The MT Position

Posted by Fred Jandt
Editor, Mass Transit magazine

Memory is a funny thing. There’s sensory memory — think visual recognition — short-term memory, which lets you remember where you just put your keys, and long-term memory, which allows many of us to store away wonderfully useless bits of information for our entire lives. Then there is transit memory, which is the ability to remember to use transit only when gas prices double from a set amount we’ve been conditioned to accept as okay.

My sister-in-law was all excited last week when gas prices dropped below $2/gallon. OK, I know I am not that old, but I remember when gas was a lot lower than $2. I remember thinking when gas hit $1.50/gallon that we’d never see the downside of that again, same thing at $2. And while gas prices are currently a little below $2, I don’t expect them to drop to $1.75 or lower. Maybe if the economy continues to drag as we head into the winter months, but by July I expect to see gas prices topping $3/gallon or more again.

So as gas prices drop people cheer and they hop into their cars again, forgetting that transit got them through the worst of the gas crunch this summer. It’s like turning down that clearance aisle at the department store and finding something you were planning on buying anyway, but now it’s half the cost you expected. Bonus!

And the worst part is that many transit agencies will just be glad to keep the riders they can, not go out and campaign to keep ridership surging even though gas prices are plummeting. Will transit ridership drop off that much now that gas prices have gone down? I hope not, but they will definitely drop below the highs we had over the summer.

Now is the time for transit to step forward and make sure people don’t forget all the other benefits riders enjoyed while switching to transit other than relief from high gas prices.

Transit memory is a problem we can all overcome together!

Thanks for reading the MT Position updated every Friday,

Fred
fred.jandt@cygnusb2b.com

Posted by Fred Jandt
Editor, Mass Transit magazine

Despite all of the increased connectivity given us by modern conveniences, it still can be pretty easy to insulate yourself from the outside world. Try turning off the television and not watching the news — or just watching what your kids want to watch. Leave the computer off the Internet for a couple days. And only answer the phone if it is someone you know. Suddenly the world becomes what is directly related to your daily routine.

Then again, life has a way of butting itself in and not being ignored. And what about the transit industry? Business as usual, right? Wrong.

Take, for example, the current economic crisis — actually, let’s call it a global economic crisis because that is what it’s quickly becoming. If you don’t own a home, already have yours paid off, or don’t have an adjustable rate mortgage, the housing crisis feels kind of distant. Same goes for other economic struggles. But suddenly someone you know loses his or her job due to a company going bankrupt. But that couldn’t happen to a transit agency, could it?

It’s becoming more and more likely every day. Washington Metro is seeking protection from the federal courts to stave off paying $43 million in debt to a Belgian bank due to the AIG collapse and it could be faced with more than $400 million in payments if every lender came calling. And agencies around the country are waiting with bated breath to see what the court decides as 30 transit agencies in 18 states had similar deals.

Then there is the MTA New York situation. Due to the poor economy, transportation bonds not performing the way they were expected (among other factors), MTA is looking at a more than $1 billion shortfall in its budget next year. According to Lee Sander, MTA CEO, the service cuts to balance the budget could be “draconian.”

We’re in a situation where Chicken Little may be correct; the sky is indeed falling. Transit agencies across the nation are being squeezed more and more between the rock and hard place of increased ridership with limited to no way to pay for the service. And it’s going beyond being able to purchase new vehicles or expanding routes, it is now about keeping essential services going just to keep a system afloat.

As we move into 2009 with the funding bill reauthorization looming and a new, transit-friendly administration about to take office, let’s hope the old adage is correct — it’s always darkest before the dawn.

Thanks for reading the MT Position updated every Friday,

Fred
fred.jandt@cygnusb2b.com

Posted by Jack Lee

Every time the price of oil drops, I get asked why the price at the pump stays high. With 12 years in the fuel business, it seems I’m always being asked, “aren’t the two linked?”

The short answer is yes they are definitely linked, but as you guessed there is a longer answer. When oil prices skyrocketed earlier this year, the pump prices kept pace. Now that the barrel price has come down, the pump price is falling too, but slowly. You might call it a controlled descent and there are several reasons for it.

Fuel prices are affected by a number of things; the price of oil is just one.  Fuel is a retail product just like thousands of other things we need from day to day. But unlike other retail products, fuel is also a commodity so supply and demand determine the price on the open market and ultimately at the pump. Also unlike retail products, oil is used in many applications — not just as a fuel but also as raw material in manufacturing a myriad of goods, chemicals, foods, fertilizers, etc. While supply is abundant and demand consistent, prices are stable. But when supply is disrupted, short-term inventory is threatened and this affects millions of businesses worldwide. We quickly see demand surge and prices spike. And there are so many things that can interfere with supply.

A year ago, an almost nation-wide fuel shortage was triggered by a fire in a refinery in Ontario and it became a perfect storm. It was an unusually cold winter and when one of three refineries went off-line, a fuel crisis began. Fuel normally brought by rail from Quebéc was held up by a strike at the railway. Fuel normally brought by ship from Michigan was blocked by thick ice in the ports. Soon, commercial filling stations ran out of diesel and businesses weren’t able to operate. Needless to say, fuel was expensive if you could get it and even after supply returned, it was months before inventory was restored and prices came back down. But there’s more to oil prices than bad luck and worse weather.

A huge part of the rise and fall in the world oil prices is market forces — and this is where it gets a little complicated. There’s oil in everything. And by that I mean there’s very little in our lives that doesn’t require oil to produce it, bring it to market, take it home or put it on the table. That’s why oil prices are also affected by indicators like consumer confidence and employment rates. Also, since oil is global, prices here are affected by demand elsewhere. In the spring we saw oil consumption in China and India rival that of the United States and suddenly oil prices were rising even when U.S. consumption was falling. Commodity markets were trading oil just like gold, foreign currencies and stocks. Now, with the turmoil in the stock markets and world oil consumption still fairly stable, oil is holding its value nicely because of another distinct advantage oil has — control of supply. Like diamonds and gold, if market prices fall too far, supply can be reduced until the price goes back up. All of this means that we should get used to high oil prices — but it doesn’t mean there’s nothing you can do. Learn these two words: Fuel Management.

Fuel Management is a concept whose time has come. It is the idea that if you collect accurate data on how you use fuel that you’ll be better able to control consumption, reduce cost, and eliminate theft and waste. As an idea, it’s not an entirely new one and there are a number of fuel management companies that offer solutions of varying effectiveness.

The most basic systems comprise manual data collection and spreadsheets. The program relies on the consistency of drivers recording their daily odometer readings and fuel purchases, as well as the accuracy of the data entry person and the commitment of the manager to make sense of all the information and decide how to use it. However, these manual and semi-manual systems are susceptible to lost receipts, illegible faxes, inaccurate records and data entry errors. They also don’t help the manager make any sense of the data. Only a system which is fully automated can eliminate human error and add tools to help the manager understand the data. But that’s not all a fuel management system can do.

Fuel Management refers to measuring all activities related to refuelling — and there are many. Fuel supply is critical and your fuel management system must begin with finding a professional fuel supplier who can deliver regardless of fuel shortages, adverse weather and other challenges. Your fuel manager should give you online access to all your fuelling records, including price history, dockets, and fuel consumption across your fleet and broken down by vehicle. To eliminate human error, they should also use automated collection of fuel data and a positive identification system for digitally attaching the right fuel data to the right equipment. They should also assure you of high safety and environment standards and be able to accommodate short notice changes to your equipment list or fleet profile.

A reliable fuel management system can save you up to 20 percent on your fuel costs. When combined with onsite delivery, you make productivity gains of at least 20 minutes per day, per vehicle. When your vehicles are refuelled in place, you also reduce the cost of labour, overhead, insurance, maintenance and fuel consumption. With automated reconciliation of fuel data available online, you also reduce administration costs. And the biggest hidden savings is theft. Onsite refuelling eliminates theft which many businesses reckon accounts for between 10 and 20 percent of fuel costs.

The most amazing thing about fuel management technology is that it shows you all of these costs, which until now were not measurable. Which, unless you’re using a fuel management system, are impossible to manage.

So no matter what fuel prices do, no matter how high oil climbs or how slowly the pump price falls, you can always exert more control over your fuel expenses. It’s just a matter of having the tools to measure and the systems to manage it.

Jack Lee is the President and CEO of 4Refuel Inc, The Leader in Fuel Management.  If you have any questions or comments about this article Jack can be reached at (604) 513-0386 or on line: AsktheExpert@4refuel.com

Posted by Fred Jandt
Editor, Mass Transit magazine

November 4, 2008 will go down in history as one of, if not the most important Election Day in our country’s history. It was truly a watershed moment with the potential to reshape America’s landscape. Proposition 1 in Washington and Proposition 1A in California have the potential to remake how transit is viewed in the United States and they both passed this week. What did you think I was talking about, Obama?

Sure, our new president has the chance to affect change in our nation’s capital, the likes of which haven’t been seen in a generation or two, but let’s hope he really means it when he talks about our infrastructure. The president-elect has pointed to China and its efforts in investing in its infrastructure and the benefits that country has gained from said investment. Let’s stop and chew on that for a bit.

SAFETEA-LU authorized about $286 billion over six years. The American Association of State Highway and Transportation Officials (AASHTO) recently released its recommendation for next year’s reauthorization and is recommending it be at about $544 billion. That’s a pretty good-sized jump, but not when you compare it to the estimated $600 billion already spent in Iraq with an estimated $1 to $2 trillion total expected cost.

Think of that. $1 trillion. To have that for transit improvements across the board — ports, roads, transit systems. Now take a look at the two ballot initiatives that just passed. Proposition 1 in Seattle is asking for roughly $22 billion to expand Sound Transit’s bus and light rail systems. Proposition 1A is asking for about $10 billion to start the process to put in a high-speed rail line between Northern and Southern California.

This is where this all falls apart, though. The costs I understand. I get those, but when you start comparing this “investment” in our infrastructure with China, it all falls apart. Sound Transit is looking to add 34 miles of light rail … by 2023. Yep, 15 years.

In comparison, since 2000 China has put in about 60 miles of rail (above and below ground). Almost twice as much as Sound Transit has planned in nearly half the time.

If our government truly wants us to compete in a global market, we need to look at what other countries are doing in terms of scope and not be held back by what we think we can do. We put a man on the moon because we wouldn’t accept no as an answer. The same should go for our infrastructure. We simply cannot accept no when it comes to improving our country. This is the challenge laid at the feet of our new president.

The various transit ballot initiatives passed across the country have made me optimistic we have the public support to do it, but I still feel the need to temper that with some caution to see if our government can summon the will to really affect change in a time frame that will make people sit up and take notice.

Thanks for reading the MT Position updated every Friday,

Fred
fred.jandt@cygnusb2b.com