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Posts Tagged ‘inflation’

In the California environmental consulting business, there’s been a bit of dismay for the past month over a letter sent by the State Water Resources Control Board to various participants in the Underground Storage Tank Cleanup Fund.

The Underground Storage Tank Cleanup Fund Program was created in 1989 to help owners and operators of petroleum underground storage tanks (USTs) meet federal and state financial responsibility requirements. As some friends of mine sometimes remember, the changes in regulations regarding the pollution created by USTs, especially at fuelling stations, often became a difficult burden for small owners. They suddenly had to meet environmental standards they were not ready for; excavating old tanks and the contaminated soil around them was expensive.

The program was created to help the owners and operators of leaky USTs clean up their sites. Claims are prioritized in four categories:

  • The highest priority, Class A, is reserved for residential tank owners
  • Class B is reserved for small California businesses, nonprofit organizations and governmental agencies with gross receipts below a specified maximum
  • Class C is for certain California businesses, nonprofit organizations and governmental agencies not meeting the criteria for Class B
  • Class D is for all other eligible claimants

Here’s the kerfluffle: a few weeks ago, the Board notified participants that it was short on cash and payments would be delayed several months. The primary reason cited was poor revenue; you see, the Fund is financed by a per-gallon fee paid by the UST owners who are required to have a permit — but not as a percentage: as a flat amount per gallon sold. With the record highs on gasoline prices this summer, people drove less and the revenue, ahem, tanked.

So first, payments for already authorized and completed work are on hold for who knows how long. Then the Board announces that Class C agreements are suspended altogether. (Class D is not even on the horizon right now.) But to top it off, the Board tells Class B and C claimants:

“Have your consultant prepare a line item budget covering planned corrective action activities for your site for the 18-month period January 1, 2009 to June 30, 2010.”

Notice a problem with this? (1) “We’re holding your payments and we’ll pay out by priority.” (2) “Ask your consultant, which you now can’t pay, to do more work!”

But wait, there’s more! The budgets have to be submitted no later than February 1, 2009. And with the Holidays in the middle, you can bet all consultants are delighted to create a bunch of unscheduled budgets from whole cloth, for which they will have a hard time getting paid by their clients left hanging in the breeze.

On the one hand, the Board does need those budgets in order to plan and prioritize. On the other, the suddenness of the changes is really hitting a lot of clients hard, and the getting-paid-for-work issue is non-negligible. Fun times!

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According to last Wednesday’s Seattle Post-Intelligencer, SkyHook and Boeing are teaming up to create a skycrane that is a cross between a dirigible and a helicopter.

I don’t know enough about the economics of construction and operation of such craft to know the answer to my own question, but I wondered how the fuel, material, and labour requirements compare to that of building roads in remote areas; according to SkyHook President Peter Jess, they might be favourable.

Regardless of the answer, the primary clients for such a craft are oil and mineral extraction operations in remote areas. It’s a measure of just how expensive such commodities have become, thanks largely to war in the Middle East. We hear a lot about the price of oil, but the price of metals has climbed dramatically, making operations that were prohibitively expensive just a few years ago suddenly seem attractive. And therefore, expensive technologies to reach them also seem economically feasible.

That said, I’d love a ride in the new JHL-40.

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Interesting article in today’s Seattle Times: “Will Gas prices drive homebuyers away from suburbs?” Seattle, like the rest of the major West Coast cities, has a relatively high cost of living and high housing and fuel costs. Although the situation is not as acute as in San Francisco or L.A., this sort of question is probably representative of what other cities will experience. In fact, California cities, with their more lengthier commutes, will probably present sharper dilemmas.

On the other hand, the SF Bay Area has a good public transportation network, while Seattle’s is rather lackluster. In Seattle, the system works pretty well if you’re working downtown and taking a single bus line; but as soon as you need to transfer between buses or head anywhere but downtown, it becomes very inconvenient. We still don’t have a good rapid transit (subway, metro, skytrain, or monorail) system; the regional light rail lines are being expanded, but are only useful to a fraction of commuters.

The City of Seattle changed its planning a few years ago to adopt a policy of growth by infill and densification. The mockups of this sort of development always show low-impact, green, family-friendly theoretical projects, but what gets built is most often condominium blocks, with perhaps mixed-use/commercial on the ground floor. I have trouble believing that so many people in Seattle are both willing and able to buy condos; they’re OK for young couples and singles, but not so great for families. I expect a condo glut on the local market within five years, and I expect many of those will be bought cheaply by management companies that will rent them out to people who can’t afford to buy.

So the question of home prices versus gas prices will probably be important to a lot of people for a long while.

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