City Commissioner Sam Adams announced today action items the Portland Office of Transportation (PDOT) will take in response to the impact of high fuel prices on Portland's transportation budget. Adams and PDOT officials addressed the fact that rising fuel prices are projected to generate $2.7 million less Gas Tax revenue in Fiscal Year 2007-08 than forecasted six months ago and see this trend continuing for the foreseeable future.
The City's budget process required PDOT to make cost escalation estimates in October 2007 for a budget submitted in December 2007. Today's prices require substantial adjustments to those estimates.
Adams outlined the following actions PDOT will take to deal with reduced transportation revenues:
Evaluate all capital projects to ensure recent price increases are included, including the Flanders Street Crossing to insure integrity of the budgets
- Evaluate all capital projects to ensure recent price increases are included, including the Flanders Street Crossing to insure integrity of the budgets
- Review vacant positions to determine essential hires
- Restrict discretionary spending such as out-of-town travel
- Accelerate ongoing efforts to find additional productivity improvements
- Examine opportunities to reduce fuel consumption
- Evaluate major road paving projects
"Like all citizens, the City is aware of rising prices for fuel and other petroleum-based products. We have been monitoring the situation for several months," said Adams. "An increase in the price of fuel means an increase in costs for PDOT projects, not only for paving projects done in-house by our Transportation Maintenance crews but also for construction projects contracted out."
Prices of fuel and other petroleum-based products have been steadily rising in recent years. The City is paying more for fuel and asphalt. The City's price for solid asphalt, which is a petroleum-based product, today is $45 per ton. A year ago the price was $36 per ton. Considering that the City's overlay crews use an average 600 tons of asphalt per day for 106 crew days, that's a big impact. "Certainly, this affects our choices. It affects everyone's choices - the City's and the individual resident's," said Adams.
Although fossil fuels are woven into nearly every thread of the fabric of society, the transportation sector is the largest user of petroleum products. An estimated 38% of the total fuel consumption each year is used for transportation, with electricity being the second at 28%. The transportation sector includes every gallon of gas used to power each car or truck used every day to deliver us from point A to point B, to school, to work, or for errands. City Fleet has seen an average cost increase of 32% per year for fuel in recent years.
If the price of petroleum continues to go up, the City won't have a lot of options, say Adams and PDOT officials. Areas of concern include the following:
- Long-term pavement and bridge conditions
- PDOT's maintenance program
- Future construction projects
"An increase in the price of petroleum means it's more difficult for us to get our work done, meet our street paving goals, and manage construction projects. Rising petroleum costs will reduce the miles of streets paved this year and beyond," said Adams.
Costs of construction projects have been steadily increasing in recent years due to rising prices of major materials. The following material costs have risen 10-25% in the last few years and are expected to continue to rise over the next few years:
- Asphalt
- Cement
- Structural Concrete
- Diesel Fuel
- Sand, Gravel, Crushed Stone
- Pre-stressed Concrete Products
PDOT has implemented a range of measures aimed at reducing its oil use in day-to-day operations and the general public's oil consumption. The City has adopted best practices around using recycled materials. The Sunderland Recycling Facility in northeast Portland, for example, crushes asphalt and concrete into reusable rock that City crews use in maintenance projects.
"We are using sustainability as a tool to reduce long-term costs on all new projects," said Adams. The City has purchased Hybrids, implemented the ZipCar partnership program, purchased bio-diesel fuel, and implemented new technologies to defray the costs of fuel. The City also partners with other government agencies in the region sharing resources to reduce costs.
In the past few years, powerful evidence has emerged that casts doubt on the assumption that oil and natural gas will remain plentiful and affordable. The evidence suggests that global production of both oil and natural gas is likely to reach its historic peak soon. This phenomenon is referred to as "Peak Oil." In March 2007 Portland became the first government body in the U.S. to acknowledge imminent peak oil as a reality and to release a plan for what the city should be doing to cope with the years ahead. A resolution was adopted by City Council that calls for cutting oil consumption in Portland in half by the year 2030.