rear view mirror, Perry is pushing policies that will greatly enhance his home states energy future.

As the current US Energy Secretary, Perry is making major moves to ensure US dominance in the global energy market.  And just about every action he is taking will have a profoundly positive impact on Texas energy leadership.  He is helped by the fact his energy policies are closely aligned with the man who appointed him to the post, President Donald Trump.

Just as Perry can’t claim total credit for what happened in Texas (credit Houston oilman/developer George Mitchell for the gamechanging fracking approach to the expansion of oil and gas production), he must also nod in Trump’s direction for what is happening to US energy development.  But, Perry is front and center on the advocacy and implementation of those policies.

A major driver of this effort is the push to export Liquefied Natural Gas (LNG).  Fracking in Texas has unleashed massive amounts of natural gas – so much that “overabundance” has been used to describe it.  Well, converting gas into liquid makes it easier to ship to markets around the world.

New and expanding LNG plants along the Texas Gulf Coast are the key to this effort.  So is expansion of the Ports of Houston, Beaumont, Corpus Christi, Texas City and Port Arthur.  And yeah, pipelines to get the gas to the Texas coast.  No longer are there roadblocks in the way of exporting this fossil fuel.  As Perry told the National Press Club:  “If you meet the rules, heres your permit.”

Of course, environmentalists are still battling the reliance upon fossil fuels – urging a move to alternative, sustainable fuel sources such as those derived from wind and solar.  (The City of Austin is one of the nation’s leaders in this direction).  As governor though, Perry was an all-inclusive energy advocate.  The massive wind farms and solar power installations that erupted in Texas during his tenure are testimony to that approach.  Perrys history indicates the US Energy Department may follow his all of the above approach.  If so, Texas will benefit. Read more →