Overall, we’re delighted that the Sunset Commission sees the need for fundamental reform at TxDOT, and acknowledges that simply tweaking some things or maintaining status quo will not suffice to restore the public trust in this agency or in transportation decision-making around the state.

However, in response to the Committee Report, we have some further suggestions we need the Commission to recommend to the Legislature.

ISSUE 1
SINGLE ELECTED COMMISSIONER
While the Sunset Committee staff recommends abolishing the Transportation Commission and replacing it with a single commissioner, we DO NOT need to have that position APPOINTED by the Governor, giving us more of the same. The new head of this agency needs to answer directly to the people of Texas through statewide election. We need an independent representative who answers to the voters and who represents the entire state, as a whole, in transportation matters. A single elected commissioner also avoids chopping up the state by region with regional commissioners, which inevitably pits region against region, urban against rural, and may compromise seamless transportation throughout the state. When 76% of the feedback you received from the public asked for an elected commissioner, it’s abundantly clear that’s what the people of Texas want the Legislature to adopt.

ISSUE 2
PROJECT PROGRAMMING – NEED FREEWAY VS TOLLWAY “NEEDS” ANALYSIS
We agree that TxDOT and MPO planning mechanisms are broken. We need to end the toll road wish lists (TMMP plans that even the Governor admitted were based on an if-money-were-no-object principle) and get a true side-by-side, apples to apples comparison of the cost of fixing our roads and keeping them freeways versus the cost of turning them into tollways. If it’s anything like the US 281 project in Bexar County, TxDOT/ARMA has turned a $100 million gas tax funded FREEway plan into a $1.3 billion toll project. This side-by-side comparison will help Legislators and the public discern our true “unfunded needs” if we truly have any, since we cannot rely on TxDOT’s “funding gap” figures to be accurate. Then and only then can we accurately assess funding our roads in the least invasive, most affordable, and most transparent fashion.

ISSUE 3
PROPAGANDA VERSUS EDUCATION CAMPAIGNS
TURF is suing the State to STOP TxDOT’s propaganda campaign called Keep Texas Moving, which advocates the Trans Texas Corridor, privatization, and tolling. Just look at the fixation on tolling over other funding options on TxDOT’s web sites. The Committee Report highlights no less than 3 web sites dedicated to tolling using taxpayer money. The information found on these sites only extols the benefits of tolling and privatization (never any criticisms) to the exclusion of other modes of transportation and other forms of financing. Conveniently, tolling puts the most money in TxDOT’s coffers and creates a slush fund not subject to federal law, which has higher environmental and public involvement standards.

The Sunset Commission needs to strongly recommend to the Legislature that we need a statute that clearly spells out what TxDOT is authorized to do as far as marketing. A statute must include restriction of advertising toll roads (restrict to “Get your toll tag here” for toll projects already built and open to traffic) and advocating one policy over another through its web sites, public information resources, staff time and resources. The law must also clearly prohibit not only advocacy of certain policies over another (versus truly educational campaigns like “Click it or ticket”), but also enforce the prohibition against state agencies lobbying using taxpayer money. TURF would be happy to share the evidence we’ve uncovered in our lawsuit that shows the blatant political nature of the ad campaign and that also documents illegal lobbying, including the hiring of registered lobbyists, by TxDOT.

NOT JUST PUBLIC “INVOLVEMENT,” BUT PUBLIC VETO POWER
There are no specific public involvement recommendations that would force TxDOT to do what the public asks them to, particularly in regards to toll projects and the Trans Texas Corridor. Simply taking public testimony and then ignoring it is what has caused a massive revolt against transportation policies all over the state! We need some public involvement REQUIREMENTS that FORCE TxDOT to implement the alternative chosen by the public, not the one that makes the State the most tax revenue. Whether it be a public vote on all toll projects, or through public comment on projects through public hearings, something must be done to give the taxpayers who foot the bill the final say, including how the project is financed, on the best alternative for their community.

TRANSPARENCY, NOT LIP SERVICE
SB 792 tried to force more transparency with the financial terms for toll projects. However, the financial guts of these projects are still being withheld from the public, by law. For instance, as long as TxDOT calls something a “draft” document, they do not have to release it. Also, the market valuation studies and toll viability studies (also called traffic and revenue studies) that reveal the genuine feasibility of these projects, the structure of the bonds, and if the tolling entity plans to refinance and backload a toll, are not being released per SB 792.

The San Antonio MPO, for instance, was asked to give final approval of the financial terms on the US 281 toll project in December 2007 without having access to the actual market value study or documents showing the financial terms of the deal (which aren’t required to be disclosed per SB 792 until 30 days prior to letting a contract). The public hearing revealing this financial information didn’t happen until June 2008, and the meeting was held at 1:00 PM in the middle of the workday 20 miles from the project area. The purpose of a public meeting is to solicit public comment, and when the tolling entity holds the meeting when the vast majority of the population is at work as far away from the project area as possible, the meeting can in no way be legitimate. The whole process is secretive and absolutely backwards! If the public objects to the structure of a deal, how can they stop it if the MPO already approved it prior to disclosure of the information? It’s insane to withhold these documents from the public and even our Legislators when they’re being asked to give FINAL APPROVAL for the toll rates and terms of these deals at the MPO.

This practice has got to stop! If a toll project is in the public’s best interest, then it should withstand the light of day.

ISSUE4
END THE “BEST VALUE” PROPOSAL AND PAYMENT TO LOSING BIDDERS, IT’S A TAXPAYER RIP-OFF
The report mentions that toll contracts are different than the Department’s traditional contracts. This differing standard shows the disproportionate emphasis and special privileges given to toll road contractors not otherwise enjoyed on non-toll projects. Rather than require TxDOT use the lowest bid, toll contracts are allowed a nebulous “best value” bid. State law also allows payments of to $1 million to losing bidders on toll projects.

This policy creates an entire pro-toll lobby through road contractors themselves who will profit handsomely by merely bidding on a toll project and it allows them to re-coup a cost of doing business that other industries do not enjoy when bidding on government projects. This practice is a total waste of taxpayer money and needlessly inflates the cost of transportation. No other bidders on government contracts get this pay-off, and it’s likely to spread to other government agencies. This is NOT a precedent the taxpayers want to set. The Sunset Committee’s job is to identify waste, fraud, and abuse, The “best value bid” and payments to losing bidders qualify! Get rid of them!

DO NOT RE-AUTHORIZE CDAS
If the public outcry over privatizing our public infrastructure wasn’t loud enough in the 80th Legislative Session, then what more must the public do to end this risky, extremely expensive method of delivering toll projects? How quickly the testimony from Dennis Enright of Northwest Financial in New Jersey before the Senate Transportation Committee March 1, 2007 has been forgotten. Mr. Enright said there is no risk transfer to the private entity and that CDAs cost the taxpayers of a minimum of 50% more than public toll roads. Mr. Enright rightly called toll roads monopolies by their very nature. He also said it’s always best to keep these projects in the public NOT private sector. So why are CDAs being discussed at all? We wouldn’t need all the recommended extra oversight and bureaucracy if CDAs were not re-authorized. There were 20 lawyers present at the signing of the SH 130 CDA. Such waste of taxpayer money when TxDOT is claiming we’re out of money for roads is the height of hypocrisy! Public infrastructure (a government sanctioned monopoly free of competition) that Texans depend on for daily living shouldn’t be under the control of private companies whose primary motive, naturally, is profit, not the public interest.

OTHER AREAS NOT ADDRESSED
ABOLISH UNACCOUNTABLE RMAS, FIX MPOS
The Committee Report was silent on the problems with Regional Mobility Authorities enacted through HB 3588 in 2003, but touches on some of the problems at MPOs. MPOs and RMAs are just as tone deaf to the will of the public as TxDOT. Hundreds of people can fill their boardrooms and submit public comments opposing toll projects, yet they proceed with tolling anyway. RMAs are subdivisions of the State, and though local county commissioners appoint most board members and often provide some start-up loans, they are funded primarily by TxDOT and an extension of TxDOT’s toll-first mentality. They’re merely a front for local control. When TxDOT shows them the money, we know who holds the wheel.

RMAs are essentially created to sell bonds and toll roads, and they were created without a public vote. We have the Texas Turnpike Authority, TxDOT, and now RMAs. We do not need all of this duplication in effort. RMAs are mini-TxDOTs, they don’t answer to the people, and pit region against region (board members from one part of a city vote to toll another part of the city). We’ve also found that even though Board members are appointed by Commissioners representing various precincts, the majority of appointees do not reside in the areas to be tolled, leaving those who will be tolled without representation. The same is true of MPOs. The regions that won’t be tolled vote with TxDOT to toll the regions that are proposed to be tolled, leaving the citizens who will bear the tax increase with no meaningful representation.

If a law is enacted as suggested in the “PUBLIC INVOLVEMENT” section giving the public the ability to choose the best alternative for road projects, it must also apply to overruling an MPO plan that may designate a project as a toll road. The PEOPLE should have the final say, period.

END THE FIXATION ON TOLLING
The Transportation Commission passed a Minute Order on December 18, 2003 mandating all new capacity to Texas roads be studied for tolls first. This policy is why TxDOT is tolling everything in sight, and the Legislature must step-in to change the direction.

With gas at $4 a gallon, and driving decreasing for the first time in more than 30 years, we have to revisit this shift to tolling. We’re in uncharted territory as it relates to fuel and energy costs, even topping the inflation adjusted high of 1980. Selling billions in bonds for toll projects that depend on high growth rates and old patterns of driving for 40-50 years at a time, is foolish and unsustainable in the long-term. Some of these RMAs are foregoing buying bond insurance for multi-million dollar toll projects. This leaves the taxpayers on the hook to bail out failed toll projects. We’re setting up the taxpayers for an Enron/mortgage-crisis style bail out.

Link to article here.

Worst bottlenecks in North Texas? Right here in Tarrant
By Bud Kennedy
Star Telegram
Friday, June 20, 2008

We’re No. 1.But not in a good way.

Northeast Loop 820 in Hurst is the worst bottleneck in all of North Texas, according to a new study that ranks the region’s roads among America’s most choked, behind only Los Angeles, New York, Chicago and Washington.

There’s more bad news.

Not only is the 820-Airport Freeway interchange the No. 1 bottleneck — worse than anyplace in Dallas— but the Loop 820 exits at Denton Highway and Rufe Snow Drive are Nos. 2 and 3.

Overall, Northeast Tarrant County drivers face worse traffic than anyone in Dallas or Houston, according to a study of truck GPS data compiled by INRIX Inc. of Seattle.

Only Austin — where Interstate 35 amounts to a 5-mile-long elevated parking lot — has a freeway as crowded as Loop 820, and that city’s traffic overall is nowhere near as bad as Fort Worth’s.

What’s more, the region’s No. 4 worst bottleneck is Interstate 35W north of downtown Fort Worth. It’s congested an average of 7 hours a day.

Basically, Houston and Dallas already fixed their roads. We’re waiting for state money.

I would like to assure you that every county and city official is working on the problem.

But I couldn’t find many of them yesterday. For all I know, they were stalled in traffic at Holiday Lane.

When North Richland Hills Mayor Oscar Trevino called back, he was weaving down neighborhood streets to escape U.S. 377.

He described Loop 820 as “just ugly.”

“The people who have to drive that every day don’t say nice things,” he said. “It’s bad for our city. Businesses want to come, but they see the traffic and say, ‘Why would I get into this?’ ”

County Judge Glen Whitley is very familiar with the time-waste potential of Loop 820. He lives in Hurst.

“It’s a big drawback to the whole county,” he said. “The traffic north of Fort Worth is so unreliable that nobody can predict how long it’ll take to get to work.”

There’s a solution in the making. But lots of Texans won’t like it.

Three Spanish-owned companies are in the running for a $1 billion contract to widen Loop 820 and operate two private toll lanes. The toll would be $4 each way.

The project is part of the North Tarrant Express, a new tollway network slow off the drawing board in Austin.

“We can’t get Austin to move forward,” Whitley said. “It’s ridiculous that this is the last part of Loop 820 to be improved.”

A public hearing July 1 at 7 p.m. at Richland Hills Church of Christ will give both residents and tollway-haters a chance to vent about both the slow plans and high tolls.

Terri Hall of San Antonio leads an anti-tollway group, Texans Uniting for Reform & Freedom (TURF). She said she opposes any private tollway.

“The bottom line is, this the most expensive way to expand that road,” she said. “It means the highest possible cost to taxpayers and drivers, and hands over money to foreign companies. When the state has a record budget surplus, it’s hard to see how there’s not money for that road.”

Call it the Billion-Dollar Bottleneck.

Link to article here.

The danger of borrowing anticipated toll revenues up front to spend like Monopoly money on other road projects, is that no one knows exactly how much of that revenue will actually materialize. Given that we’re in uncharted territory with the highest price of gas in history with no end in sight, these market-based toll deals are allowing politicians to gamble away our future and build another house of cards cottage industry (courtesy of road builders & infrastructure funds) for the taxpayers to bail out, perhaps worse than the current $700 billion (and counting) mortgage mess. With the biggest drop in driving in recorded history now on the books, who do they think has the money to take these toll roads?

Toll stash in Metroplex churning out dollars
By Ben Wear | Tuesday, June 17, 2008
Austin American Statesman
By this weekend, the Dallas-Fort Worth area will have another $1 million to spend on transportation. This time next month, another $10 million or so will have rolled in.

That’s what happens when you go borrow $3.2 billion, and then don’t spend it for awhile. Of course, all this “free” money will have to paid back, and then some, on the back end.

What happened is that the North Texas Tollway Authority agreed to pay TxDOT $3.2 billion for the privilege of getting to build the Texas 121 tollway in Collin County. It won this right last year in a curious bidding war with a private group headed by Spanish toll road builder Cintra. The idea is that the road is so perfectly located in Dallas’ congested north suburbs that it will belch up generous amounts of toll revenue over the next several decades. That allowed the tollway authority to borrow much of the anticipated profits upfront.

That money, in turn, will be used in the Dallas-Fort Worth area on other transportation projects, including tollways, freeways, managed lanes, traffic signals and bike/pedestrian projects. State law requires that it be spent only from whence it came.

But for now, it’s just sitting in the bank, as it were, and churning out bucks, with the exception of about $120 million already spent on projects that were underway and had gone over budget. To be specific, the money has generated $69.2 million in earnings in a little over six months. That’s more money than the 11-county Austin districts gets in a full year, and that’s back when TxDOT actually had money to pass out to the locals.

As we said above, the tollway authority will of course have to pay interest over the next 30 years or so on the borrowed $3.2 billion, money that will come from tolls. But in the meantime, the stash will generate enough money to build a next freeway interchange (or more) for each year it sits there.

Are you getting the feeling our politicians simply refuse to get the message the grassroots is sending? After hundreds of precincts and dozens of senate conventions passed anti-toll, anti-privatization, anti-market-based tolls, and anti-Trans Texas Corridor resolutions, thirty three members of the Republican state platform committee erased all their work in about 10 minutes.

The Trans Texas Corridor plank has strong wording in this year’s Republican platform, but the call to repeal the TTC legislation was removed from this year’s version. The 2006 version was: “Because there are issues of confiscation of private land, State and National sovereignty and other similar concerns, we urge the repeal of the Trans Texas Corridor legislation.”

The 2008 plank says:

“We emphatically oppose the Trans Texas Corridor in any form or manner. We call for a full investigation of any public official authorizing any form of eminent domain for the Trans Texas Corridor and foreign funding.”

There is also a call asking Congress to withdraw from the Security and Prosperity Partnership (SPP) and the formation of the North American Union.

Republicans officially pro-toll tax

Then, the strong 2006 anti-toll plank (“We oppose tolls charged for traversing previously toll free roadways and disallow continued tolls except for maintenance on existing toll roads already paid for”) was replaced with this nebulous, awkwardly worded statement:

“We support the legitimate construction of toll roads in Texas, but we oppose converting existing state and federal roads to American-owned toll roads without voter approval.”

OKAY to build foreign-controlled toll roads?

This plank is strangely silent on foreign-controlled toll roads and seems to contradict the Trans Texas Corridor plank. By its silence on foreign-controlled toll roads, it allows such without voter approval. Also, no freeway should be converted to a toll road, period! It’s not something the public needs to vote on, it’s DOUBLE TAXATION and a money grab. It shouldn’t be done, EVER! Then note the pro-toll statement at the outset, “we support…toll roads in Texas.” Oh really? The grassroots sure don’t, especially when they’re paying $4 a gallon at the pump and spending nearly $100 to fill their gas tanks just to get to work!

Waste, fraud, abuse leave taxpayers in no mood for higher transportation taxes

They also don’t support them when TxDOT is wasting the taxpayers’ money on $20 million dollar earmarks to build a park in downtown Dallas and $18 million dollar rest stops equipped with free wi-fi, not to mention $9 million dollar propaganda campaigns pushing the TTC and toll roads down our throats. The taxpayers don’t support new toll taxes when the Legislature sees fit to siphon off nearly 50% of our gas taxes to non-transportation uses like tourism promotion and enhancing employee benefits in the Attorney General’s office.

The pro-toll special interest machine won out over the grassroots

So, when yours truly, among others, attempted to amend the platform to revert back to the previous planks. Here’s what happened. The Party had scarcely provided a copy of the new revised platform only an hour or so before bringing the platform to a vote. So few if any delegates had the chance to review the changes. None of the changes were notated, making deciphering any differences between this year’s and the 2006 platform near impossible. All the while, the delegates were voting on Party leadership with no time to review the platform thoroughly or even in a cursory manner.

Delegates wishing to amend the platform had to write out two copies of the proposed changes and bring them to the mic. By the time I had even one written, a call for a vote came from the floor ending all debate and the platform passed in less than 10 minutes. I wasn’t the only one chapped at this railroading. Another said from the mic, “if you were just going to rubber stamp the platform, why should we bother to travel from all over the state at our expense to come here in the first place?” The whole thing was a done deal before the grassroots knew what hit ’em.

The elitist, we-know-best leadership of the Republican Party has not only lost its way, its strong-arm railroading tactics have caused them to completely trample on the grassroots responsible for getting them elected in the first place. Thousands of Texans passed the anti-toll resolutions with unanimous support at their precincts and senate conventions. They sent a clear, unequivocal NO TOLL TAX message to the Party leadership only to be railroaded by 33 members of the platform committee doing the bidding of the Party elites under the spell of the road lobby, ala toller-in-chief Rick Perry. Not only does this not bode well for the November General Election, it gives any smart Democrat an open door to eviscerating Republicans as the pro-toll party wanting to levy the MOST EXPENSIVE TRANSPORTATION TAX upon Texans at a time of record high gas prices.

Link to article here. Read TURF’s response to TxDOT announcement here. This isn’t as it appears…the new corridor isn’t toll viable so they have to revert back to the existing “free” competition to a toll road and toll it, so they get their monopoly in place!

TxDOT says TTC won’t mess with rural Texas; Review urges agency overhaul to restore public trust
By Zen Zheng
Housotn Chronicle
June 13, 2008
After waves of public protest, the Texas Department of Transportation has decided that it would not mess with rural Texas with its proposed Interstate-69/Trans-Texas Corridor that would stretch from Mexico to Texarkana.

The project route, it announced, would instead be confined to the right of way of existing major highways. (See a map of the proposed route below.)

To opponents of the project, the dark clouds didn’t dissipate, but has only changed its shade.

TxDOT’s wording maintains a degree of vagueness as it said it would “consider” sticking to existing highways “wherever possible,” Terri Hall, founder of the opposition group, Texas United for Reform and Freedom, pointed out.

Hall said that despite TxDOT’s announcement, the corridor “can still be a 1,200-foot wide land-grabbing, privatized, tolled” facility. She said because the right of way of existing highways is already paid for with gas taxes, building the corridor as a tolled facility would be “double taxation.” She added:

This corridor was promised as a free interstate highway for decades, now they’ll convert existing freeways like (U.S.) 59 into privately-controlled toll roads. Somehow we feel in no mood to celebrate.

If TxDOT changes the scope of the project like a new route and study area, TxDOT has to, by law per (National Environmental Policy Act), redo the environmental study totally and take public comment all over again, not just submit some letter to the (Federal Highway Administration) reflecting the change.

Much of the route would now go along U.S. 59. In the Houston area including Fort Bend County, in addition to U.S. 59, Loop 610 and Grand Parkway remain TxDOT’s options for the corridor, according to Amadeo Saenz, the department’s executive director.

The Harris County Toll Road Authority is pushing for the construction of the northwest segment of the planned Grand Parkway, which would be tied into the namesake road through Fort Bend.

It is unclear how the changed I-69/Trans-Texas Corridor plan would affect our region. While the exact route is yet to be determined, earlier plans had shown that areas near Huntsville, Navasota, Prairie View, Waller, Sealy, Wallis, Kendleton, Richmond and Rosenberg would be in the corridor’s path.

Fort Bend County Judge Bob Hebert Friday called the TxDOT’s decision “a good first step” but cautiously said “there is a great deal of work left to be done.” On the possibility of the corridor coming through Fort Bend County, he had this comment for me:

One thing I will work to assure is that the existing portions of US 59 and the Grand Parkway within Fort Bend County are not used as part of a Houston by-pass. The growth of local traffic demands on those two highways prohibits such a use.

Two Republican state lawmakers were quick to praise TxDOT’s announcement.

Sen. Kay Bailey Hutchison hailed the decision as “a major victory” for landowners, farmers and ranchers who have feared that their land could be taken by the government by eminent domain.

Rep. Kevin Brady from The Woodlands, who led a nine-member state congressional delegation to push for the corridor to stay out of the way of rural communities, said he wants to also push for upgrading existing highways, including U.S. 59, to “interstate standards.” Doing so would “restore public support” for the Trans-Texas Corridor, he said.

Observers, however, doubt that the public would ever support the TTC project. Residents, community leaders and officials at various government levels, including some Fort Bend County commissioners, have repeatedly expressed frustration with TxDOT’s alleged lack of regard for local and community input in many of its projects. Public trust in the state agency has been greatly eroded, they say.

The Sunset Advisory Commission, which reviews agencies regularly on their performance, in its report issued this month, among a host of recommendations, calls for the replacement of the current five-member Texas Transportation Commission, which is TxDOT’s governing board, with a single commissioner and shorten the term of office from presently six years to two years.

Here is an excerpt from the report:

The Sunset review of the Texas Department of Transportation (TxDOT) occurred against a backdrop of distrust and frustration with the Department and the demand for more transparency, accountability, and responsiveness. Many expressed concerns that TxDOT was ‘out of control,’ advancing its own agenda against objections of both the Legislature and the public . . . tweaking the status quo is simply not enough.

Nevertheless, critics said that even with the downsizing of the TxDOT’s governing board, the lone commissioner would still be appointed by Gov. Rick Perry, who led the crusade for the unpopular Trans-Texas Corridor plan. Critics noted that the current commissioners have been advancing the very agenda of one who appointed them.

Link to article here.The free fall continues…not the time for new toll taxes!

Stocks tumble 206 points on oil surge
Wall Street slumps as crude prices rally more than $5 a barrel, the dollar falls and Fed’s ‘Beige Book’ shows more weakness.
By Alexandra Twin, CNNMoney.com senior writer
June 11, 2008

NEW YORK (CNNMoney.com) — Stocks tumbled Wednesday, with the Dow losing over 200 points, amid a $5 spike in oil prices, more problems for the bank sector and a report showing continued economic weakness.

The Dow Jones industrial average (INDU) lost 206 points, or 1.7%. The broader Standard & Poor’s 500 (SPX) index lost 1.7% and the Nasdaq composite (COMP) lost 2.2%.

The Dow Jones Transportation average fell 4.7% on the jump in oil prices.

“Oil prices are spiking today and there’s also this renewed issue with the financial sector,” said Greg Church, president at Church Capital.

Lehman Brothers (LEH, Fortune 500) stock fell as investors continued to react to the company’s huge quarterly loss announced earlier this week. Merrill Lynch downgraded the stock to “neutral” from “buy.”

And Church said that the financial sector was being plagued by vague market rumors that supposedly bullet-proof Goldman Sachs (GS, Fortune 500) could take a big hit.

Anheuser-Busch (BUD, Fortune 500) stock could be active Thursday after it was announced late Wednesday that Belgian rival InBev has made a nearly $47 billion offer for the company. Reports suggested InBev was interested in the maker of Bud a few weeks ago. Shares gained 7% in after-hours trading.

In other news, it was announced after the close of trade that the House bid to extend jobless benefits beyond the six-month mark has failed. (Full story)

Thursday brings the May retail sales report from the Commerce Department. Sales are expected to have risen 0.5% after falling 0.2% in April. Sales excluding autos are expected to have 0.7% after rising 0.5% in April.

Oil prices surge. U.S. light crude oil for July delivery rose $5.07 to settle at $136.38 a barrel on the New York Mercantile Exchange, after the government’s weekly supply report showed crude prices shrank more than expected.

Meanwhile the DOE forecast that oil prices will stay well above $100 a barrel and gas prices will stay above $4 a gallon through 2009.

“You’re seeing a growing awareness that the rising price of oil is impacting everyone’s ability to do business,” said Mark Travis, president and CEO Intrepid Capital Funds.

Additionally, he said investors were responding to the ongoing malaise in financial markets.

The Federal Reserve released its periodic ‘Beige Book’ survey of economic activity in the afternoon. As expected, the survey showed continued economic weakness in late April and early May, due to weaker consumer spending and advancing commodity prices.

Eye on the Fed: Chairman Ben Bernanke hinted earlier this week that the central bank will soon need to raise interest rates, to combat higher pricing pressure – and to prop up the weak U.S. dollar.

Fed Vice Chairman Donald Kohn, speaking at a Fed conference in Massachusetts, said that the rise in oil prices is raising consumer inflation expectations and that it is critical for these expectations to be contained. Fed Governor Randall Kroszner spoke at the same conference on consumer protection and the role of credit in the economy.

Company news: Corporate Express NV, a Dutch distributor of office supplies, accepted an improved $2.7 billion bid from Staples (SPLS, Fortune 500).

Alcoa (AA, Fortune 500) tumbled almost 8% after a JPMorgan (JPM, Fortune 500) analyst said that the aluminum producer is not looking to sell itself or spin off part of its business and that this will be a disappointment for Wall Street.

Including Alcoa, 27 out of 30 Dow components slid. Other big decliners included AIG (AIG, Fortune 500), American Express (AXP, Fortune 500), Citigroup (C, Fortune 500) and General Motors (GM, Fortune 500). The lone Dow advancers were the oil components Exxon Mobil (XOM, Fortune 500) and Chevron (CVX, Fortune 500) and chemical maker DuPont (DD, Fortune 500).

Market breadth was negative. On the New York Stock Exchange, losers topped winners four to one on volume of 1.39 billion shares. On the Nasdaq, decliners topped advancers three to one on volume of 2.17 billion shares.

Gas hits new record: The national average price for a gallon of regular unleaded gas rose to a record $4.052 from the previous day’s record of $4.043, AAA reported.

Other markets: The dollar slipped versus the euro and yen.

Treasury prices advanced, lowering the yield on the benchmark 10-year note to 4.07% from 4.10% late Tuesday. Bond prices and yields move in opposite directions.

COMEX gold for August delivery rose $11.70 to settle at $882.90 an ounce.